ANALYSIS AND UNDERSTANDING THE DYNAMIC INFLUENCE OF COST OVERRUN DRIVERS/FACTORS AFFECTING COST PERFORMANCE IN BUILDING CONSTRUCTION PROJECTS

Abstract

Construction cost overrun remains one of the most critical challenges affecting the performance and success of building construction projects worldwide. Despite the availability of advanced cost estimation methods, digital project management tools, and financial control systems, a large number of projects still fail to achieve their planned budget targets. Traditional research studies generally focus on identifying individual causes of cost overrun; however, actual construction projects involve highly interconnected and dynamic relationships among financial, managerial, technical, executional, and stakeholder-related factors. This research presents a comprehensive investigation into the dynamic behavior of cost overrun drivers affecting cost performance in building construction projects.

The study focuses on understanding the relationships among cost overrun factors, analyzing stakeholder involvement in cost management, and developing a dynamic decision-support framework capable of predicting and controlling cost-related risks. A mixed-method research methodology was adopted combining qualitative and quantitative approaches. Data collection included structured questionnaire surveys, semi-structured interviews, participatory observation, document analysis, and real project case studies from building construction projects in India and Nepal.

A total of sixty-four cost overrun factors were identified through literature review, expert consultations, and project analysis. These factors were classified into five major categories: financial factors, quality-related factors, design-related factors, execution-related factors, and professional skill-related factors. The relationships among these factors were examined using Total Interpretive Structural Modelling (TISM) and Fuzzy Cognitive Mapping (FCM). TISM was used to establish hierarchical interrelationships among cost factors, while FCM was applied to develop a dynamic simulation model capable of analyzing influence and dependency relationships.

The Relative Importance Index (RII) analysis identified “construction delays or suspension” (RII = 0.933), “additional work” (RII = 0.880), “frequent design changes” (RII = 0.861), and “poor project planning and scheduling” (RII = 0.844) as the most influential causes of cost overrun. Centrality analysis of the FCM model showed that project delays, financial instability, material price fluctuation, and stakeholder coordination possess the highest influence on overall project cost behavior.

Dynamic simulation and scenario analysis demonstrated that the developed model achieved more than 80% similarity with actual observations from selected case study projects. The results confirm that construction cost overrun is not caused by isolated factors but by complex interactions between multiple project risks that evolve continuously during the project lifecycle.

The developed framework provides practical support for project managers, consultants, contractors, and clients in improving cost planning, risk identification, project monitoring, stakeholder coordination, and decision-making processes. The proposed model can significantly enhance cost performance and strengthen financial control in building construction projects.