Factors affecting construction costs in Sri Lanka

Abstract

This study identifies severe cost factors that define the construction project cost in order to reduce costs and cost overruns in public sector building projects. A comprehensive literature survey was followed by two rounds of Delphi surveys to extract a set of exclusive cost factors and their levels of importance with the participation of a panel of 30 experts. Severity index (to rank the cost factors according to the importance), correlation analysis (to check the agreement between the parties),cross tabulation (to identify the linear relationships between the collected data) and hypothesis testing (to prove the agreements between the parties and to check the confident levels)were used to analyze the data. According to the research study findings, 44 cost defining factors were identified for the public sector building projects. Further, the differences in perspectives upon significance of cost factors by the direct stakeholders of construction industry were also identified.Most significant cost factors were identified as; cost of materials, size of the projects, projects planning and thecomplexity of projects. Further, factors were categorized in to the five main categories. Construction parties’ related factors contributed to the construction costs by 25%. Financial factors contributed to the costs by 21%. Construction item related factors contributed to the costs by 20%. Environmental factors contributed to the 18% while political factors affecting to construction costs by 19%. Most significant cost factors of each category were identified separately and a guideline was formed to help minimize building construction cost in Sri Lanka.