Cost management of public sector construction projects in KwaZulu-Natal.

Abstract

It is common that public sector construction projects do not finish on time, within budget or to the desired quality. These failures are caused by, for example, change of scope, change of schedule, change of design, unavailability of material, lack of appropriate construction experience, poor project co-ordination, and inefficient management of the project schedule which frequently lead to variation orders and cost overruns. Government who is an Employer in the public sector construction project is interested in projects to be completed on time, within budget and a quality end product. The objective of the study was to investigate the effectiveness of cost management in the public sector construction projects determined by estimates done at various stages of the procurement process, with arguably increasing level of accuracy, the reasons for frequent cost overruns during the construction phase of projects need to be investigated. Therefore the aim of this research was to investigate the effectiveness of cost management techniques in the construction projects in public sector in KwaZulu Natal. The study also assessed the accuracy of the cost estimates that are developed by the quantity surveyors at different stages of the construction projects and the effectiveness of procurement methods used to implement projects. The qualitative method was adopted for the data collection using systematic random sampling which resulted in 20 case studies selected and analysed. The open ended questions were used during the interviews to get the in depth understanding. Generally it was found that there was no clear evidence of cost management technique used by the public sector, the focus was on the outputs to be delivered and budget spending. The scrutiny of the case studies revealed that quantity surveyors were found to be out of touch of the market trend as 75 % of the tender amount were below the cost estimates. Inter alia the client was found to be the most predominant origin agent of cost overruns caused by the time it takes between the planning and the actual implementation of the project. The study recommends that the public sector should take an active role in cost management from the planning stage, the selection of a cost effective procurement method, the construction phase until the project closeout.