353

Paper No. 726

COST AND TIME OVERRUNS IN HIGHWAY PROJECTS IN

PAKISTAN

Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

354 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel
Centenary Celebration (1912 – 2012) 355

COST AND TIME OVERRUNS IN HIGHWAY PROJECTS IN PAKISTAN

By:
Rafiq Muhammad Choudhry ; Abdur Rehman Nasir 2; and Hamza Farooq Gabriel3
1

Abstract
Timely completion within allocated cost reflects good project management. Construction
industry of Pakistan having a contribution of 2.4 percent of the total GDP suffers due to lack of
investment in infrastructure sector including roads, rail and poor management resulting in
projects experiencing delays and cost overruns. Highways are a vital trade route in transport
sector as it carries 80 per cent of the country’s commercial traffic, clearly indicating that it
constitutes major component of the construction industry. The objective of this study is to
investigate key factors causing cost and time overruns in highway projects of Pakistan.
Identified factors of cost and time overruns in highway projects were investigated through
questionnaire survey of 25 contractors, 21 consultants and 10 clients. A total of 28 cost overrun
and 30 delay factors were ranked using relative importance index (RII). Analysis of the results
show that scope changes and additional work, inappropriate government policies and priorities,
improper planning, price escalations on major construction materials and land acquisition and
resettlement were major factors responsible for cost overruns. Delay in progress payments to
contractors, conditions under force majeure, financial difficulties faced by clients and land
acquisition and resettlement were established as most important causes for delays. This study
shows considerable agreement among contractors, consultants and clients regarding ranking of
factors using rank agreement factor. The identified factors are required to be carefully managed
to avoid risks and calls for improved risk and project management practices by clients,
contractors and consultants. This work can assist professionals in taking proactive measures for
reducing cost overruns and delays in road construction projects.
Keywords: Construction sites; Highway projects; Delays; Cost overruns; Time overruns;
Pakistan.
Introduction
A project is considered successful if it is completed on time, within budget and to the specified
quality standards (Frimpong et al. 2003). Project Management as defined by Oberlender (1993)
is the art and science of coordinating people, equipment, materials, money, and schedule to
complete a specified project on time and within approved cost which clearly indicates that
balancing the competing demands of cost within scheduled time is very essential to a project.
Cost and time overruns are major problems faced by both developed and underdeveloped
world, however their dynamics are quite different in both (Angelo and Reina 2002). In case of
developing countries, where wealth measure is greatly dependant on performance in
infrastructure especially on road construction projects; exceeding of project costs or schedules
from planned targets would ultimately lead to compromised client satisfaction and the resulting
effects become detrimental (Kaliba et al. 2009). According to (Ahmed et al. 2003), delays on

1
Professor and Head, Dept. of Construction Engineering and Management, School of Civil and Environmental
Engineering, National University of Sciences and Technology, Islamabad, Pakistan. Tel: +92 51 90854130, Fax:
+92 51 90854002, E-mail: choudhry03@gmail.com
2
MS Student, Dept. of Construction Engineering and Management, School of Civil and Environmental
Engineering, National University of Sciences and Technology, Islamabad.
3
Associate Professor, Dept. of Water Resources Engineering, School of Civil and Environmental Engineering,
National University of Sciences and Technology, Islamabad.
356 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

construction projects are a universal phenomenon and road construction projects are no
exception. They are usually accompanied by cost overruns which have a debilitating effect on
clients, contractors, and consultants owing to growth in adversarial relationships, mistrust,
litigation, arbitration, cash-flow problems, and a general feeling of trepidation towards each
other.
In Pakistan, transport is the fourth largest sector which contributes about 10% to the Gross
Domestic Product (GDP) and over 17% to the Gross Capital Formation. The sector is recipient
of 20-25% of the annual federal Public Sector Development Program (PSDP). It is estimated
that 2.3 million people (6% of the total employed labor force of Pakistan) earn their livelihoods
from this sector (Javied and Hyder 2009). The government is trying to improve the quality of
road network and ultimately improving the quality and standard of life of the masses. Road
density of Pakistan, an indicator of prosperity and development level is currently 0.32 km/km2,
which is much less even from regional standard. The government is endeavoring hard to double
the road density to 0.64 km/km2. Starting with only around 50,000 km in 1947, current road
network is now more than 260,000 km. This includes national highway network of around
12,000 km, which despite being merely 4% of the overall road network takes 80% of commercial
traffic (ESP 2010-11). With deteriorating performance of the Pakistan Railways, the road sector
has progressively increased its share in the market. The reliance on roads has increased
enormously, where the road sector now carries over 96% of inland freight and 92% of
passenger traffic as compared to that of total 8% in 1947 (ESP 2010-11).
In an attempt to overcome the deficiencies of infrastructure sector highlighted in World Bank
Document (Durrani 2007), which showed transport sector inefficiencies costing the economy
between 4-5 percent of GDP each year, a high level activity was carried out in road construction
sector of Pakistan vide billion dollars in loans from financial institutions including World Bank,
Asian Development Bank (BMI’s Report 2008). Numerous projects of highways have been
planned and executed to increase the contribution of road sector to the GDP of country.
Unfortunately, objectives of timely completion within costs are not achieved in highway projects
of Pakistan as same delayed badly with exceeded costs. Tribune (2010) a leading newspaper of
the country, published a news article regarding approval of a $130 million loan by World Bank
on the request of government to cover cost overruns and for completion of works on road
projects, facing delays. Several factors are responsible for these delays and cost overruns and
few might be totally different from building projects.
A wide range of studies have been made worldwide in order to evaluate factors that cause cost
overruns and delays in construction projects. Similarly in Pakistan, a number of studies were
carried out to identify factors causing delays and cost overruns in construction projects, mostly
focused on building projects or construction projects of all types, indicating a clear need to
identify these factors specifically in highways sector as probably, none of the study has been
documented till date. In order to carry out a study in road sector, following objectives are
considered:
1. To obtain information through interviews from highly experienced professionals of road
construction sector to get an insight of the challenges faced by the road construction
sector;
2. To conduct a questionnaire survey in order to obtain the response for analyzing the data
statistically for evaluating important causes of cost overruns and delays in highway
projects.
Centenary Celebration (1912 – 2012) 357

Literature Review
Cost Overruns
Cost overrun is simply defined as ‘when the final cost of project exceeds original estimates’
(Avots 1983). It is an excess of actual cost over budgeted one. Cost overrun is sometimes
called “cost escalation”, “cost increase”, or “budget overrun” (Zhu and Lin 2007). United States
General Accounting office in 1997, found that 77% of highway projects in the USA experienced
cost escalation. The study for cost and time overrun factors in highway projects of Zambia found
bad or inclement weather, resulting from heavy rains and floods on the top list of factors causing
cost overruns in road projects (Kaliba et al. 2009). Other major factors identified by the study
were scope changes and additional work, land acquisition and resettlement, schedule delays,
labor disputes and strikes, law and order situations, technical challenges, price adjustment,
shortening of contract period due to government pressures and priorities. A study undertaken to
evaluate factors causing cost overruns in Ghanaian Road Construction Sector shows that
delays in monthly payments to contractors, variations, inflation, schedule slippage and lack of
project knowledge are the five most important factors agreed by project participants i.e. clients,
contractors and consultants (Nicholas and Paul 2010). Inconsistent cash flow was the most
significant factor causing delays in construction projects of Pakistan (Nadir 2010).
Changes in design and scope, inadequate site investigation, inadequate quality of contract
documents, relocation of services and utilities, shortening of contract period due to government
pressures and priorities, land acquisition and resettlement, environmental issues were the most
dominant factors identified, resulting in cost escalations in highway project (Creedy et al. 2010).
Scope changes and additional work, changes in design, inappropriate government policies were
the leading factors contributing to cost overruns in international development projects (Ahsan
and Gunawan 2010). Morris (1990) studied the factors influencing cost overruns in public sector
projects and found that escalation in costs is attributable partly to the fact that the original
estimates were prepared at the then current prices, and partly to delays which enhance the
effect of inflation and to direct escalation in costs arising out of change in scope and errors.
Based on certain assumptions with regard to the pace of expenditure on projects, Morris (1990)
has roughly computed that for the 133 projects, which were studied, only 25 to 30% of the cost
increase is attributed to inflation. The remaining 70 to 75% has to be explained in terms of
delays, inefficiencies, scope changes, changes in statutory levies, variations in exchange rates
and to the combined effect of these factors with inflation.
Study of Datta (2002) depicts that delays between the planning stage and actual implementation
of especially large infrastructure projects is a ubiquitous problem resulting in cost and time
overruns. Other studies (Mansfield et al. 1994; Schexnayder et al. 2003) identified that cost
overruns occur due to a result of problems such as delay in land acquisition, unexpected
problems in supply of raw materials, illegal encroachment on land even during project
implementation, or due to internal problems in government organizations.
Time Overruns
Time overrun refers to a condition where a construction project does not meet completion within
the planned period (Daniel and Mohan 1997). It is defined as the extension of time beyond
planned completion dates traceable to the contractors (Kaming et al. 1997). Also known as
‘delay’/ it cause the project completion date to be delayed (Al- Gahtani and Mohan 2007).
Ahmed et al. (2003) grouped the delays in the following four broad categories depending on
how they operate contractually: 1) Non-excusable delays; 2) Non-compensable excusable
delays; 3) Compensable excusable delays; and 4) Concurrent delays. Ahmed et al. (2003)
found that the most common type of delay is excusable-compensable at 48%, followed by non-
excusable delays with 44% and 8% for excusable non-compensable delays. In most of the
358 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

cases, it is found that when the contractor has the responsibility, the type of delay respectively is
non-excusable; when the responsibility is the owner’s or the consultant’s it is an excusable
compensable delay; and when the government is responsible, the delay is considered an
excusable compensable.
The study conducted by Kaliba et al. (2009) for cost and time overrun factors in highway
projects of Zambia came up with the factors like delay in progress payments by the owner, slow
financial process, difficulties in financing project by contractor, contract modification, delay in
material procurement, design changes, staffing problems, equipment unavailability, poor
supervision, construction mistakes, poor coordination on site, changes in specifications and
labor disputes and strikes as the major causes of delays in road projects. The responsibility of
each delay factor was mentioned in terms of major stakeholders i.e. construction contractor,
consultant and the client.
Delay in material procurement, land acquisition and resettlement, environmental issues, natural
catastrophes, slow financial process, riots and commotion, and scope changes were the leading
factors contributing to time overruns in international development projects (Ahsan and Gunawan
2010). Daniel and Mohan (1997) came up with a conclusion that poor site management and
supervision, unforeseen ground conditions, low speed of decision making involving all project
teams, clients-initiated variations and necessary variations of work are five significant causes of
delays in construction projects. Contractor’s improper planning, poor site management,
inadequate experience, and inadequate client’s finance and payments for completed work and
problems with subcontractors were the delay factors evaluated in Malaysian construction
industry (Sambasivan and Soon 2007).
Important causes of delays identified (Mansfield et al. 1994) were financing and payment for
completed works, poor contract management, changes in site condition and shortages in
materials. Odeyinka and Yusuf (1997) classified the causes of delay via project participants and
extraneous factors. Client-related delays identified include variation orders, slow decision-
making and cash flow problems while contractor-related delays include financial difficulties,
material management problems, planning and scheduling problems, inadequate site inspection,
equipment management problems and shortage of manpower. Extraneous causes of delay
identified were inclement weather, natural catastrophes, labor disputes and strikes (Aibinu and
Jagboro 2002). Literature review indicates that several studies were conducted worldwide in
order to evaluate factors that cause cost overruns and delays in construction projects. In
Pakistan, nonetheless, not many studies were carried out to identify factors causing delays and
cost overruns focused on construction projects of all types, indicating a clear need to identify the
factors specifically in highways sector.
Research Methodology
In order to identify the major causes of delays and cost overruns in highway projects detailed
literature review, structured interviews and questionnaire survey was carried out. Structured
interviews were targeted at respondents from construction contractors, consulting firms and
agencies responsible for implementing and executing projects. The interview questions were
structured based on the information gathered through literature review. The main intention was
to identify challenges that major stakeholders face in implementing highway projects. Obtaining
possible factors of delays and cost escalations in highway projects was the major intention. A
total of ten (10) respondents, selected from a cross-section of organizations in road construction
sector, were interviewed. Two experienced professionals from client, four each from contractors
and consultants of road construction sector were interviewed that provided preliminary insights
into the challenges faced by road construction sector in which the government is more or less
the sole client. Following information from the interviewees were acquired: 1) Overview of the
Centenary Celebration (1912 – 2012) 359

projects handled by the interviewees in last five years; 2) Cost Overruns; 3) Delays; 4) Key
factors that contribute to projects failing to meet desired objectives; and 5) Frequency of
projects failing to meet objectives.
Information of projects, on which the interviewees had been involved in the past five years, were
captured. Questions relating to the number of projects undertaken, contract values, the extent to
which the projects had satisfied the objectives of budget, schedule and performance
requirements were asked. The interviewees indicated that they had been involved with not less
than 3 projects in their work experience. Further, the value of contracts managed by the
interviewees ranged from Rs. 1,000 Million to Rs. 8,000 Million. The contract values indicate
that significant magnitude of resources has been injected by the government which requires
effective and efficient utilization of resources.
Cost Overruns
Interviews indicate that cost overruns on projects were a common occurrence. Five of the
interviewees indicated that ‘many’ projects they had been involved in, suffered cost overruns.
Four stated that ‘quite a few’ projects had budget overruns, while only 1 believed that the
number of projects that had experienced budget overruns was ‘negligible’. With the above
responses, it was quite clear that the subject warrants further exploration. Interviewees
indicated that scope change in a project or additional work is main reason for cost overruns. The
issue of land acquisition and relocation of services was raised as to cause overruns in the total
project cost allocated by the government through PC-1. Inaccurate cost estimation results in
changing the original project cost while differing ground conditions lead to re-rating of items
caused due to inadequate field survey.
Delays
Results of the interviews showed that a significant number of projects were not completed within
schedule. Six of the interviewees indicated that ‘many’ projects they were involved in suffered
from delays. Three responded that ‘quite a few’ projects had schedule overruns, while only one
stated that the number of projects with schedule overruns was ‘negligible’.
The literature showed that completing projects within time is one of the biggest challenges being
faced in various parts of the world. It was revealed that if risks are not managed well, schedule
overruns are likely to occur. From the interviews, it was clear that schedule overrun risks were
significantly high on road projects in Pakistan. Main reasons for delays in highway projects
highlighted by the interviewees were delayed payments to the contractors on the certified work
done, restriction to work due to land acquisition issues, delay in permits from other
organizations, design errors and abnormal changes in the original scope of work.
Factors Contributing for Failure of the Desired Objectives
Key factors responsible for failure of highway projects in achieving objectives of cost, time and
quality were necessary to be identified through interviews. From the experience of respondents,
it was asked to pick out from a given list, factors considered by them as most significant in
contributing to projects failing to meet desired objectives. Contractor’s incapability to do the job
was rated by majority of the interviewees as the most significant factor contributing to failure of a
highway project. Other factors include delay in progress payment by client, delay in decision
making by client, inaccurate cost and time estimation and inappropriate government policies and
priorities. These results are similar with most of the factors identified through the literature review.
Interviewees were asked to rate the frequency of projects failing to meet project objectives. Four
interviewees marked the prevalence as ‘high’, 5 rated ‘medium’, while one rated the frequency
as ‘low’. It was highlighted by the interviews that government is solely the only client in highway
360 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

projects and the major factors that affect the project objectives are related to client. The findings
from the interviews were vital input into the questionnaire design.
Questionnaire Survey
A questionnaire was developed in order to assess the perceptions of owners, consultants, and
contractors for delays and cost escalation in highway projects. Factors were examined and
identified through literature review and by conducting structured interviews that sought advice
from experienced construction practitioners. A total of 28 factors were evaluated for survey that
can cause cost escalations in highway projects. For time overruns, a total of 30 factors were
evaluated.
The questionnaire was targeted at major project participants only related to road construction
sector and consisted of two parts related to the factors of time and cost overruns in highway
construction projects. First part was aimed at organizational and personal profile while second
part was targeted at factors influencing cost escalation and schedule overruns. In second part,
respondents were asked to rate the causes of cost escalation and schedule overruns. The
rating of factors given by the respondents for cost and time overruns were used to rank the
factors so as to obtain the construction industry’s perspective of the main causes of cost
escalation and delays.
There were three types of organizations targeted for response i.e. Contractor, Consultants and
Clients. The highest response rate observed was 45% (25 responses) from contractors, 37%
(21 responses) from consultants and 18% (10 responses) from clients were obtained. The
response rate for contractors, consultants and owners was 70.8% with 56 respondents out of a
total of 79. The experience of respondents in survey was documented. It was found that 11% of
the respondents were having an experience of 5 years or less, 13% of the respondents were
having an experience of 6 to 10 years, 11% of the respondents were having an experience of 11
to 15 years, 29 % of the respondents were having an experience of 16 to 20 years while 38% of
the respondents were having an experience of 20 years or more. Overall, majority of the survey
respondents were having an experience of more than 15 years.
Designation of respondents from three groups (clients, contractor, consultant) in terms of four
categories; Senior officers and executives, Project manager and team leader, Site engineers,
and / or Office engineers were documented. It was found that 40% of the respondents belonging
to clients were office engineers, 10% were project managers and 50% were senior officers. In
contractor group, 4% were office engineers, 12% were site engineers, 56% were project
managers and 28% were senior officers. In the group of consultants, 23.8% were office
engineers, 19% were site engineers, 19% were project managers and 38.1% were senior
officers. It is evident from the percentages that the project managers and the senior officers
have greater representation indicating their experience in the profession.
Data Analysis and Results
The data was analyzed and ranked using the ‘relative importance index’ as used by Kometa et
al. (1994). This method was adopted for the analysis of the data collected from the current
questionnaire survey. The five-point scale was transformed to relative importance indices for
each factor to determine the ranks of the different causes. The relative importance index (RII)
was evaluated using the expression (Kometa et al. 1994):
(RII) = ∑ w / (A x N), (0 ≤ index ≤ 1) Eq. (1)
where w = weighting given to each factor by the respondents and ranges from 1 to 5 where ‘1’ is
‘not significant’ and ‘5’ is ‘extremely significant’, A = highest weight (5 in this case), and N = total
number of respondents (in this case 56) .
Centenary Celebration (1912 – 2012) 361

In order to determine the magnitude of agreement between different groups of respondents

(clients, contractor, consultant), a rank agreement factor was used for any two groups. The
factor represents the extent of agreement in the ranks of the items as used by Okpala and
Aniekwu (1988) as shown in the Equation (4), known as Ranking Agreement Factor (RA). For
any two groups, assuming the ranking of the ith item in group 1 is Ri1, and in group 2 be Ri2.
Then the absolute difference Di between rankings of the ith item by the groups would be
Di =│Ri1 − Ri2│ Eq. (2)
Where i = 1, 2, 3 . . . , N (when there are N number of items)
D max is defined as the maximum absolute difference between the rankings of all N items by
the two groups, which assumes the two groups are in complete disagreement (they ranked the
items in opposite orders).
D max =│Ri1 − Rj2│ Eq. (3)
Where j = N - i + 1 (For example, for five items N = 5, when i = 1, j = 5–1+ 1 =5; for i = 3, j = 5 -
3 + 1 = 3)
The rank agreement factor (RA) is:

RA = Eq. (4)
While a maximum rank agreement (RA max) is:

RA max = - Eq. (5)

The percentage disagreement (PD) and percentage agreement (PA) are defined as:
PD (%) = (RA / RA max) x 100 Eq. (6)
PA (%) = 100 – PD Eq. (7)
The rank agreement factor can be greater than one, with a higher factor implying greater
disagreement. A lower value of RA implies a closer agreement between the two groups while a
Rank Agreement Factor of zero implies perfect agreement.
Causes of Cost Overruns in Highway Projects
Table 1 shows the ranks and relative importance indices for the top ten most important cause of
cost overruns according to each group as well as the overall response from all three groups.
The top ten most important causes of cost overruns in highway projects of Pakistan as
perceived by the respondents included additional work, inappropriate government policies and
priorities, improper planning, price escalation on major construction materials and price
adjustment, land acquisition and resettlement, inconsistent cash flows, delay in decision by
employer, design errors and changes, inaccurate estimation, relocation of services and utilities.
Relative importance index (RII) and rank for contractors, consultants, clients as well as the
overall RII and ranking is shown in Table 1.
Additional work is the most important cause of cost escalations in highway projects of Pakistan.
It was ranked, according to overall respondents, at the first position with RII = 0.832.
Contractors and consultants with RII = 0.872 and RII = 0.819 respectively ranked the factor as
first, while the clients ranked it as fourth factor with RII = 0.760 which showed considerable
agreement among the parties for this factor (see Table 1). Decision by client to include
additional scope in the existing contract, changes the contract cost drastically for which the
362 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

client is responsible and the same give space to re-rating of items in accordance with the
contract conditions.
Inappropriate government policies and priorities (RII = 0.786) was ranked as second important
factor in the list with an individual RII = 0.824 by contractor, RII = 0.760 by consultant and RII =
0.700 by client (see Table 1). As the sole client in highway construction is government itself, this
factor is the cause of difficulty with the employer for arranging funds in order to maintain the
progress of works at the committed contract amount and the delay caused by client ultimately
leads to cost overruns.
Improper planning was the third most important factor and was ranked according to overall
respondents at the third position with RII = 0.786. Contractor, consultant and client agreed that
this factor is one of the main causes for cost overruns in highway projects. It was ranked by
contractor in the fifth position with RII = 0.792, fourth by consultant with RII = 0.781 and sixth by
client with RII = 0.740 (see Table 1). The poor planning by the parties leads to project cost
escalations since they lack in giving proper attention to the project in the concept, design and
execution phases. The improper planning by clients in the initial phases leads to cost overruns
as long time period is elapsed during estimation and tendering. This reason accounts for higher
rates by the bidders which ultimately lead to award of contract to lowest bidder.
Price escalation on major construction materials and / or Price Adjustment (RII= 0.775) was
ranked as the fourth most important cause for cost overrun as shown in Table 1. There is
agreement between parties that this factor is one of the important factors, included in the top ten
list of each party. It was ranked by client as first with RII = 0.800, third by consultant RII = 0.781,
and eighth by contractor RII = 0.760. All the parties were of the view that this factor is
responsible for escalating the contract price with a high percentage due to inflation. The
compensation for said increase in the price of construction materials is paid to the contractors
through price adjustment formula included in the contract conditions. Nonetheless, no amount is
allocated in the bill of quantities (BOQ) for such price increase. Consequently, the said amount
is paid to the contractor in addition to the original contract amount thus becoming a major factor
for the client in highway projects.
Table 1: Important Causes of Cost Overruns
Overall
Contractor Consultant Client
Factors Response
RII Rank RII Rank RII Rank RII Rank
Additional work 0.872 1 0.819 1 0.760 4 0.832 1
Inappropriate government policies and
0.824 3 0.762 6 0.700 8 0.786 2
priorities
Improper planning 0.792 5 0.781 4 0.740 6 0.786 3
Price escalation of construction
0.760 8 0.781 3 0.800 1 0.775 4
materials and / or price adjustment
Land acquisition and resettlement 0.728 12 0.781 2 0.800 2 0.764 5
Inconsistent cash flows 0.848 2 0.676 16 0.680 11 0.754 6
Delay in decision by client 0.808 4 0.705 8 0.580 19 0.739 7
Design errors and changes 0.784 6 0.705 9 0.700 9 0.736 8
Inaccurate estimation 0.776 7 0.686 14 0.720 7 0.732 9
Relocation of services and utilities 0.720 13 0.705 10 0.760 3 0.729 10
Centenary Celebration (1912 – 2012) 363

Land acquisition and resettlement was ranked at fifth position with RII = 0.764. There was
perfect agreement between consultant and client that the factor is part of the most important
causes for cost escalation. The factor was ranked by consultant and client in 2nd position with
RII = 0.781 and 0.800, while the contractor ranked the same factor at 12th position with RII =
0.728 (see Table 1). The said factor caused severe cost demand if necessitated during
acquiring of the project right-of-way which gets escalated due to the slow regulatory framework.
Inconsistent cash flows was ranked in sixth position with RII = 0.754. The factor was considered
as very important by contractors (RII = 0.848) who being most affected due to inconsistent cash
flows. The consultant and client ranked the same as sixteenth and eleventh position with RII =
0.676 and RII = 0.680 respectively. This factor is responsible for cost overruns on the project
and the same leads to suspension of work by contractor, which results in claims for idle charges
of equipment and manpower.
Delay in decision by employer was ranked as seventh most important factor from the responses
of all three parties having RII = 0.739. It was ranked by contractor in fourth order with RII =
0.808 while consultants and clients rated at eighth and nineteenth position with RII = 0.705 and
RII = 0.580 (see Table 1.). This factor is responsible for cost overruns and sometimes causes
the work suspended by the contractor which makes ground for financial claims.
Design errors and changes were rated at eighth position from responses of all three parties
having RII = 0.736. It was ranked by contractors in sixth order with RII = 0.784 while consultants
and client rated the same at ninth with RII = 0.705 and RII = 0.700 (see Table 1). This factor
leads to cost overruns as changes in design necessitate or design errors lead to changes in
quantities of the BOQ.
Inaccurate estimation was ranked at ninth as an important cost overrun factor with RII = 0.732
and it was ranked as seventh factor by both contractors and clients with RII = 0.776 and RII =
0.720. The consultant ranked this factor at thirteenth position with RII = 0.686. This factor
causes cost overruns due to change in quantities during the execution phase.
Relocation of services and utilities was ranked in the tenth position with RII = 0.729. The client
consider it the most important factor, ranked it at third with RII = 0.760. The contractor rated the
same factor at thirteenth with RII = 0.720, while the consultant rated at tenth with RII = 0.705.
The clients were of the view that concerned departments demand highly escalated rates for
relocation of utilities and services which cause cost overruns in the amount allocated by the
client.
Causes of Delays in Highway Projects
Ranks and relative importance indices for the top ten most important causes of time overruns
and delays in accordance with each group as well as the overall response from all three groups
are shown in Table 2. The top ten most important causes of delays in highway projects as
perceived by all the respondents included delay in progress payments, extreme weather and
law and order (force majeure), contractor’s incapability to do the job, financial difficulties faced
by client, land acquisition and resettlement, ineffective planning and scheduling, scope changes
and additional work, delay in handing over site to contractor, delay in obtaining permits and
delay in decision by client. All ten factors are described and discussed.
Delay in progress payments is the most important cause of delays in highway projects. Overall,
it was ranked at the first position with RII = 0.861. Contractor ranked this factor at first position
with RII = 0.928 while consultant and client ranked the factor at fourth with RII = 0.790 and RII =
0.800 respectively. This factor is usually debated in the construction industry because many
projects get affected due to delayed payments from the clients. Respondents revealed that due
to delayed progress payments, the pace of works gets slow on-site which ultimately leads to
364 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

stoppage or suspension of work when contractor’s funding to the project is subjected to timely
provision of funds by the client. The conditions of contract enables the contractor for action of
slow pace of works, suspension of work for nonpayment and in the last stage even to
termination of the contract. This factor comes under excusable-compensable delay category.
Extreme weather, law and order (Force majeure) was ranked as the second important factor
with RII = 0.804 in the overall category. This factor was ranked at the 2nd position with RII=
0.832 by contractors, RII = 0.790 by consultant and RII = 0.760 by client. Occurrence of heavy
rains and floods like that of 2010 in Pakistan, severely affected the project durations. Law and
order situation is also affecting the construction pace especially in the provinces of Baluchistan
and some part of Khyber Pakhtunkhwa where work remains suspended till the normalization of
security in some areas. Sometimes the project staff gets harassed by the militants forcing them
to leave the project site. This results in unavailability of manpower which ultimately leads toward
project delays. This factor is counted among excusable-compensable delay category.
Contractor’s incapability to do the job was the third most important factor with RII = 0.786 in the
overall. Contractor, consultant and client agreed that this factor is one of the main cause for cost
overruns in highway projects. It was ranked sixth by contractor with RII = 0.784, second by
consultant with RII = 0.790 and ninth by client with RII= 0.760. The contractors compete very
hard in order to get or win the contract but sometime fail in delivering the project in accordance
with the contract. Contractor sometimes do not have the capability in effectively handling the
project. This factor comes under non-excusable delay category.
Financial difficulties faced by client (RII= 0.786) was ranked as fourth most important cause for
time overrun (see Table 2). This factor was ranked by contractor at fourth (RII = 0.816), third by
consultant (RII = 0.790) and sixteenth by client (RII = 0.700). This factor got importance in
current financial situation when funds to concerned ministries and departments were not
released on timely basis by the government which ultimately lead to notification of the client to
contractor for unavailability of funds resulting in project delays. This factor comes under
excusable-compensable delay category.
Land acquisition and resettlement was ranked in fifth position with RII = 0.764. The factor was
ranked ninth by contractor (RII = 0.760), seventh by consultant (RII = 0.733) and third by client
in (RII = 0.820). Respondents consider this factor with prevail in coming years since future
projects of highway either target construction of new carriageways for which land from
concerned departments will be acquired or widening of existing carriageways which ultimately
warrants the requirement of land to extend the right of way. It was highlighted that delays occur
in acquiring additional land only because of the slow regulatory framework. The land acquiring
process in the first stage requires census of all the affected persons (APs) and then pricing of
land in accordance with the market price of district and the locality. After comprehensive
working, required amount needs to be transferred to the revenue department which is
responsible for transferring payments to actual APs. In majority of the cases the APs reject to
take the price and starts legal proceedings. After stay been issued, they bound the executing
agencies not to commence construction of certain stretches. This whole procedure severely
delays a highway project since a mechanism of the current law governing land acquisition for
public purposes i.e. Land Acquisition Act of 1894 is followed. This delay factor is counted
among excusable-non compensable category of delays.
Ineffective planning and scheduling factor was ranked in sixth position with RII = 0.764. This
factor was considered as very important by all the parties with contractors rating the same as
eighth (RII = 0.768), consultant rating as fifth (RII = 725) and client rating as fifth (RII = 0.780).
Less importance by the client on a specific project at the time of start leads to failure of project.
Less mobilization of resources by the contractors instead of being in accordance with the
Centenary Celebration (1912 – 2012) 365

resources mentioned in the contract documents for technical assurance, and inadequate
allocation of finance for a project at initial stage results in delays. The implementation program
or schedule submitted by the contractors are mostly unrealistic and are made only to win the
contract at the time of bidding. This factor is included in non-excusable delay category.
Scope changes and / or additional work is ranked as seventh most important factor from the
responses of all three parties having RII = 0.746. It was ranked by contractor in seventeenth
position with RII = 0.712, while the consultant and client rated as sixth and first factor with RII =
0.743 and RII = 0.840 respectively. This factor is responsible for delays since a considerable
amount of time is required for completion of additional scope of work along with original scope in
similar time marked in the contract document. This factor is included among excusable-
compensable delay factors.
Table 2: Important Causes of Delays

Overall
Contractor Consultant Client
Response
Factors

RII Rank RII Rank RII Rank RII Rank

Delay in progress payments 0.928 1 0.790 4 0.800 4 0.861 1

Extreme weather, law and order (Force

0.832 2 0.790 1 0.760 8 0.804 2
majeure)

Contractor’s incapability to do the job 0.784 6 0.790 2 0.760 9 0.786 3

Financial difficulties faced by clients 0.816 4 0.790 3 0.700 16 0.786 4

Land acquisition and resettlement 0.760 9 0.733 7 0.820 3 0.764 5

Ineffective planning and scheduling 0.768 8 0.752 5 0.780 5 0.764 6

Scope changes and additional work 0.712 17 0.743 6 0.840 1 0.746 7

Delay in handing over site to the

0.736 14 0.705 8 0.840 2 0.743 8
contractor

Delay in obtaining permits 0.816 3 0.657 14 0.660 17 0.739 9

Delay in decision by client 0.752 12 0.705 9 0.760 11 0.739 10

366 Rafiq Muhammad Choudhry, Abdur Rehman Nasir, Hamza Farooq Gabriel

Delay in handing over site to the contractor was ranked as eighth in the delay factor list with RII
= 0.743. The factor was ranked as fourteenth factor by the contractor with RII = 0.736, eighth by
consultant with RII = 0.705 and second by client with RII = 0.840. The factor usually leads
toward delays when a contract is awarded without full assurance of availability of complete
project stretch to be executed. This factor comes under excusable-non compensable delay
category.
Delay in obtaining permits was ranked as ninth in the important delay factor list with RII = 0.739.
The contractor considered this factor as most important factor, ranking as third with RII = 0.816.
The factor was ranked as fourteenth and seventeenth by consultant and client with RII = 0.657
and RII = 0.660 respectively. Permits and / or NOCs are required for relocation of electric poles,
telephone cable, and stoppage of river water from concerned departments. This factor comes
under excusable-non compensable delay category.
Delay in decision by client was ranked in the tenth position with RII = 0.739. The consultant
ranked this factor at ninth with RII = 0.705. The contractor rated as twelfth with RII = 0.752,
while the client rated as eleventh with RII = 0.760. The consultants rated this factor higher as
compared with contractors and clients. This factor in most of the cases results in suspension of
the work. Common examples quoted by the contractors under factor were delay in decision by
client on the inclusion of non BOQ items during the execution phase, rerating of existing BOQ
items due to exceeded quantities and approval of any design change proposed mutually by
contractor and consultant. This factor comes under excusable-non compensable delay
category.
Rank Agreement Factor and Percentage Agreement
Table 3 and Table 4 shows values of rank agreement factor (RAF) and percentage agreement
(PA) for the client-contractor, client-consultant and consultant-contractor groups for the cost and
time overrun factors ranked. The agreement between client and consultant was the highest in
the cost overrun factors with an agreement percentage of 69.4% while the agreement between
client and contractor was considerable with an agreement of 65.3%. The agreement between
contractor and consultant is the lowest among all and was above the half way with an
agreement percentage of 57.1%. This shows the agreement in general among major groups in
the category of cost overruns (see Table 3).
Table 3: Rank Agreement Factor and Percentage Agreement on Cost Overrun

Group RAF PA (%)

Client – Contractor 4.9 65.3 %
Client – Consultant 4.3 69.4 %
Consultant - Contractor 6.0 57.1 %

Table 4 shows that for time overrun factors identified, there was a considerable agreement
among major stakeholders. Client and consultant had large agreement with a percentage
agreement of 75.6%, Consultant and contractor had medium agreement with 64.9% while the
agreement between client and contractor was also good with percentage agreement of 59.6%.
The overall agreement among stakeholders show that the parties agree to a considerable extent
for time overrun factors of highway projects.
Centenary Celebration (1912 – 2012) 367

Table 4: Rank Agreement Factor and Percentage Agreement on Delay Factors

Group RAF PA (%)

Client - Contractor 6.1 59.6 %
Client – Consultant 3.7 75.6 %
Consultant - Contractor 5.3 64.9 %

Conclusion
The study was carried out to identify major factors causing cost and time overruns in highway
projects separately. Among the 28 factors of cost overruns, the additional work is considered as
the most important cause of cost overruns in highway projects. Other major factors which
contribute to increase in the project cost include inappropriate government policies and
priorities, improper planning, price escalation on major construction materials and / or price
adjustment, land acquisition and resettlement, inconsistent cash flows, delay in decision by
employer, design errors and changes, inaccurate estimation relocation of services and utilities.
Among the 30 factors of time overruns, the delay in progress payment is considered as the most
important cause of delays in highway projects. Other major factor of delays include extreme
weather and law & order (force majeure), contractor’s incapability to do the job, financial
difficulties faced by client, land acquisition and resettlement, ineffective planning and
scheduling, scope changes and additional work, delay in handing over site to contractor, delay
in obtaining permits and delay in decision by client.
The clients, consultants and contractors agree on the overall ranking of cost and time overrun
factors. Respondents agree that cost and time overruns are very much the ‘twin evils’ for road
construction sector as huge cost and time variation had been recorded on many projects. Most
of the identified factors come under the responsibility of client. A considerable attention is
required to build a policy so as to ensure reduction in impacts of identified factors for
infrastructure development in the country. The findings of this study and the methodology may
be useful for research in other construction sectors and culture. The study can assist
professionals in taking proactive measures for reducing cost overruns and delays in road
construction projects.
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