Cost Risk Factors in Construction Projects: A Contractor’s Perspective

Abstract

Cost overrun is a major challenge in the construction industry. However, there is a notable lack of data from empirical studies that exhaustively identify and analyze risk factors contributing to overruns. This study aims to address this gap by systematically identifying and analyzing these risk factors. A hybrid methodology was employed. It combined a systematic literature review, a three-round Delphi process, and fuzzy set techniques. Insights from the literature review informed the first-round Delphi questionnaire. Subsequent rounds were refined based on earlier results. In the third round, experts’ opinions on the likelihood and impact of the cost risk factors were collected using a 5-point Likert scale. Finally, a fuzzy approach was employed to assess the severity of cost risk factors based on the combined effects of their likelihood and impact. The results revealed that the primary cost risk factors include escalation and fluctuation in material prices, inflation, material shortages, the country’s political instability, the country’s economic instability, delays in payment to the contractor, and delays in material procurement and delivery. Notably, the significant cost risk factors are largely beyond the contractor’s control and are closely tied to the broader political and economic conditions of the country.