Identification of the Significant Factors Causing Cost Overruns in Small and Medium Enterprise (SME) - Based Construction Firms Using Analytical Hierarchy Process (AHP)

Abstract

— Construction is one of the industries that greatly contribute to the economic growth of every
state. The industry is known to be having one of the most critical and conservative knowledge area which is
cost management, also known to face a major problem which is cost overrun. Cost overrun is an inevitable
phenomenon that the society is used to live with. The study is both qualitative and quantitative. Five phases
were used to fulfil the aims of this research. The objective is focused on the identification of the significant
factors causing cost overruns in small and medium enterprise- based construction firms. Survey was
conducted to elicit the construction firms’ opinions. Analytical Hierarchy Process was considered in the data
analysis. It was found that factors causing cost overruns are macroeconomic, workforce, material and
equipment, project management, project finance, and other external factors. Workforce factor ranked at the
top for both small and medium enterprise- based construction firms. Factors are found to have no
statistically significant difference for each scale. It was tested through p-value determination. Additional
knowledge on the determinant would not only benefit the project but also the whole company which would
give a positive impact in the country’s economic performance.