An evaluation of risk factors impacting project budget performance in New Zealand

Simple item page
dc.citation.issue1
dc.citation.volume19
dc.contributor.authorAdafin J
dc.contributor.authorRotimi JOB
dc.contributor.authorWilkinson S
dc.date.available3/03/2021
dc.date.issued3/03/2021
dc.description.abstractPurpose There has been a lack of research, particularly within the New Zealand (NZ) context, focusing on the identification and assessment of risk factors for construction projects, leading to a wide variation between design-phase elemental cost plans (ECPs) and the outturn tender sums (OTS). Still to be investigated is how risks interact to produce such variability. This study aims to determine the risk-influencing factors, identified through risk measurement, during design development. Design/methodology/approach This study adopted literature review and online questionnaire survey. The literature review was used to identify the factors affecting project budgetary performance, which was used to design the questionnaire survey culminating in data analysis. The questionnaire was administered to 64 practising project managers (PMs) in NZ. Their responses were analysed using descriptive statistics, mean ranking analysis, degree-of-risk measure and correlational analysis, to find the top-five risk factors impacting the variability observed, through ranking the mean and degree of risk values that produce such variability. Findings Significant risk factors were identified from the questionnaire survey analysis, such as changes in project owner/stakeholder requirements, experience of project team, site condition information, competency of consultants and information flow and quality. These provided some insights in explaining the variability between the design-phase ECPs and OTS based on risk impacts from PMs’ viewpoints. Research limitations/implications Findings revealed a drift of 23.86% in budgeted costs (inflated risks), which seems significant. Prioritising top risk factors may provide handy information for researchers on the variables that could be relied upon for the development of a forecasting model for application in NZ. Practical implications The study findings have implications for PMs seeking to provide information on mitigation strategies by using risk management approach, considering the influence of development risks on building project delivery and, consequently the project owner’s financial position. To guard against wide variation between design-phase ECPs and OTS, the main contribution of this study is to raise consultants’ awareness of the important risk factors for their planning at the outset, thus assisting PMs in pro-actively managing their clients' budgets. Originality/value This study creates value by synthesising literature on construction project budgeting and highlighting areas for further research. By giving adequate attention to key risks associated with budget overruns in commercial projects, variability between ECPs and OTS, a common phenomenon in NZ, can be controlled to achieve cost savings. Based on this, further study suggests the development of a model that could assist the stakeholders in NZ to more reliably predict OTS from the design-phase ECP and pro-actively avoid unfortunate budget/cost overruns, disputes and even project abandonment.
dc.description.confidentialFALSE
dc.edition.edition2021
dc.format.extent41 - 61
dc.identifierhttps://www.emerald.com/insight/content/doi/10.1108/JEDT-03-2019-0056/full/html
dc.identifier.citationJournal of Engineering, Design and Technology, 2021, 2021, 19 (1), pp. 41 - 61
dc.identifier.doi10.1108/JEDT-03-2019-0056
dc.identifier.elements-id432335
dc.identifier.harvestedMassey_Dark
dc.identifier.issn1726-0531
dc.identifier.urihttps://hdl.handle.net/10179/15380
dc.languageEnglish
dc.publisherEmerald Publishing Limited
dc.publisher.urihttps://www.emerald.com/insight/content/doi/10.1108/JEDT-03-2019-0056/full/html
dc.relation.isPartOfJournal of Engineering, Design and Technology
dc.subjectElemental cost plan
dc.subjectNew Zealand
dc.subjectOut-turn tender sum
dc.subjectProject manager
dc.subjectRisk impact
dc.subjectVariability
dc.subject.anzsrc09 Engineering
dc.subject.anzsrc12 Built Environment and Design
dc.titleAn evaluation of risk factors impacting project budget performance in New Zealand
dc.typeJournal article
pubs.notesNot known
pubs.organisational-group/Massey University
pubs.organisational-group/Massey University/College of Sciences
pubs.organisational-group/Massey University/College of Sciences/PVC's Office - College of Sciences
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