Budget Overrun Issues in Construction Projects of Southern Part of Malaysia

Aftab Hameed Memon, Ismail Abdul Rahman


Aim of Study

This study has focused on identifying the issues related to budget overrun faced by construction industry.

Need of Study

Construction industry is very significant in contributing socio-economic growth of a country. Hence, Malaysian government has allocated huge amounts of money for construction development in recent years. Unfortunately, the industry is facing severe problem of budget overrun

Research Approach

This study was carried out quantitatively by conducting questionnaire survey amongst the client, consultant and contractors. A total of 122 collected questionnaires (97 large projects and 25 small scale projects) were analyzed statistically using SPSS software package.

Research Findings

The findings show that budget overrun is a common phenomenon in large as well as small projects. For large project, amount of cost overrun ranges from 5-10% of the estimated cost while in small projects, it was found as 10-15% of estimated cost. The major contributors to theses overrun in large projects are material and construction costs while in small construction projects, the causes are material and plant & equipment costs. Most of the respondents suggested that the effective methods of controlling these overrun are cost code system and value management technique.


Data collection for this was limited to construction industry of southern region of Malaysia.

Importance and Contribution

The findings of the study gave a very clear insight about the budget overrun problem in construction industry. Determined level of implementation for various techniques and significant contributors of budget overrun will be helpful for practitioners and researchers in developing a better system for controlling budget overrun. 


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