Successful management of construction projects is based on three major factors i.e. time, cost and quality. Time and cost are the lifelines of any and every project. The success or failure of any project depends largely on these two factors apart from its quality. They are vital, still they are neglected. India is the tenth largest country in the World and yet her record of implementing major projects has been far from satisfactory. It has been observed very frequently that most of the projects in India ended with extra involvement of time, money and resources. It's a rare scene in construction industry, that a project is completed well within the estimated budget and time and with desired quality. Our GDP factor cost in year of 2014 is 4.7% and construction sector 1.1% acquired, Time and cost overruns have significant implications from an economic. In general, time overruns and cost overruns reduce the G.D.P. (Gross Domestic Product) or productivity of available economic resources, edge the development potential and diminish the effectiveness of the economy. Government data suggest that a majority of projects close to 60 per cent are overwhelmed by time and cost overruns. If present trends continue over the Eleventh and Twelfth Plan periods (2008 to 2017), McKinsey estimates suggest that India could suffer a GDP loss of US$ 200 billion around 10 per cent of its GDP in financial year 2017. A considerable number of international literatures opine that the inability to complete projects on time and within budget continues to be a chronic problem worldwide and a far worsening case (Azhar and Farouqui, 2008). However, as the trend of construction projects cost overrun becomes severe, a number of adverse consequences such as project failure, reduction of profit margin, loss of belief of citizen in government funded projects, would certainly take place. In Vietnam for example, a developing country in Asia, many problems had arisen during implementation of construction projects, out of which two main concerns were delay and cost overruns, and the frequently faced consequences were also project failure, reduction of profit margin, and loss of belief of citizen in government funded projects among others (Le-Hoai, Young, and Jun, 2008). The construction industry is the total through which physical development is achieved, and that is truly the locomotive of the national economy. The more resources, engineering, labour, materials, equipment, capital, and market exchange are provided from within the national economy, the higher the factor of the extent of self-reliance. The increasing complexity of infrastructure projects and the environment within which they are constructed place greater demand on

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known fact that a larger number of infrastructure projects in India have been delayed due to various issues. Infrastructure plays a paramount role in the economic growth of our country. Today, India is one of the leading outsourcing hubs in the world. The construction industry is the total through which physical development id achieved and that is truly the locomotive of the national economy. The more resources, engineering labour, materials, equipment, and capital market exchange are provided form within the national economy, the higher the factor of the extent of self-reliance. The increasing complexity of infrastructure projects and the environment within which they are constructed place greater demand on construction manager to deliver projects on time within the planned budget and with high quality. The successful execution of construction projects and keeping them within estimated cost and prescribed schedules depend on a methodology that requires sound engineering judgment. To the dislike of owners, contractors and consultants, however, many projects experience extensive delays and thereby exceed initial time and cost estimates. This problem is more evident in the traditional or adversarial type of contracts in which the contract is awarded to the lowest bidder-the awarding strategy of the majority of public projects in developing countries like India. Although the construction industry in the our country has suffered ever since last decade, recent events in the region coupled with the restructuring of economies, joining regional and global free trade organizations, and attracting foreign investment are expected to yield an unprecedented growth in the construction activities. Therefore, improving construction efficiency by means of cost-effectiveness and timeliness would certainly contribute to cost savings for the country as a whole. Efforts directed to cost and time effectiveness were associated with managing time and cost, which in this study were approached via investigating time and cost overruns of construction projects in India. The formal sector consists of public and private contractors. The Construction industry of India is an important indicator of the development as it creates investment opportunities across various related sectors. The industry is fragmented, with a handful of major companies involved in the construction activities across all segments, medium-sized companies specializing in activities; and small and medium contractors who work on the subcontractor basis and carry out the work in the field. In 2011, there were slightly over 500 construction equipment manufacturing companies in all of India. Time overruns is defined as the extension of time beyond planned completion dates traceable to the contractors. Delays are incidents that impact a project‘s progress and postpone project activities, delay causing incidents may include weather delays, activities that have both external and internal causes and effect relationship. The actual date of completion is invariably different from the expected date. Further it is defined that the time overruns as the difference between the actual completion time and the estimated completion time. It was measured in number of days. Project delays are those that cause the project completion date to be delayed. Thus time overruns is defined as the time increased to complete the project after planed date which caused by internal and external factors surrounded the project. Delays are incidents that impact a project‘s progress and postpone project activities; delay causing incidents may include weather delays, unavailability of resources, design delays, etc. In general, project delays occur as a result of project activities that have both external and internal cause and effect relationship. Cost overrun is defined as excess of actual cost over budget. Cost overrun is also sometimes called ―cost escalation,‖ ―cost increase, or ―budget overrun.‖ Cost overrun is defined as the change in contract amount divided by the original contract award amount. Besides being unique, expensive and usually carried out within a limited time frame, construction projects have been described as complicated and uncertain in nature, as no two construction projects are ever exactly the same. Even if two construction projects are similar, the opportunity for exactly repeating the process of execution is very low, as most of the projects‘ elements are site-specific. Although the level of investment represented by construction projects has increased over the years, construction projects have a consistently poor record in finishing within budget. Morris (2000) considers cost overrun as a ―regular feature‖ for public projects. Himansu (2011) defines cost overrun as ―…the degree to which the final cost of the project exceeds the ‗base‘ estimate‖.

Cost is the budgeted expenditure, which the client has agreed to commit for creating/acquiring the desired construction facility. Cost overrun is defined as the difference between the actual and estimated costs as a percentage of the estimated cost, with all costs calculated in constant prices. Actual costs are defined as the accounted costs actually spent, as determined at the time of project completion. Estimated costs are defined as the budgeted or forecasted costs at the time of project approval, which are typically similar to costs presented in the business case for a project (Lee, 2008). The cost of a work unit is comprised of many cost elements. These cost elements include labour costs, material costs, plant and machinery costs,

Sanjay Nanasaheb Patil1* Dr. Vikas Chauhan2 Dr. Tande Shrirang N.3 1

identify costs associated with an activity, construction costs are categorized into „Direct costs‟ and „Indirect costs‟ or „Overhead costs‟. Direct Costs: Direct costs are costs that can be correlated to a specific activity or a work item, which is being done or produced. Direct cost of permanent work item = Direct material cost + Direct labour cost other direct expenses Direct material costs cover all costs connected with materials, which are incorporated into permanent works of the project. Direct labour costs cover net expenses far procurement, maintenance, and wages of all category of workers employed at the work site for the execution of an item of project. Other direct expenses include all other expenses on account of services rendered, which can be directly attributed to and clearly identified with the execution of an activity or work item. Indirect Costs: Indirect costs include all costs, which are attributable to a given project but cannot be identified with the performance of a specific activity or a work package. In other words, all costs other than direct costs are covered under indirect costs. Alfredo Federico Serpella et.al. (2014), in Risk management in construction projects who addresses the problems of risk management in construction projects using a knowledge-based approach, and proposes a methodology based on a three-fold arrangement that includes the modelling of the risk management function, its evaluation, and the availability of a best practices model. This approach is part of a research effort that is underway. A major preliminary conclusion of this research is the fact that risk management in construction projects is still very ineffective and that the main cause of this situation is the lack of knowledge. Usama Hamed Issa in Implementation of lean construction techniques for minimizing the risks effect on project construction time that the construction projects involve various risk factors which have various impacts on time objective that may lead to time-overrun. This study suggests and applies a new technique for minimizing risk factors effect on time using lean construction principles. The lean construction is implemented in this study using the last planner system through execution of an industrial project in Egypt. Evaluating the effect of using the new tool is described in terms of two measurements: Percent Expected Time-overrun (PET) and Percent Plan Completed (PPC). Construction project is a mission, undertaken to create a unique facility, product or service within the specified scope, quality, time, and cost. In practice, however some construction projects encounter cost overrun, delay on completion time or poor workmanship upon completion. Cost overrun, bed quality workmanship and delay of construction projects require an in-depth investigation to improve the outputs of the construction industry. to achieve their mission of creating facilities within the specified cost and time. Hardly few projects get completed on time and within budget since construction projects are exposed to uncertain environments because of such factors as construction complexity; presence of various interest groups such as the project owners, end users, consultants, contractors, financiers; materials, equipment, project funding; climatic environment; the economic and political environment and statutory regulations. The successful execution of construction projects, keeping them within estimated cost and the prescribed schedules, primarily depends on the existence of an efficient construction sector capable of sustained growth and development in order to cope with the requirements of social and economic development and to utilize the latest technology in planning and execution adequate planning at the early stages of a project is crucial for minimizing delays and cost overrun. Cost overrun is common in infrastructure and building construction projects. Researches on construction projects in some developing countries indicate that by the time a project is completed, the actual cost exceeds the original contract price by about 30%. One of the most comprehensive studies of cost overrun that exists found that 9 out of 10 projects had cost overrun. Overruns of 50 to 100 % were common Studies of construction projects in Madhya Pradesh, for example, found that more than 60 % of projects experienced up to 200 % time overrun and 75 % cost overrun.

There are 58 factors of cost overrun divided in to eight categories. They are: site management of contractor; management of contract and project; issues associated with labour; equipment and material; management of financial matters; communication and information; and outside reasons. Factors That Cause Severe Price Fluctuation-The followings are some of the most common factors which cause severe price fluctuations: commodity prices throughout the world for basic supplies; the present position of the domestic economy; requirement of the quality of supplies and workmanship; and demand and supply. Macro-economic Factors-Expense of a development would incorporate the expense of cash, the expense of work, the expense of material, and the expense of administration. The three main factors that affect cost are: fluctuation in raw material prices, manufactured materials, and cost of machineries. All three of them are market related. So it can be said

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can change almost daily. These changes make it tough for vendors to fix a price. One of the most important parts of a country‘s socio-economic growth is the construction industry. The construction industry forms quite an important part of the country‘s overall GDP (gross domestic product). It also develops the quality of life by creating and building new infrastructure like roads, hospitals, schools, and other important infrastructure. All these prove that the completion of a construction project under the expected time and meeting the expected quality is very important. However, the industry unfortunately faces chronic problems like low quality, cost overruns, time overruns, etc. very often. Out of all the problems faced by construction industry, cost overruns are probably the most important, because they can affect the overall development of a country. This problem is a global one as the construction industry around the world exceeds the expected budget often. A global study (Flyvbjerg, Holm, & Buhl, 2003) on construction projects has found that cost overrun is the most faced problem. It is estimated that nine out of 10 projects faced the problem with an overrun of 50% to 100%. Another investigation on 87 projects conducted by Cantarelli (2009) has found that the problem of cost overrun exists in projects by an average of 10.3%. Even the construction projects in developed countries face this problem. In the UK, it is found that nearly one third of all clients have complained about their projects exceeding their allocated budget. Malaysia is also another country being affected severely by this problem. It is found that only 46.8% of public sector and 37.2% of private sector projects are being finished in the allocated budget (Rahman et al., 2013). This issue has grown so much that it has become a major concern for investors. This is an issue which needs a solution by giving it a lot of attention and performing in-depth studies on it. Cost overrun can act as a great indicator of the success of a project. By overcoming it, a firm‘s productivity and profitability can be understood. So, solving this issue remains one of the most important things in the construction industry. The construction industry has been showing poor performance very often. This is one of the reasons for the cost overruns. Most of the times, cost overruns have been investigated. The reason was found to be the poorly managed cost control systems. Some other sources for it were poor technological performance or inefficient equipment, improper materials from the local market, and site accidents. A study performed by Olawale and Sun (2010) on the UK construction industry has found 21 major things that could factor in for cost overruns. They are: changes in design, risk and uncertainty that comes high difficulty of works, conflicts among project parties, errors in project related documentation, different interpretations of the contracts, increase of prices, funding and payment for finished works, project manager lacking proper training and experience, lack of skill in human resources, bad climate conditions, depending on imported materials, unavailability of proper software, changing interest rate, changing exchange rates, improper regulation and control, frauds in project, corruption, and changing government policies. Management Factors-On one hand, even though proper care is taken to prevent cost overruns, sometimes they are unavoidable because it is not possible to reasonably prevent them. This would include any unanticipated events. On the other hand, errors in design plan or project management can be foreseen and prevented thereby reducing a lot of chance for cost overruns. By using the project control procedure, the management can understand its present situation associated with a future position. According to Sriprasert (2000), cost overrun problems occur as a result of ineffective construction management and other poorly designed control systems. The carelessness of project managers can be controlled if the management modifies the project schedule and other estimates, according to the changes or discrepancies that could happen while the project is being implemented (Azhar, Farooqui, & Ahmed, 2008). Business and Regulatory Environment-The problem faced by the construction industry is that many of the players in the industry are small. They have weak financial positions and their technology is lower grade. They also lack proper organizational structure and a vision for growth. This makes these small players extremely susceptible to policies of government and changes in them. The major cause of cost overrun associated with business and regulatory environment is the government implementing lowest bid price. This increases practices like corner cutting and usage of weak construction methods. The lowest bid price generally does not lead to best value. This is because the lowest bid price is usually made at 50% of the actual cost required. The lowest bid price system creates a lot of competition between contractors. As a result, the contractors submit a project for a bid price lower than required unintentionally or on purpose. Most of the times, this would lead to the harm for owner and contractor, as it creates cost overruns and schedule delays. Methods Used to Avoid Cost Overrun-The proactive measures are those which should be adopted in the planning stage of project. The

Sanjay Nanasaheb Patil1* Dr. Vikas Chauhan2 Dr. Tande Shrirang N.3 1

common planning strategies. The proactive strategies include: efficient planning of strategies, and management of site and supervision of the project; appropriate planning and arrangement of project; organised regulatory mechanism; and using proper methods for construction (Azis et al., 2012). The organisational strategies include: appropriate prominence on previous experience; regular coordination between the associated parties; increasing human resources in the industry; and complete administration of contracts. Regular meetings on development, employing proficient subcontractors and suppliers, attributing less weight to prices, and more weight to abilities and earlier performance of contractors to improve the contracts and their procedures are some reactive and organisational strategies. Using channels for perfect information and communication is a proactive and organisational strategy. Utilization of latest technology is a proactive and reactive strategy. Undertaking a preconstruction planning regarding the procedures and resources of project is a proactive, reactive, and organisational strategy.

Construction Projects in India are scandalous for delays. Even the service of insights and Program Implementation (MOSPI) affirms that numerous projects are experiencing delays. In any case, the degree and the reasons behind the postponements have suggestions huge Economic and Political perspective. For one, as a rule, these activities are financed citizen‘s cash. In this way, individuals ought to know how productively their cash in used by the authorities while making procurements of open merchandise and benefits. Two, delays in Project execution implies that the general population and Economy need to sit tight for Construction Facilities Longer than it is vital. This thus restricts the construction capability of economy on the loose. Three, administrations gave by construction projects serve as info for some other segment of economy. Along these lines, time delays lead to increment in capital-yield –ratio for whole economy. Basically, postpones can decrease the productivity of accessible assets and limit the construction capability of whole economy. Therefore, the inadequacy of research on the subject is surprising. Many construction projects suffer from delay. Suspension means stoppage of work directed to the slowing down of work without stopping it entirely Critical or non-critical delays-Delays that affect the project completion or in some cases a milestone date are considered as critical delays, and delays that do not affect the project completion, or a milestone date, are noncritical delays. Excusable or non-excusable delays-All delays are either excusable or non-excusable. An excusable delay is a delay that is due to an unforeseeable event beyond the contractor‘s or the subcontractor‘s control. Compensable or non-compensable delays-A compensable delay is a delay where the contractor is entitled to a time extension and to additional compensation. Relating back to the excusable and non-excusable delays, only excusable delays can be compensable. Compensable delays are caused by the owner or the owner's agents. Concurrent or non-concurrent delays-The concept of concurrent delay has become a very common presentation as part of some analysis of construction delays. The concurrency argument is not just from the standpoint of determining the project‘s critical delays but from the standpoint of assigning responsibility for damages associated with delays to the critical path. Many reasons can be identified for different sources in delay problem. These reasons are:

1) Possible changes in initial design. 2) Complexity of the project.

1) Variations and claims 2) Change of scope of project

1) Financial ability of the owner 2) Not enough funds

1) Unavailability of suitable management team. 2) Unspecialized subcontractors. 3) Lack of project management.

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5) Lack of experience of the contractor

1) New legal instructions or rules.

Cost revisions and cost overruns are common across infrastructure projects. According to MoSPI, infrastructure projects in central Government sector costing INR 150 crore and above, are currently experiencing cumulative cost overruns of 16.9 percent1 of their planned cost. Our survey makes an attempt to identify the key factors, experienced by project owners, resulting in cost overruns in a project from the pre execution stage until the close out phase. Infrastructure projects executed by State owned agencies usually involve a large number of stakeholders. It has been observed that in several projects, all functional teams were not involved in the conceptualization stage. This results in inadequate assessment of the risks and mutual interdependencies that projects could face in the execution stage. The desired level of collaboration between the project owners and the contractors also appears to be lacking. Consequently, projects face deviations in scope, which affect the delivery both in terms of time schedule as well as budgeted cost. Moreover, in case of Government infrastructure projects, the item rate contract system is the prevalent model used for allotment of contracts. Under this model, detailed drawing and designing of the projects at the time of award of contract is not mandatory. As a result, divergence from the original estimation is quite common during project execution - often leading to cost escalations. In majority of projects, scope creep and inadequate DPRs arises due to lack of holistic planning and limited ability of project managers to assess all potential risks; and could be easily mitigated by putting an effective project management system in place and providing training to project managers.

Sanjay Nanasaheb Patil1* Dr. Vikas Chauhan2 Dr. Tande Shrirang N.3 1

across sectors. 73 percent of energy and transport and logistics sector respondents agree that inadequate DPRs lead to cost overruns in their respective sectors. As Indian regulatory agencies tighten their noose by bringing in additional environmental regulations, infrastructure project owners need to ensure project compliance with stringent safety and environment standards. Adhering to the evolving environment and safety standards leads to additional costs. The proactive approach of Ministry of Environment and Forest (MoEF) in recent years has forced project owners to include environmental safeguards in their project plans. Moreover, as environmental policies in the country are constantly evolving, an under-construction project might need to comply with these standards midway through the execution stage. As a result, the project can face cost escalations in order to comply with the approved design, technology, material etc. While, 48 percent respondents agree that the high cost of the environmental safeguards leads to project cost overruns, 71 percent assign a high to medium probability of project cost overruns due to this reason.

Material price escalation is a business risk faced by all contractors. In recent years, costs of key inputs such as iron and steel, cement, bitumen, concrete, crude oil, etc. have fluctuated sharply. The risk of material cost fluctuation is inherent in infrastructure projects, and to some extent is taken into consideration in overall project cost estimates. However, the volatility in material prices makes forecasting a challenging exercise and leads to inaccurate forecasts. Furthermore, the cost estimate assumes the project completion as per the schedule and does not account for inflation beyond the schedule date. Thus, any delay obsolete leading to cost overruns. Quite often, an increase in material cost over the agreed percentage leads to dispute between project owners and contractors. For example, the dispute between one of the India's largest State owned power generation company and its initial equipment supplier on price escalations (over 80 percent) delayed a three-unit 1,980 MW project in Bihar by two years2. Many a times, the variables used for cost estimation during project cost scheduling are not adequate to cover all aspects of project costs. As a result, various cost items that are necessary for the project budget estimation remain either unidentified or inadequately defined at the planning stage and lead to cost overruns at a later stage. Project teams need to be extensively experienced (should have costing personnel/engineers) and adequately equipped with scientific tools and techniques to develop a realistic budget estimate for the project.

The studies show that the main causes of cost overrun differ from country to country. As a result, it would not be accurate to identify the causes of cost overrun for a specific country from a global literature only. One of the potential solutions to reduce the effect of the cost overrun in construction projects is the embedding of an effective resources (human, technical and material) management system within construction projects as it seems that most of the causes of cost overrun are related to poor resources management. Moreover, effective communication between a project‘s internal and external stakeholders is a very important task to deliver projects successfully and reduce cost overrun. This task is more important in construction megaprojects where different government authorities are involved. To help contractors‘ financially and reduce the effect of payment delay for the completed projects, government should be involved to help contractors find a middle way with banks and other surety groups.

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Education, Research, and Practice, Karachi, Pakistan. Azhar, N., Farooqui, R. U., & Ahmed, S. M. (2008). Cost overrun factors in construction industry of Pakistan. Proceedings from First International Conference on Construction in Developing Countries. Azis, A. A. A., Memon, A. H., Rahman, I. A., & Karim, A. T. A. (2012). Controlling cost overrun factors in construction projects in Malaysia. Research Journal of Applied Sciences, Engineering and Technology, 5(8), pp. 2621-2629. B. Himansu (2011). ―Avoid cost overrun for megaprojects,‖ Project and Technology Management Foundation News Letter, 2011, DLF City, India, p. 2. Cantarelli, C. C. (2009). Cost overrun in Dutch transportation infrastructure projects. Bijdrage aan het Colloquium Vervoersplano Speurwerk (Contribution to the transport planning research colloquium). Retrieved from http://www.cvs-congres.nl/cvspdfdocs/cvs09-156.pdf Chitkara, K. K. (2011). ―Construction Project Management - Planning, Scheduling and Controlling‖, 2nd Edition, Tata McGraw Hills. Fetene Nega [2008]. A Thesis Causes and Effects of Cost overrun on Public Building Construction Projects in Ethiopia Flyvbjerg, B., Holm, M. K. S., & Buhl, S. L. (2003). How common and how large are cost overruns in the transport infrastructure projects? Transport Review, 23, 71-88. Le - Hoai, L., Lee, Y.D., & Jun, Y. L. (2008). Delay and Cost Overruns in Vietnam Large Construction Projects: A Comparison with Other Selected Countries. KSCE Journal of Civil Engineering, pp. 367-377. Lee, Jin-Kyung. (2008). ―Cost Overrun and Cause in Korean Social Overhead Capital Projects: Roads, Rails, Airports, and Ports‖, Journal of Urban Planning and Development, Vol. 134, No. 2, pp. 59-62. Olawale, Y. A., & Sun, M. (2010). Cost and time control of construction projects: Inhibiting factors and mitigating measures in practice. Construction Management and Economics, 28(5), pp. 509-526. large construction projects in Malaysia. Journal of Applied Sciences, 13(2), pp. 286-293. Risk management in construction projects: a knowledge-based approach - Alfredo Federico Serpellaa* Ximena Ferradaa, Rodolfo Howarda, Larissa Rubioa (2014) S. Morris (2000). ―Cost and time overruns in public sector projects,‖ Economic and Political Weekly, vol. 25, no. 47, pp. M154-M168. S. Shanmugapriya., Dr. K. Subramanian (2013). Department of Civil Engineering, Coimbatore Institute of Technology, Coimbatore, International Journal of Emerging Technology and Advanced Engineering Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 3, Issue 10, October 2013) 734 Investigation of Significant Factors Influencing Time and Cost Overruns in Indian Construction Projects [5] IS 15883 Part 2 2013. Shane, Jennifer S., Molenaar, Keith R., Anderson, Stuart. & Schexnayder, Cliff. (2009). ―Construction Project Cost Escalation Factors‖, Journal of Management in Engineering, Vol. [32]. No. 4, pp. 221-229. Sriprasert, E. (2000). Assessment of cost control system: A case study of Thai construction organisations (M.S. thesis, Asian Institute of Technology, Bangkok).

Ph.D. Research Student, MUIT, Lucknow