Causes of cost overruns for development road projects in Tanzania a case study of Tanzania national roads agency (TANROADS

Abstract

The problem of cost overrun has been reported as a chronic problem in many developing countries including Tanzania. The current prevailing debate is how the construction industry can do in order to minimize if not to eradicate the cost overrun. This study investigated factors causing cost overrun in development road projects in Tanzania, and proposed measures for reducing the project cost overruns based on the findings of the study. The study was limited to development road projects implemented by TANROADS/MoW in Tanzania in the past ten (10) years. The methods used in data collection were questionnaire, interviews, and documentation reviews where by Sixty one individuals representing (71.76%) from key projects was involved. Data retrieved was consequently analyzed using the Software Package for Statistical Sciences (SPSS). The study used the pre – established factors in developing countries and worldwide from literature and came up with ten most high ranked factors by both stakeholders, ie., contractors, consultants and clients that contribute to cost overrun in development road projects in Tanzania. Long time lapse between design and time of bidding/tendering as well as execution, additional work and variations, funding delays, unrealistic budget and Project/ scope changes, fluctuation in prices of raw materials and labour, wrong method of cost estimation as well as Low bidding/ tendering procurement method and Politics. The study came up with various suggestions to reduce the cost overrun in road projects in Tanzania to be implemented by each part that is involved in road project. Among the suggestions include: design process should be improved and be cost realistic during tendering, clients should enter into contract only after ensuring the availability of funds.