Uncertainties and cost overruns in Construction Industry : An explanatory multiple case study investigating the differences in cost management under uncertainties in conventional and green construction companies

University essay from Jönköping University/Internationella Handelshögskolan; Jönköping University/Internationella Handelshögskolan

Abstract: Abstract Background Construction industry greatly affect the environment in the aspect of energy consumption and its contribution to global warming. Accordingly, green building construction is significantly growing, which makes it an interesting topic for researchers. Green buildings are defined as buildings constructed according to sustainability standards that keeps the natural environment healthy. However green construction is challenging in the economic aspect and the cost efficiency. Based on the researches, uncertainty is a main reason for cost overrun. In addition, procedures in early stages of the project is of great importance and have influence on the costs. However, further study is needed to identify the differences between conventional and green construction companies regarding uncertainties, cost overrun, and uncertainty mitigation techniques. Purpose The focus of this research is to compare two types of construction companies (conventional and sustainable) in the aspect of uncertainties as inevitable part of risks, it’s effect on cost overrun, and techniques being used in the pre-construction phase to mitigate them. Method Multiple-case study was conducted, and two construction companies were selected of each type. This research is a qualitative study with abductive approach. The empirical data were collected by conducting semi-structured interviews with several positions in each company. Also, secondary data were collected from companies’ archival reports and documents, and from scientific blogs. Conclusion The findings of this research indicate that sustainability creates fields of uncertainties extra to those existing in conventional construction. The study revealed the direct effect of uncertainties on cost, and the indirect effect by generating events which cause overruns in cost. Moreover, Companies work on improving managerial skills in the preconstruction phase to mitigate the effect of uncertainties and to reduce probability of cost overrun occurrence in both sustainable and convention construction companies. While in sustainable construction, additional techniques and efforts are needed as technology, artificial intelligence, and hiring external resources and staff.

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