COST OVERRUN CAUSALITY MODEL IN SAUDI ARABIAN PUBLIC SECTOR CONSTRUCTION PROJECTS

Abstract

Saudi public projects construction performance has been poor over the years, with 70% of projects considered as failures and costing the country over 1 trillion SAR (over £202 Billion) between 2005 and 2015. The project delivery mechanism used to deliver construction projects is one of the main reasons for such poor performance as all service providers (consultant, designer, and contractor) are chosen based on the lowest price. The contract evaluation shows that contractors hold most of a project’s risks and suffer a cost overrun problem, thereby positioning them as the weakest link in the procurement chain. This study aims to develop a contractors’ cost overrun causality model in the Saudi public sector. A systematic literature review was performed and shows three schools of thoughts regarding the investigation and identifying cost overrun causes. However, none of the three schools has addressed the limitations of exploring the interaction between any causes identified and then linking root causes with a direct cause, nor including the effects of the context and the process that used to develop construction projects. Exploring the interaction between causes is important in that the construction projects that provided the research base reported within the literature involved different stakeholders at different phases in a project’s life cycle. Moreover, it has been found that the amount and the causes of cost overrun are different based on the projects’ global location. As an approach to achieve the research aim which is to develop contractors' cost overrun causality model in the Saudi public sector that considers the effects of context, the practices, and processes of developing construction projects. The research explore the commercial context of the Saudi public construction projects procurement under four major portfolios (Economy, Business, Resources, and Regulation), as well as the process and practices which are used to develop construction projects in the sector based on the Porter model (diamond) and institutional theory. Then, the research establishes the link between the commercial vii context of the Saudi public construction projects procurement and contractors' performance. Based on the systematic literature review and interviews, the causalities of cost overrun in Saud Arabian construction projects were critically reviewed, established, classified and evaluated. The data created a causes pool with over 200 causes which were passed through a number of sieves resulting in 49 remaining causes. Based on these causes, the study explores the relationship between them to create causal paths and eventually the overall model. During the model’s development, the model building process and the resultant outputs were reviewed by two industry experts, resulting in more than one attempt to reduce the complexity of the model. The final model contains 49 causal chains that have been individually explained thoroughly. Because of the nature of the problem investigated, this research adopts a Pragmatism philosophical and an abductive approach to achieve the stated objectives. Systematic literature review and case study are the main research strategies which were adopted, along with using Interviews, and Project Document as methods to collect the data. The research emphasises the importance of investigating the context and projects’ development process. In fact, the study finds, by comparing the Saudi public sector practices to the identified best practices, that the weaknesses within the context, process, and practices, which occurs in the early stage of project life cycle, work as triggers and contributors for the causal chain. However, during the construction phase, it is established that only direct causes occur. Moreover, the output confirms that the current environment, regulation, practices, and behaviours of the Saudi