Cost overrun in the Malaysian construction industry projects: A deeper insight

• More than 50% of Malaysian construction projects are found prone to cost overrun.
• Traditionally procured projects exhibited best cost performance (CP).
• Selective tendering yielded better CP than open and negotiated methods.
• Office/residential projects displayed worst and best CP respectively.
• Medium/small size projects experienced worst and best CP respectively.

The construction industry drives economic growth and development in Malaysia, but unfortunately, its projects often suffer from cost overruns (that is, negative cost variance such that final project cost exceeds contract sum). This can lead to conflict and litigation, or in the extreme, projects may even be abandoned. To better understand this phenomenon, a questionnaire survey of Malaysian quantity-surveying consultants was undertaken to obtain project characteristics and cost performance data, in relation to a sample of 359 recently completed construction projects. Data were analysed in terms of project financial outturn based on: contract values; project sector; type of project; procurement route; nature of projects; and tendering method used. The findings offer stakeholders descriptive statistical cost performance information in relation to these characteristics. These statistics will support first-order project management decision-making within Malaysia particularly; and internationally more generally, with a view to helping minimise project cost variance in the future.