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Factors Influencing Cost Overruns in Construction Projects of International Contractors in Vietnam

Author

Listed:
  • Quoc Vu, Thong
  • Phu Pham, Cuong
  • Anh Nguyen, Thu
  • Thanh Nguyen, Phong
  • Thanh Phan, Phuong
  • Le Hoang Thuy To Nguyen, Quyen

Abstract

A construction project is a designed product made up of labors, materials, and installations in the project positioned on the ground and may include the underground and ground section, and the section in water or on the water surface. It is a civil, industrial, transport, agricultural and rural development, infrastructure, or some other. A key phase in the life cycle of these construction projects is the implementation when building products are made directly with workers, equipment, materials, and managers. If there is a lack of management experience, information, and problem-solving solutions to tackle the risks faced by contractors, especially foreign ones, will fail in controlling the project’s cost. This study was conducted with investigations, discussions, and evaluation of the factors that lead to cost overruns in the construction projects of international contractors in Vietnam. The principal component analysis (PCA) showed that those factors that influence cost overruns these construction projects fall into five general groups, including factors related to (i) the owners, (ii) the foreign contractors, (iii) the subcontractors and suppliers, (iv) state management, and (v) the project itself. Besides, the study proposes solutions to limit cost overruns in construction projects and improve the profitability of international contractors in Vietnam.

Suggested Citation

  • Quoc Vu, Thong & Phu Pham, Cuong & Anh Nguyen, Thu & Thanh Nguyen, Phong & Thanh Phan, Phuong & Le Hoang Thuy To Nguyen, Quyen, 2020. "Factors Influencing Cost Overruns in Construction Projects of International Contractors in Vietnam," MPRA Paper 103435, University Library of Munich, Germany, revised 28 Jul 2020.
    • Handle: RePEc:pra:mprapa:103435
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    References listed on IDEAS

    as
    1. Nguyen, Phong Thanh & Phu Nguyen, Cuong, 2019. "Risk Management in Engineering and Construction," MPRA Paper 103509, University Library of Munich, Germany, revised 09 Jan 2020.
    2. Nguyen Minh Ha & Nguyen Dang Le & Pham Trung-Kien, 2019. "The Impact of Urbanization on Income Inequality: A Study in Vietnam," JRFM, MDPI, vol. 12(3), pages 1-14, September.
    3. Nazym Bozgulova & Rimma Parmanova & Maira Abenova & Tatyana Ivanyuk & Vassiliy Aryshev, 2019. "Calculation methods for cost management in the construction industry," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 1450-1461, December.
    4. Molusiwa Stephan Ramabodu & Jacobus J.P. Verster, 2013. "Factors that influence cost overruns in South African public sector mega-projects," International Journal of Project Organisation and Management, Inderscience Enterprises Ltd, vol. 5(1/2), pages 48-56.
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    More about this item

    Keywords

    Cost Overrun; Financial Management; Foreign Contractor; Project Management; International Management;
    All these keywords.

    JEL classification:

    • F39 - International Economics - - International Finance - - - Other
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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