The main risk factors leading to cost overrun in delivery of Czech public building projects

Abstract

Non-compliance with a construction budget threatens the development and success of building projects and reduces investor's profit. The biggest cost overruns of building projects occur in developing countries, however, construction budget overruns are common problem of many building projects all around the World and have become an industry-wide status quo. It’s important to understand the root of the general problem, especially if a project budget is curtailed or in the public gaze, as in a case of public buildings. Based on the literature review, this paper discusses the main risk factors leading to cost overruns and delay of public building projects in the Czech Republic and compares the local situation with that in the World. The analysis showed that in most cases, the main factors that have major impact on project´s budget overrun are those related to an inaccurate project management prior the start of a building process, such as inaccurate estimates of project´s budget and timelines, serious errors in design plans, administration errors or poor site management. Adopting an appropriate precaution during a pre-construction phase, such as better communication between architects, contractors, owners and site managers or using specific construction software, can enable execution of complex projects with greater control and limit the project´s cost overruns in the future.