Risk of Delay in Construction Projects

Abstract

The construction sector is considered the most important sector, as it contributes to raising the country’s economy. Therefore, it is necessary to search for the obstacles. One of these obstacles is the delay, as the project is rarely completed within the planned period. Among the most prominent reasons for this delay are change orders, financial problems for the owner, and slow decision-making on the part of stakeholders. This delay led to various risks, like financial risks, which were represented in exceeding the cost of the project as well as the other in operating the facility and benefiting from the planned benefit. The risk identification process starts with Existence of uncertainty, Preliminary checklist, Risk events consequence scenarios, Logical categorization scheme, Risk mapping, and finally is risk category summary. Therefore, these risks should be analyzed during the planning stage, which can reduce risks during the implementation of the project must be developed. Also, money must be involved in the planning process to be able to fully understand the owner’s perception of the project. The provision of the required budget for the project in the early stages ensures the availability of financial liquidity and thus does not delay payment to the contractor.

1. Introduction

Nowadays the construction industry is considered an important sector among the other sectors in any country around the world. Therefore, great attention was given to this sector by several researchers to improve its effectiveness and addressed its problems. One of the challenges facing construction projects worldwide is the delay in completing the required work within the specified time. It either goes past the deadline set forth in the contract or the one agreed upon by the parties for project delivery [1]. On the other hand, time, according to Majid [2], is the amount of time required to complete a building job. When a project is delayed, it indicates that the work cannot be finished by the original contract deadline [2]. The problem of delays in construction projects has become inherent in almost every project, as it is rarely completed within the time specified in the contract. So, because of the nature of construction projects, which distinguishes them from other sectors, they are considered huge in production and need long periods of implementation. However, there are a lot of anticipated and unforeseen factors that can impact the production rate [1].

The delay in the completion of the project does not only affect the stakeholders of the projects, but it extends to be reflected in the impact on other economic fields. Therefore, it is necessary to identify the risks of this delay as a starting point for searching for appropriate solutions to mitigate these risks.

2. Delay in construction projects

Delays in construction projects are caused by several variables. According to Desai and Bhatt, a construction delay is a time overrun in which the project’s completion date is later than the date stipulated in the contract or takes longer to finish than the date on which the parties originally agreed to deliver the project [3]. Delays in construction projects are now becoming a frequent problem in most projects due to various reasons that vary from one project to another. Regardless of the reasons for the delay or who is at fault, project delays decrease the contract’s value [1]. Therefore, the project manager is crucial in ensuring that the projects are finished within the budgeted time and cost, as stipulated in the contract because delays in construction projects create stress and worry for all the parties under the terms of the contract [4]. There are various types of delays in construction projects, which are based on the source or the affected parties for this delay. For example, construction delays can be categorized into critical delays, non-critical delays, causable delays, non-causable delays, and concurrent delays according to Thorat et al. [5]. According to Ahmed et al. [6], delays may be non-excusable, excusable (with or without compensation), or concurrent. Non-excusable delays are those that are brought on by the contractor, a subcontractor, or another party but are within the contractor’s control [6]. Based on the various studies, the major types of delay in construction projects can be summarized into three types, which are excusable delay, non-excusable delay, and concurrent delays, as shown in Figure 1.

Figure 1.

Types of delay in construction projects.

2.1 Excusable delay

It is the kind of delay that happens as a result of an unforeseen circumstance that neither the contractor nor the subcontractor can control. Excusable delays are caused by the following occurrences: floods, fires, acts of God, general labor strikes, typically harsh weather, etc. [1].

There are two types of excused delays: compensable and non-compensable. Owner or owner’s agents are to blame for compensable delays. Non-compensable delays, however, are brought on by events or persons outside the control of the contractor, the owner, or both. These delays are frequently referred to as “acts of God” because no one is to blame for them [7, 8].

2.2 Non-excusable delay

The foreseeable incident that is within the contractor’s control constitutes a non-excusable delay. Examples of this type of delay include late material deliveries from suppliers, late work completion by subcontractors, incorrect work execution by the contractor or subcontractor, a shortage of labor and equipment, and strikes by workers because the contractor intends to stop paying them on time [1].

2.3 Concurrent delays

Concurrent delays are more difficult and common in building projects. This circumstance occurs when multiple factors cause the project to be delayed simultaneously or over a period of time [9].

3. Causes of delay

Many studies have found multiple reasons for project delays, from which many projects in various countries, whether developing or developed, have suffered. Where the causes and the extent of their impact varied according to economic, political, and social factors. For example, even though Malaysia is a nation that is noted for its rapid development, there are still times when projects are delayed. About 17.3% of Malaysia’s 417 government projects in 2005 were deemed sick, meaning they had been postponed for more than 3 months or abandoned. One of the industries that significantly contributes to Malaysia’s economic expansion is the building industry. However, some of the reasons for and outcomes of construction project delays might be classified as nation-specific [10, 11].

On the other hand, Long et al. [3] discovered that several issues arise in Vietnam throughout the execution of a building project, with schedule and cost overruns being the two main concerns. Another study in Saudi Arabia, Assaf et al. [12] conducted research about construction project delays in different types of projects in the state. It was concluded that 70% of projects experience time overruns [4]. Table 1 summarizes the most causes of delay in construction projects that are related to different countries.

Country	Causes of delay	Study
Saudi Arabia	The causes related to labor, contractor, project, owner, and consultant	[12]
Egypt	financing by contractor during construction, delays in contractor’s payment by owner, design changes by owner or his agent during construction, partial payments during construction, and non-utilization of professional construction/contractual management	[13]
Libya	Improper planning, lack of effective communication, design errors, shortage of supply, i.e., steel, concrete, slow decision making, financial issues, shortage of material, cash-flow problems during construction	[7]
Malaysia	Contractor’s improper planning, contractor’s poor site management, inadequate contractor experience, inadequate client’s finance and payments for completed work, problems with subcontractors, shortage in material, labor supply, equipment availability, and failure, lack of communication between parties, and mistakes during the construction stage	[10]
Jordan	Poor design and carelessness of the owner, change orders, weather conditions, site conditions, late delivery, economic conditions, and increase in quantities	[14]
Punjab-Pakistan	Factors related to contractor, client, consultant, material, and equipment	[15]

Table 1.

The main causes of delay in construction projects in different countries.

It is clear in Table 1 that there are several reasons for the delay in construction projects located in different countries. With the reasons differing from one project to another due to the difference in size, location, type, scope, and requirements. It also differs from one country to another due to the difference in economic, social, and political conditions.

The project manager is crucial in ensuring that the projects are finished within the budgeted time and cost, as stipulated in the contract because delays in construction projects create stress and worry for all the parties under the terms of the contract [4].

According to a study by Rahsid et al. [15], classification in his research is one of the project participants, such as the contractor, the owner, or the consultant, may be at fault for the delay. On the other hand, the causes may be related to factors within the project such as delays in the supply of materials, poor management of the site, and difficulty in moving within the project [14]. The delay may also occur as a result of poor relations between the parties involved in the project, whether it is between the owner and the contractor or the contractor and the consultant. Also, it may be a bad relationship between the contractor and his staff on site.

These various reasons clearly affect the success of the project in completing within the required standards related to time, cost, and quality. The impact of the delay in completing the project was not limited to the project only but extended to all other ramifications around the project.

4. Risk of delay

The construction project sector is considered one of the vital sectors that contribute to raising the efficiency of the economy in general. Despite this, it is considered one of the sectors most exposed to various risks. One of these risks is the delay in the completion of projects, the effects of which appeared on the project in particular, as well as its stakeholders, which later extended to the entire sector, in addition to other sectors related to this sector. There are various types of risks in construction projects namely: financial risk, time-related risk, technical risk, market risk, nature risk, external risk, and risk related to the human factor and workplace safety [16]. Sources of construction hazards are listed by Cohen and Palmer as changes in project scope and requirements, design flaws and omissions, poorly defined roles and duties, a lack of qualified employees, force majeure, and new technology [17].

Therefore, during the planning phase of the project life cycle, it is important to provide risk analysis. The results of the risk analysis at this stage will help to reduce the different types of risks that occur during the construction phase. This analysis should be the responsibility of the main stakeholders in the project. However, choosing the appropriate method to respond to risks is an important management process of risk analysis.

The research done by Szymański [16] gave examples of selected situations of reactions on how the investor, contractor, or interested party in a specific situation progresses when making judgments on developing risks, namely: avoiding risk, risk mitigation, dispersion of risk, and absorbing risk.

The factors that cause construction delays that are frequently challenging to fix are time, cost, scope of work, material delivery, benefits, process, resources, stakeholders, or organization [18]. Therefore, when performing their various duties, project team members, in particular customers, consultants, and contractors, should eliminate or mitigate delays [19]. According to a study by Al-Bahar and Crandall [20] the risk identification process is summarized in Figure 2.

Figure 2.

Risk identification process framework.

Tight project schedules, design variations, lengthy approval processes in administrative government departments, client variations, incomplete approval and other documents, inappropriate construction program planning, and insufficient program scheduling are time-related risks identified by Zou et al. [21] that have an impact on project delivery [21].

5. Effect of delay on construction projects

The effect of delay in construction projects is clearly visible to the parties concerned. For the contractor, the delay incurs additional administrative expenses, which were not taken into account in the initial stages of the project. On the other hand, the delay also delays the owner’s use of the project and its operation, and thus deprives the owner of the expected profits at an earlier time. Zhu asserts that the discrepancy between a project’s allocated projected cost and actual cost is what causes cost overruns or escalations [22]. Other impacts, like project time overruns, project cost overruns, project abandonment, and litigation, were also addressed [22].

According to Sambasivan and Soon [10]‘s research, there are six ways that delays affect how well projects perform in Nigeria. These consequences include conflicts, arbitration, litigation, time and expense overruns, and complete abandonment. The main repercussions of delays and interruptions, however, include time overruns, cost overruns, poor social impact, idle resources, and disagreements [17]. According to Chileshe and Berko, delays in monthly payments to contractors, variances, inflation, and schedule slippage are the main drivers of cost overruns in the Ghanaian road-building industry. Once more, these describe the reasons for delays and the consequences of cost overruns [23].

6. Conclusions

The delay in completing the project within the agreed period is one of the most prominent problems that many construction projects in various countries around the world suffer from. Therefore, the current study focused on identifying the risks of delay. Where the results of the research showed that the effect of delay is not only limited to the project itself but also affects all parties associated with the project, whether directly or indirectly. One of the most prominent risks of delay is the cost overrun resulting from the requirements of this delay, as any additional time requires additional expenses associated with additional labor and materials. It was found that the reasons for the delay were related to the owner, as he was responsible for the early stages of the project. Therefore, more attention must be paid to the planning stage and the preparation of project documents, since most of the reasons were the result of a lack of planning and preparation of project documents. Accordingly, sufficient time must be given for this stage, in addition to selecting qualified specialists to prepare the project documents necessary for its implementation within the requirements and standards specified by the owner. On the other hand, the study recommended the establishment of other studies that focus on identifying potential risks in the planning phase of the project life cycle.