Cost Management of Large Construction Projects in South Malaysia

Achieving project completion within the estimated cost is fundamental criteria for success of any project. Hence cost management and control is very important consideration for ensuring cost performance. Various cost management techniques can be applied throughout the project life cycle to avoid poor cost performance and overrun of cost. This study focused assessing project cost performance and level of effectiveness of various cost management techniques implemented in large construction project in south Malaysia. Data collection was carried out through structured questionnaire survey which resulted in collecting 97 data samples. It was found that most of projects face cost overrun problem with an average overrun in the range of 5% to 10% of the total project cost. Most effective approaches of cost management adopted in construction projects were cash flow forecasting, tender budgeting/estimating and elemental cost plan. Value management and cost code system were rated as less effective technique. One of possible reason for low level of value management application in Malaysian construction industry may be unawareness of the benefits of value management. Realizing the advantages of value management, it should be considered to implement this method to achieve better cost performance.