Examining the Effects of Construction Project Delays on Costs from the Perspective of Stakeholders Using a System Dynamics Approach: Insights from a Commercial Complex Project in Qom

Document Type : Research Paper

Authors

1 PhD Candidate, Department of Industrial Management, Faculty of Management and Accounting, Farabi Campus, University of Tehran, Tehran, Iran.

2 Associate Prof., Department of Business Management, Farabi Campus, University of Tehran, Tehran, Iran.

Abstract

Objective
Project delays are a prevalent issue in construction projects, particularly in Iran. The project schedule is established and approved after signing the contract and designing the plans, however, most of the project managers cannot complete the project on time and projects often overrun their scheduled completion dates. Generally speaking, the project is "delayed". Various factors contribute to these delays, and extensive research has been conducted to explore their causes. Disagreements between contractors and employers over the causes of delays often result in disputes and negotiations regarding costs and accountability. Consequently, delays are generally a costly problem. In some cases, it has been observed that delays may not be costly for all parties involved and can create conflicts of interest. In addition, project delays have many varied effects that increase the complexity of the problem. When explaining the cause-and-effect relationships of delay impacts, the System Dynamics model illustrates the outcomes of management decisions related to these delays. This paper aims to examine the consequences of construction projects’ delays and the relationships between them from the perspectives of various stakeholders.
 
Methods
This research utilized a combination of qualitative and quantitative methods, as well as nested methods. First, delay effects were gathered from various sources and compared with expert opinions during the initial interview. After categorizing these delay effects, a conceptual model was developed. The case study centered on a construction project in the central Iranian city of Qom. Due to the limitations of the case study, the number of project delay effects was reduced. Relevant variables were defined and incorporated into the System Dynamics model for simulation. Additionally, the perspectives of project actors from a second interview were considered. These viewpoints informed the development of policies and conditions, which were then, analyzed using the System Dynamics model
 
Results
The results of this study revealed that, in inflationary conditions, costs increased exponentially over time. However, employing contract termination could prevent the imposition of more costs in such a situation. Nonetheless, if managers prioritize reputation over cost, they would increase the project’s budget allocation to avoid additional expenses and expedite its completion. Moreover, the simulation of project financing during price fluctuations indicated that the purchase profit at a lower price could compensate for the cost of delays of up to two months. In a speculative scenario, up to 10% of the project budget could be invested in other medium-term projects, with the resulting revenues supporting the primary project.
 
Conclusion
This paper investigated the assertion that delays are costly in all construction projects. After setting up a list of delays and categorizing them, this paper simulated a System Dynamics model. This study confirmed that delays are almost always costly. However, their impact depends on the managers’ mindset and project conditions. This paper proved that project managers could strategically introduce temporal delays. Specifically, under the two analyzed scenarios, managers could arrange delays such that the benefits from the delay would outweigh its costs.

Keywords

Main Subjects

References

 
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Industrial Management Journal
Volume 16, Issue 2
2024
Pages 250-281

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