Application of PLS-SEM to Assess the Influence of Construction Resources on Cost Overrun

Abstract:

Being resource-driven industry, success and failure of construction projects highly depend on resources. As construction industry is now-a-days facing major problem of cost overrun worldwide, this can be contributed by construction resource issues. Hence, this study aimed to assess impact of construction resource on project cost overrun. Structured questionnaire survey was carried out to understand the perception of construction practitioners. A total of 106 samples were collected. Partial Least Square (PLS) of Structural Equation Modeling (SEM) approach regarded as the graphical equivalent of a mathematical representation of relationship between dependant variable to explanatory variable was adopted for data analysis, as common methods of data analyze does not give insight of underlying relationships between various factors. In analyzing cause-effect relationships, PLS-SEM is a dominant approach to establish rigor in complex models. Smart PLS 2.0 software was used to test the relationship between resources and cost overrun. The developed structural model indicates that relationship between resource and cost overrun was satisfactory by having substantial explaining power (GoF=0.529) and 40% of the cost overrun was influenced with resources. The most significant resource was construction material. Hence, effective material planning and management is vital to improve potential construction cost overrun.

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