EFFECT OF RISK FACTORS ON COST OVERRUNS IN ELECTRICAL INSTALLATION PROJECTS IN OSUN STATE, NIGERIA

Abstract

The technical complexity and cost involved in electrical installation projects make them prone to risks. These risks, when not properly managed, often result to cost overruns. This study examined the effect of risk factors on cost overruns in electrical installation projects. The study focused on financial risk, technical risks, and managerial risks of electrical installation projects. This study adopted a survey research design which involves the use of structured questionnaire for data collection. The electrical contractors, project managers, site engineers, consultants, quantity surveyors, and client representatives in Osun State make up the target demographic for this study. Two hundred and forty-three (243) copies of questionnaire were administered to the respondents. This study utilised both stratified sampling and snowball sampling technique to select the respondents. The data collected were analysed using multiple regression analysis on Statistical Package for Social Sciences (SPSS) software. Findings revealed that financial risk indicators have a positive significant effect on cost overruns (β = 0.458, p < 0.05), technical risk indicators also show a positive and statistically significant effect on cost overruns (β = 0.276, p < 0.05), and managerial risks indicators have a positive significant effect on cost overruns (β = 0.332, p < 0.05). The study found that financial risk factors were the biggest driver of cost overruns. The study concludes that all three risk indicators, which include financial risk, technical risk, and managerial risks have positive significant effect on cost overruns of electrical installation projects. Hence, the study recommends that project stakeholders should strengthen financial planning and improve cost control mechanism. Also, project managers should apply a strong risk management framework across the whole project lifecycle; risk identification, appraisal, monitoring, plus mitigation actions should be folded right into planning and execution, so the likelihood of disruptions and cost overruns drops noticeably.