Applying Interpretive Structural Modeling to Cost Overruns in Construction Projects in the Sultanate of Oman

Abstract

Cost overruns in construction projects are a problem faced by project managers, engineers, and clients throughout the Middle East.  Globally, several studies in the literature have focused on identifying the causes of these overruns and used statistical methods to rank them according to their impacts. None of these studies have considered the interactions among these factors. This paper examines interpretive structural modelling (ISM) as a viable technique for modelling complex interactions among factors responsible for cost overruns in construction projects in the Sultanate of Oman. In particular, thirteen interrelated factors associated with cost overruns were identified, along with their contextual interrelationships. Application of ISM leads to organizing these factors in a hierarchical structure which effectively demonstrates their interactions in a simple way. Four factors were found to be at the root of cost overruns: instability of the US dollar, changes in governmental regulations, faulty cost estimation, and poor coordination among projects’ parties. Taking appropriate actions to minimize the influence of these factors can ultimately lead to better control of future project costs. Thisstudy is of value to managers and decision makers because it provides a powerful yet very easy to apply approach for investigating the problem of cost overruns and other similar issues.