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Factors affecting cost and quality in PSDP. Public Sector Development Projects in Punjab, Pakistan

by Ali Joiya (Author) Rana Saifullah Hassan (Author)

Research Paper (postgraduate) 2016 19 Pages

Politics - International Politics - Topic: Development Politics

Excerpt

Table Of Contents

ABSTRACT

1 INTRODUCTION

2 REVIEW OF LITERATURE

3 RESEARCH METHOD
3.1 IDENTIFICATION OF QUESTIONNAIRE FACTORS.
3.2 CRONBACH’S ALPHA TEST FOR DATA VALIDATION

4 DATA PRESENTATION, ANALYSIS AND DISCUSSION OF RESULTS
4.1 Frequencies Results
4.1.1 Cost Frequency Table
4.1.2 Quality Frequency Table

5 IMPORTANT CONCLUSIONS
5.1 Recommendation

6 REFERENCES

ABSTRACT

Aim of Study

This study first, aims to understand the relationship between cost overrun and quality within Public sector development projects (PSDP) executed in Punjab, Pakistan. Secondly, study also ascertained the most common factors affecting cost and quality relationship within PSDP. Finally the study mark the frequencies to the factors resulting in cost overrun and poor quality.

Need of Study

Quality and cost relationship has always been a challenge in the execution of PSDP, Punjab Pakistan. These two issues are inseparable and generally have a profound bearing on the success of a project. There are numerous of projects accomplished at very higher cost than expected whereas less attention has been paid to overall project quality. There are records of projects executed at a cost far higher than expected. Others suffer high percentage of delay whereas some suffer less attention been paid to quality.

Research Approach

The study was executed through survey and interviews, using the self-managed questionnaires among the respondents including top level management to lower level management of the PSDP, Punjab, Pakistan. The data was analyzed through Statistical Package for Social Sciences (SPSS-20).

Research Findings

This study revealed that there is highly positive and significant relationship between cost and quality of the PSDP, Punjab, Pakistan. Inter-relationship of the cost and quality explore the major and foremost factors affecting the PSDP, Punjab, Pakistan. This study has also categorized and prioritizes the most vital factors affecting cost and quality within PSDP, Punjab, Pakistan respect to their significance. This study also subsidizes by enabling the contractor/consultants to succeed with maximum quality ensuring at reasonable cost, thus confirming safety performance within PSDP, Punjab, Pakistan.

Limitations

This study is limited to the PSDP, Punjab, Pakistan only.

Importance and Contribution

The findings of the present study are also important for all the stakeholders (clients, project managers, contractors and consultants). This study will enable management of PSDP, Punjab, Pakistan for taking suitable actions in improving the performance of cost and quality in the PSDP, Punjab, Pakistan.

1 INTRODUCTION

Cost is the main reflection within the life cycle of Project Management and major consideration towards the success of the project. It is very common for a project and fixed as the most significant limitation, failing to achieve the objectives within the predefined cost. Dane also explained “to manage we must control, to control we must measure, to measure we must define, to define we must quantify". Cost overrun has become critical/high level concern and need to be deal with great concern in the future in order to achieve the success of project within the fixed parameters. Within developing and under developing countries cost overruns are the major problems and sometimes becomes uncontrollable. The trend is more serious in nature sometimes when it exceeds from 100% of the predetermined cost in the developing countries.

Quality is the satisfaction measurement criteria for every part of project deliverable. It’s a common perception that projects cannot completed within predefined Quality standards or exceeds cost. Quality can be explained in numerous ways in contrast of costs. Quality define the degree of structure properties that follow the requirements (Yasamis et al. 2002).

Dissanayaka and Kumaraswamy (1999) defined that if such project was accomplished within predetermined budget, realistic time and at a quality level fixed by the owner, than only a project will be known as successful. Yet, very low consideration has been anticipated for quality assessment in relation with cost. Moreover in 2011, Rezaian also endorsed that time, cost and quality are not independent but are intricately related.

Cost and quality both are relevant issues which are inseparable on the project, Duttenhoeffer (1992). The commonly supposed notion is that "quality" has a direct relation with "cost". However, there are many factors which are affecting the cost resulting in the cost increase from the predefined and quality can also be decreased. Numerous projects cannot meet with approved quality standers and by the customer necessities, so this research scrutinized the analysis of relationship between cost and quality within Public Sector Development Projects (PSDP), Punjab, Pakistan.

In Pakistan, Public development projects starts from planning, Approval, Execution and then Evaluation as per instructions issued by the Planning Commission, Govt. of Pakistan. Same as other countries; in Pakistan development projects are very important, significantly in the growth for the development under socio-economic schemes as it generates employment opportunities, rotates capital in the economy and creates development activities etc. Punjab has the largest development budget as compared to other provinces of the Country. During 2013-2014, a target of 1576 development projects (including both ongoing and new schemes) having a total investment volume of Rs. 262.2 billion in Punjab had been set. Later on the Punjab Govt. of Pakistan put an increase in the volume of the annual development budget for 2014-15 to Rs. 345 billion. On 1st June 2015, National Development program was approved by the National Economic Council (NEC) for the year 2015-16 at Rs. 400 billion. It shows that a massive portion of the budget is being spent on the Public Development Projects due to which development sector is always kept to on priority as the provisions are increasing day by day after realizing the importance. PSDP are facing various challenges like Expenditure (cost) exceeding from the predetermined budget, low quality ultimately delays to the project in time. Accomplishment of the project completion within the prescribed parameters of Time and within budget is major criterion. This required a study of cost and quality relationship of PSDP in Punjab, Pakistan.

2 REVIEW OF LITERATURE

The definition of cost overrun is not always clear cut, quite a lot of Empirical studies on cost overruns since Arditi et al. (1985) and Flyvbjerg et al. (2002) was of the view that escalation in cost is actually the gap of actual cost and estimated cost. A project is said to be successful that is accomplished within agreed budget and in accordance with the required specifications to the satisfaction of stakeholders, Long et al. (2004). Parallel interrelated definitions were used by Avots, 1969; Gaddis, 1959; Handa & Adas, 1996; Kerzner, 1998; Morris & Hough, 1987; Olsen, 1971; Trauner, 1993; Tuman, 1983 & 1986 and Williams, 1993. Furthermore, cost has proven its strong focus on quality for the want of raised quality in the projects (Topcu, 2004). In 2010, Ali found that measurement of quality level is associated with appraisal cost.

Idiake et al. (2015) determined the relationship between cost and quality within private projects. The study also explore the knowledge ways by enabling the consultants/contractors general understanding to achieve highest level of quality at reasonable cost.

Dragan and Bojan (2014), were of the view that Cost and Quality is closely related and change of one effect on other. Moreover there is direct relationship of cost with quality, Duttenhoeffer (1992). Liberatore and Pollack-Johnson (2008), described non-linear programming model in order to deal with the cost, quality and time in addition to rank the quality position for the realization of project success. According to Ashworth (1991), relationship of the cost-overrun with quality of the construction project shows the significance level. Whereas, performance & quality are the factor of the structural module with high ration when cost is penetrating.

Clamp et al. (2007) identified that: “there may be clients who . . . think it is now possible to construct a quality building at break neck speed and for a knock down price. Any such unfounded euphoria needs to be dispelled at the outset. . .The reality is that although the three most important considerations for any client are usually cost, time and quality, the business of building procurement invariably calls for some comprise or a consensus balancing of these priorities. This requires adequate thinking time and careful thought.”

Hvenegaard et al. (2009) found the relationship between cost and quality differs which depends upon the level of the quality to be achieved lower costs associated with the compromise with ultimate quality standards. This was further buttressed by Fleming (1991), a positive association explore that quality and cost travel in the same direction, an increase in the project quality is being associated with rise in cost.

Kneler and Zhihong (2008), Baldwin et al. (2011) and Johnson (2012) integrated the quality of project into a model of heterogeneous firms by supercilious, that quality is determined as firm’s idiosyncratic marginal cost. Shugan (1984) found that it becomes more and more costly as the quality increases.

Fleming (1990) has shown that most hypothetical models explore that a positive relationship is strongly presents in the association of cost towards quality. Quality can be increase with the help of increase in cost factors. Moreover, they both (cost and quality) travel parallel in the similar direction, Stavrou et al. (2011).

Hagan (1986) identified that inter-relation of cost, quality and schedule, without giving the attention to the dissimilar, can results in unbalanced schedule and cost of the project and frequently damage the quality. This can imbalance the quality which correlates with the cost incurred. The above statement further endorse the statement with Hart’s (1994) “inter-relationship between cost, quality and schedule are depends upon each other (qualifying construction quality cost)

a. Within project, when costs are controlled too strictly, quality can suffer which means cost and quality are directly proportional with each other.
b. When quality controlled without looking anything else than the cost of the project can be affected.”

The trend is more severe in developing countries where these overruns sometimes exceeds 100% of the anticipated cost of the project. Low quality materials cause higher construction cost than expected because of the loss of materials during construction. This fact was pointed out by the Thungphanich (1997).

Nawaz et al. (2013) found that this unethical practice (Corruption and bribery in construction industry) is leading towards cost overruns in every construction project. Incompetence and ineptitude of the site management outcomes in to poor quality, frequent change order, and reworks. Javed et al. (2013) pointed out that overall project hinge on the cost to be incurred, when it is ended appropriately only than it results into the successful completion of the project. In construction projects, lack of quality results in delays, cost overrun, and unsafe structure (Quality of Construction by FIDIC).

Ibironke and Ibironke (2011), due to deficiencies in scheduling and planning, untrue exercise, kickback and non-availability of clear Evaluation criteria, are the most important factors that are affecting cost, time and quality in construction project. Cost overrun is also occurred due to the use of low quality material which resulted ultimately into higher cost of construction as associated to the expected cost because of material loss, Sriprasert (2000). Whereas, variations in the prices of material is only the foremost reason which badly effect the financial calculation of the project and ultimate results into cost overrun and quality affected on the other hand, Hameed et al. (2014).

Parket (2010) has shown positive expectations of budget (cost) have been found to declined quality and efficiency in the concluding creation (service or product). Iyer and Jha (2005) and Shane et al. (2009) studied that as cost factor increases than cost related concept is affected. Finally, Koushki (2005), Kaliba et al. (2009) and Olawaley et al. (2010) studied that time is inter-related with cost, which endorsed by Hanchr and Rowings (1981) that any project is known to be successful it meets with expected cost decided and limit to the agreement. Wong (2000) endorsed this with the further addition that when a tenderer is selected on the lower cost based method, it doesn’t mean to provide very good quality values to the client. Topcu (2004) also studied that “evaluation on lowest price basis is one of the major causes of project delivery problems”.

In Pakistan, PSD is an important sector where it plays significant and vital role in the economy. Even though it is not working with its completest potential, still to be known as the leading interest to this country. Development in this region is very acute to participate in the National Income. Within the region it is the largest segment that engenders great employment opportunities and also has become a key indicator towards the economy of Pakistan.

3 RESEARCH METHOD

The methodology of the study is basically, the phases that will be conducted in order to originate and valid answers to questions, Leedy & Ormrod (2005). This section deliberates the methodologies implemented in the collection of data which supported the study of cost and quality relationship in PSDP, Punjab, Pakistan. Research design adopted was quantitative research approach in which Quantitative surveys are designed to obtain information (Rossi et al. 1983). In such surveys, information level about the population gathered through sampling method (Rea and Parker 2012).

3.1 IDENTIFICATION OF QUESTIONNAIRE FACTORS.

Factors affecting cost and quality in the PSDP were pointed out with the help of literature review and expert opinions. In this study literature review from both developed and developing countries have been studied. The finalized factors affecting cost and quality within PSDP are shown below in Table # I. A total of 30 factors are selected having 15 factors affecting cost and 15 factors affecting quality in order to come out with the correlational study. To measure the impact of each factor on cost and quality, an ordinal five point Likert scale was used, from Strongly Disagree = 1 to Strongly Agree = 5 (impact) similar to the one used by Doloi (2012). Data were clustered u e-mail to a few highly executive consultants (questionnaire respondents) as added by the Danish Social Science Research Council (SSRC) (2002).

Table # I :- (Factors affecting Cost and Quality)

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Primary data was obtained through self-managed questionnaires among the respondents include top level management to lower level management. The primary data was collected with main concern within PSDP, Punjab, Pakistan includes 150 questionnaire respondents (Table # II) from whom interview conducted and they filled the questionnaires. Out of the totality, 10 female respondents and 5 male respondents could not answer all questions and showed their inability to participate in the survey. As a result, the data was collected from 135 valid respondents who have fully participated in the survey and answered all questions.

Table # II :- (Respondents of Public Sector Departments)

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The data was analyzed using Statistical Package for Social Sciences (SPSS-20).The analysis of cost and quality relationship was established by finding the averages of the variables as given by the respondents of the questionnaire and associating same in between.

3.2 CRONBACH’S ALPHA TEST FOR DATA VALIDATION

Prior to investigation data was checked for reliability as variables should be tested on reliability before we undergo for hypothesis testing, Saunders & Lewis, P. (2012). Statistically when the value of alpha goes above from 0.7 than the reliability is considered to be satisfactory (Sekaran, 2003). Cronbach's alpha Table # III, simply provides us with an overall reliability or internal, coefficient for a set of variables. Cronbach's alpha is 0.917, this level of reliability shows internal consistency at high level . The collected data is 100% as shown in Table # IV.

Table # III:- (Cronbach’s Alpha)

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Table # IV:- (Data Collected)

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4 DATA PRESENTATION, ANALYSIS AND DISCUSSION OF RESULTS

As stated before, the study is conducted on the quantitative basis which demands that data should be hypothetically checked on the SPSS because the data was taken through a Likert scale which ranges between 1 to 5 where 1 is Not at all and 5 is at great extent.

The relationship between quality and cost tested by using simple regression through SPSS. We obtained different output tables shown below with their respective interpretations. (a. List wise deletion based on all variables in the procedure.

4.1 Frequencies Results

These results shows the percentage of the number of time regarding an event within a sequence of test. It helps to mark the frequency by taking the mean (factor vise average) which results into sub-variables of the cost or quality in the PSDP with low frequency to high frequency. It also added the mean to the results that sub-variables of cost or quality in the PSDP with less or high significance/importance with the help of mean (average).

4.1.1 Cost Frequency Table

Cost frequency table enlighten the most significant factors with high of level of mean and low level of mean with less importance given by the respondents with respect to each factor of cost overrun in PSDP.

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Factors affecting COST (Mean of each factor)

4.1.2 Quality Frequency Table

Quality frequency table enlighten the most significant factors with high of level of mean and low level of mean with less importance given by the respondents with respect to each factor of cost overrun in PSDP.

illustration not visible in this excerpt

Factors affecting QUALITY (Mean of each factor)

5 IMPORTANT CONCLUSIONS

Review of previous research has shown that balancing time, cost and quality relationship in execution of building projects has always been a challenge. There are records of projects executed at a cost far higher than expected. Others suffer high percentage of delay whereas some suffer less attention been paid to quality.

On the basis of the study it can be concluded that balancing between quality and cost relationship has always been a challenge in the execution of PSDP, Punjab Pakistan. These two issues are inseparable and generally have a profound bearing on the success of a project. There are numerous of projects accomplished at very higher cost than expected whereas less attention has been paid to overall project quality.

- Based on the findings of the data within this study it is concluded that as the quality upsurge/increase the cost will also be increases. There is very strong positive relationship between the cost and quality.
- Inter-relationship of the cost and quality explore the major and foremost factors affecting the PSDP, Punjab, Pakistan. This study has also categorized and prioritizes the factors affecting cost and quality inter-relationship with respect to their significance.
- This study however subsidizes the foremost and leading factors affecting cost and quality relationship and will also enable contractor/consultants know how to understand these factors to achieve maximum quality at reasonable cost, thereby certifying maximum level of safety performance.

5.1 Recommendation

The study is based on the inter-relationship between cost and quality in the PSDP, Punjab, Pakistan. The results of this study need to be further validated on a wider data set. The measures may further be improved with the help of the results of this study. However, reliability of the study is good, which is based on sample population. The data used in the study was collected by researcher. The results of this study are limited to the population and its results may not be generalized to other population.

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Pages
19
Year
2016
ISBN (Book)
9783668252318
File size
660 KB
Language
English
Catalog Number
v334251
Grade
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Cost Quality Public Sector Development Projects

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Title: Factors affecting cost and quality in PSDP. Public Sector Development Projects in Punjab, Pakistan