AN ASSESSMENT OF THE CAUSES AND EFFECTS OF COST OVERRUNS ON BUILDING PROJECTS IN NIGERIA CONSTRUCTION INDUSTRY

ABSTRACT The primary aim of this study is to assess the causes and effects of cost overruns of building projects in Nigeria's construction industry, with specific focus on Osun State. The objectives include examining the relationship between cost overruns and project characteristics, investigating the effects of cost overruns on project timelines, quality and clients' satisfaction, and assessing the influence of stakeholders (clients, contractors, consultants) on cost overruns. Data were collected through structured questionnaires distributed to Quantity Surveying professionals across Osun State. A total of ninety-four (94) questionnaires were distributed, and eighty-five (85) were retrieved, representing a 90.40% response rate, which was considered adequate for analysis. The findings indicate that projects with imported material components (>30%), extended durations exceeding 24 months, and complex building types are the most significant project characteristics associated with cost overruns. The study reveals that cost overruns lead to severe consequences including disputes and claims, project delays, project abandonment, quality degradation through material substitution, and decreased client satisfaction. Furthermore, the research demonstrates that all stakeholder groups bear critical responsibilities in cost overrun management, with clients ensuring adequate financing, contractors providing accurate cost estimation and maintaining financial capacity, and consultants developing comprehensive designs and conducting thorough site investigations emerging as the most important stakeholder roles. It is recommended that construction organizations implement comprehensive economic risk management strategies, strengthen pre-construction planning practices, establish rigorous contractor selection criteria beyond lowest price, ensure adequate project financing, and develop proactive cost monitoring and early warning systems. In conclusion, effective cost overrun management requires coordinated stakeholder efforts, addressing external economic factors, adequate planning, and transparent communication to enhance project delivery performance, financial sustainability, and overall construction industry credibility in Nigeria.