An assessment of the causes of schedule and cost overruns in South African megaprojects: A case of the critical energy sector projects of Medupi and Kusile

Abstract

Cost and schedule overruns are the most common challenges in mega construction projects around the globe, and South Africa is no different. Although comparatively small in number, megaprojects have an inordinate number of projects failing, due to budget overflow and schedule slippage. This article assessed the causes of cost and schedule overruns as well as the challenges with the implementation of critical construction megaprojects, using Kusile and Medupi energy-sector megaprojects in South Africa. Using a quantitative research method, which included a literature review and a questionnaire survey, identified the causes of schedule and
cost overruns as well as the challenges militating against the project’s implementation success. Data was collected from engineers, quantity surveyors, architects, contractors, and project managers who were randomly selected from the two megaprojects, Medupi and Kusile. Data was analysed using mean score ratings and ranking. The results revealed that slow client decision-making, shortages of skilled labour, inaccurate material estimating, unforeseen ground conditions, poor material planning, changes in scope of work on-site, contractual claims, variation orders and poor site management were the major causes of schedule and cost overruns. Findings show that the top five challenges (poor site management, inadequate managerial skills, poor monitoring and control, unstable management structure, and lack of experience together with poor organisation structures) is all management and organisational related, showing that there is not enough local management and organisational expertise in South Africa to ensure the proper planning and effective implementation of energy megaprojects. This article is relevant, as it contributes to the understanding of key challenges faced by megaprojects in the context of a developing country. Specific solutions that mitigate the causes of schedule and cost overruns should be investigated in future studies.

Keywords: Cost overruns, energy sector, megaprojects, schedule overruns

Oorskryding van koste en skedules is die mees algemene uitdagings in megakonstruksieprojekte regoor die wêreld, en Suid-Afrika is nie anders nie. Alhoewel dit relatief klein is, het megaprojekte ’n buitengewone aantal projekte wat misluk as gevolg van oorloop van die begroting en glyplanne. Hierdie artikel het die oorsake van koste- en skedule-oorskrywings, sowel as die uitdagings met die  implementering van megaprojekte vir kritiese konstruksie, met behulp van megaprojekte vir die energiesektor (Kusile en Medupi) in Suid-Afrika, ondersoek. Deur gebruik te maak van ’n kwantitatiewe navorsingsmetode, wat ’n literatuuroorsig en ’n vraelysopname insluit, is die oorsake van skedule- en koste-oorskrydings, asook die uitdagings met megaprojekimplementering, geïdentifiseer. Data is versamel van ingenieurs, bourekenaars, argitekte, kontrakteurs en projekbestuurders wat lukraak gekies is uit die twee megaprojekte, Medupi en Kusile. Data is geanaliseer met behulp van gemiddelde telling graderings en posisie. Die resultate toon dat trae  kliëntbesluitneming, tekort aan geskoolde arbeid, onakkurate materiaalberaming, onvoorsiene grondtoestande, swak  materiaalbeplanning, veranderinge in werkomvang op die terrein, kontraktuele eise, afwykingsbevele en swak terreinbestuur die belangrikste oorsake van die skedule- en koste-oorskryding was. Resultate toon dat die top vyf uitdagings (swak terreinbestuur, onvoldoende bestuursvaardighede, swak monitering en beheer, onstabiele bestuurstruktuur en gebrek aan ervaring tesame met swak organisasiestrukture) alles bestuurs- en organisatories verwant is. Dit toon dat daar nie genoeg plaaslike bestuursen  organisasiekundigheid in Suid-Afrika is om die behoorlike beplanning en effektiewe implementering van energie-megaprojekte te verseker nie. Hierdie artikel is relevant, aangesien dit bydra tot die begrip van die belangrikste uitdagings wat megaprojekte in die konteks van ’n ontwikkelende land in die gesig staar. In toekomstige studies moet spesifieke oplossings ondersoek word om die oorsake van skedule- en kosteoorskrydings te verlig.

Sleutelwoorde: Koste-oorskryding, energiesektor, megaprojekte, skedule-oorskryding