IDENTIFICATION OF SOME FAILURE COSTS AND THEIR PERCEIVED ROOT CAUSES IN CONSTRUCTION

In 2008 the total estimated failure costs in the Netherlands was estimated to be 11.4% of the industry's turnover compared to 7.7% seven years earlier. Failure costs can be the consequence of rework as a result of failure to conform to the product requirements and specifications or due to inefficient processes and bad management practices. Many construction companies however are unaware of the exact nature of these costs, their root causes or how to control them. This paper describes work carried out in the Netherlands to identify the different types of failure costs in construction and their root causes. The research described builds on previous findings by another research institution and expands it to include information collected from project cases and a survey of a number of project managers in the construction industry. The paper describes the analysis of the results from cases and the survey to identify the root causes of failure costs. Research shows, for example, that many failure costs are related to the client taking late decisions and making changes to the project requirements.