An- Najah National University Faculty of Graduates Studies Assessment of Life Cycle Cost of Roads Projects in Palestine: A Case Study of the Palestinian Municipalities By Mais Hassan Al-Makharzah Supervisor Prof. Sameer Abu-Eisheh This Thesis is Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Engineering Management, Faculty of Graduate Studies, An-Najah National University, Nablus-Palestine. 2020 ii iii اإلهداء بسم اهلل الرحمن الرحيم ""نرفع درجات من نشاء وفوق كل ذي عمم عميم سبحانك يا ربنا لك الحمد والشكر حمدًا كثيرًا طيبًا مباركًا فيو الى معمم البشرية ومنبع العمم نبينا محمد )صمى اهلل عميو وسمم( إلى من جرع الكأس فارغًا ليسقيني قطرة حب إلى من كّمت أناممو ليقدم لنا لحظة سعادة إلى من حصد األشواك عن دربي ليميد لي طريق العمم إلى القمب الكبير )والدي العزيز( إلى من أرضعتني الحب والحنان إلى رمز الحب وبمسم الشفاء ة(إلى القمب الناصع بالبياض )والدتي الحبيب إلى القموب الطاىرة الرقيقة والنفوس البريئة إلى رياحين حياتي )إخوتي( الى الذين كانوا عونا لنا في بحثنا ىذا ونورا يضيء الظممة التي كانت تقف أحيانا في طريقنا )اساتذتي( وأخص بالذكر )االستاذ الدكتور سمير ابو عيشة( ..عنا كل خير فمو منا كل التقدير واالحترامالذي تفضل باإلشراف عمى ىذا البحث فجزاه اهلل إلى من زرعوا التفاؤل في دربنا وقدموا لنا المساعدات والتسييالت واألفكار والمعمومات، ربما دون م سميمان بميبمة( ما يشعروا بدورىم بذلك فميم منا كل الشكر، وأخص منيم )الزميل: )اصدقائي( إلى من آنسني في دراستي وشاركني ىمومي ودعمني ميس المخارزه iv v Table of content No Content Page Dedication Iii Declaration Iv List of Table Viii List of Figures Xi Abstract Xii Chapter One: Introduction 1 1.1 Chapter overview 1 1.2 Background of the study 1 1.3 Research problem 4 1.4 The significance of the research 5 1.5 Research questions 5 1.6 Research hypotheses 6 1.7 Research objective 7 1.8 Research structure 7 Chapter Two: Literature Review 9 2.1 Chapter overview 9 2.2 Key definitions and concepts of life cycle cost of road Projects 9 2.1.2 The definition of cost overrun in road projects 11 2.3 Causes and impacts of cost overrun in the road projects 12 2.4 Developed countries case studies 14 2.5 Developing countries case studies 22 2.6 Local case studies form the Palestine 25 1.7 Studies on cost overrun of road projects in municipalities 27 2.8 Factors of successful for implementing road project 29 Chapter Three: Research Methodology 32 3.1 Chapter overview 32 3.2 Strategy of research 32 3.3 Design of research 34 3.3.1 Sampling design of research 35 3.4 Research methodology flow chart 37 3.5 Data collection methods 38 3.5.1 Document 38 3.5.2 Interviews 38 3.5.2.1 Design of interviews 39 3.5.2.2 Interview content validation 41 3.5.2.3 Interviews analysis 41 vi 3.6 Survey 42 3.6.1 Questionnaire 43 3.6.2 Questionnaire design 43 3.6.3 Questionnaire validity 44 3.6.3.1 Content validity 45 3.6.3.2 Structural validity 45 3.6.4 Questionnaire reliability 45 3.7 Data analysis 47 Chapter Four: Data analysis and result 49 4.1 Chapter overview 49 4.2 Interviews analysis 49 4.2.1 Theme 1: Phenomenon of cost overrun 51 4.2.2 Theme 1: Factors for cost overrun 52 4.2.3 Theme3: Stakeholders 53 4.2.4 Theme 4: Economic, social, and environmental impacts 55 4.2.5 Theme5: Work methodology 56 4.3 Descriptive analysis 57 4.3.1 Analysis of survey response 59 4.4 Projects characteristic 59 4.5 Result of Research Questions 60 4.5.1 What is the impact level of the factors that are related to the actions and decisions made in the different phases of the project life cycle on the cost overrun of municipal road projects? 60 4.5.1.1 Planning and design phase 61 4.5.1.2 Tendering phase 63 4.5.1.3 Implementation phase 64 4.5.2 What is the impact level of external factors that have caused cost overrun in municipal road projects? 66 4.5.3 What is the impact level of economic, environmental and social factors that have caused of the cost overrun in municipal road projects? 68 4.6 Results related to the main hypothesis 69 4.6.1 Cost overrun 70 4.6.1.1 Municipality area 70 4.6.1.2 Project financing 71 4.6.1.3 Municipality classification 73 4.6.1.4 Contractor classification 74 4.6.2 Cost overrun due to the factors that are related to the actions and decisions made in the different phases of project life cycle 75 vii 4.6.2.1 Municipality area 76 4.6.2.2 Project financing 78 4.6.2.3 Municipality classification 80 4.6.2.4 Contractor classification 83 4.7 Factors that affect the project life cycle 85 4.8 Factors that affect the cost overrun percentage 88 4.9 Discussion 90 4.9.1 Discussion of the factors that is related to the actions and decisions made in the different phases on the cost overrun 91 4.9.2 Discussion of Hypotheses 96 4.9.3 Factors that is related to the actions and decisions made during the different project phases 98 4.9.4 Relationship between factors that is related to the actions and decisions made during the different phases 99 Chapter Five: Conclusions and Recommendation 102 5.1 Summary 102 5.2 Conclusion 103 5.3 Recommendation 106 References 108 Appendixes A 115 Appendixes B 116 Appendixes C 121 ب الملخص viii List of Tables No Title Page Table (3.1) The sample of projects 36 Table (3.2) Construct validity through the correlation coefficient 46 Table (3.3) Reliability statistics 47 Table (3.4) Distribution of mean value into one of the represent classes 48 Table (4.1) Targeted organizations and list of interviewees 55 Table (4.2) Codes, Issues discussed and Central Themes 52 Table (4.3) Municipal road projects and percentage of those with cost overrun 58 Table (4.4) Results of analyzing qualitative project characteristics 59 Table (4.5) Results of analyzing quantitative project characteristics 65 Table (4.6) Mean and standard deviation values of the occurrence of the factors in life cycle phases for road projects in municipalities 62 Table (4.7) Mean and standard deviation values for the study sample responses towards factors related to the planning and design phase 61 Table (4.8) Mean and standard deviation values for the study sample responses towards factors related to tendering phase 63 Table (4.9) Mean and standard deviation values for the study sample responses towards factors related to implementation phase 65 Table (4.10) Mean and standard deviation values for the study sample responses towards external factors 67 Table (4.11) Mean and standard deviation values for the study sample responses towards economic, environmental and social factors 69 Table (4.12) Results of ANOVA of the percentage of project cost overrun according to the municipality area 72 Table (4.13) Mean and standard deviation value of the project cost overrun percentage according to the municipality area 72 Table (4.14) Results of ANOVA Test of the project cost overrun percentage according to the financing 71 ix Table (4.15) Mean and standard deviation value for the project cost overrun percentage according to financing 71 Table (4.16) Results of Scheffe Test of significant source of differences of the cost overrun percentage according to the project financing 73 Table (4.17) Results of ANOVA of the project cost overrun percentage according to the municipality classification 74 Table (4.18) Mean and standard deviation value for the project cost overrun percentage according to municipality classification 74 Table (4.19) Results of ANOVA of the project cost overrun percentage according to the contractor classification 75 Table (4.20) Mean and standard deviation value for the project cost overrun percentage according to contractor classification 75 Table (4.21) Results of ANOVA Test of the impact level of factors related to the actions and decisions made during the different project life cycle phases 77 Table (4.22) Mean and standard deviation value of the impact level of factors related to the actions and decisions made during the different project life cycle phases 77 Table (4.23) Results of ANOVA Test of the impact level of factors that are related to the actions and decisions made during the different phases according to the Project financing 79 Table (4.24) Mean and standard deviation value of the impact level of factors that are related to the actions and decisions made during the different phases according to the project financing 79 Table (4.25) Results of ANOVA Test of the impact level of factors related to the actions and decisions made during the different phases according to the municipality classification 82 Table (4.26) Mean and standard deviation value of the impact level of factors related to the actions and decisions made during the different phases according to the municipality classification 82 x Table (4.27) Results of Scheffe Test of significant differences sources of the impact level of factors that are related to the actions and decisions made during the different phases due to municipality classification 83 Table (4.28) Results of ANOVA Test of the impact level of factors related to the actions and decisions made during the different phases according to the contractor classification 84 Table (4.29) Mean and standard deviation value of the impact level of factors related to the actions and decisions made during the different phases according to the contractor classification 85 Table (4.30) Matrix correlation between phases and Project Size, The time overrun, External factors, and Economic, environmental and social factor 88 xi List of Figures No Title Page Figure (3.1) Research methodology flow chart 37 Figure (4.1) Relations between phases of life cycle,* relation is significant at the level (0.05) 86 Figure (4.2) Correlation between the life cycle of rode projects and external factors, economic, environmental, and social factor, project size and time overrun,* significant relation at 0.05 88 Figure (4.3) Correlation between the cost overrun percentage and other independent variables,* correlation is significant at the (0.05) level. 95 xii Assessment of Life Cycle Cost of Roads Projects in Palestine: A Case Study of the Palestinian Municipalities By Mais Al-Makharzah Supervisor Prof. Sameer Abu-Eisheh Abstract Road projects are considered of the most important projects in Palestine in general, and in the West Bank at specific, since they play a major role in the economic development in Palestine. Since most of the municipal road projects in the West Bank suffer from cost overrun phenomena, and since there are only few studies made on this subject, there is need to study and analyze the factors that cause cost overrun in road projects in the different phases of the life cycle of projects, so that recommendations to limit this phenomena can be suggested. The research goals were achieved through analysis of the results of the responses to a questionnaire that studied 47 cases of municipal road projects in the West Bank municipal road projects with cost overrun. Analysis was also done to the outcome of interviews were held with 15 experts in the field of roads. Quantitative and qualitative analysis was conducted to find the causes of the cost overrun, identify what leads to the success of road projects without cost overrun, and then suggest the necessary procedures to minimize cost overrun. xiii It was found that the factors with the highest impacts on cost overrun for municipal road projects include the rough terrain area of the project site, and that the preparation of design drawings and tender documents is not conducted by a specialized engineering office adequately classified by the Engineers Association for the size and complexity of the project. In addition, other major factors include not considering the timing for tender release and the starting of the project, especially at the start of the winter season. Furthermore, other major factors were found to be awarding the project to the bidder with the lowest price, having changes in project activities during the implementation phase, and financial issues facing project client/government. The results also showed that the reasons behind the success of projects without having cost overrun include following a clear and professional methodology beginning from the planning and design phase to handover, and that project implementation, is performed by a qualified contractor, and followed up by specialized and professional municipal staff. 1 Chapter One Introduction 1.1 Chapter overview This chapter provides a comprehensive description of this research. It presents a general background, the research problem, the research significance, research questions and objectives, general research framework, research hypotheses, and finally the structure of the thesis. 1.2 Background of the study Road projects are considered of the most important and common projects in the sector of the construction industry in Palestine, specifically in the municipalities projects in West Bank, because of their large impact on the quality of the infrastructure in the country, and the related major economic and social importance. This study intends to investigate the factors that cause the overrun of the road project costs, specifically the municipal roads, and the problems that are associated with that, and to learn from the projects that don't exceed their specified costs in order to take advantage of that for the coming projects. This would be needed as part of studying the management of the life cycle cost of these projects. The importance of this study comes from the fact that some road projects in the West Bank exceed the estimated cost. 2 It has to be stated that the continuation of the cost overrun phenomenon would have an adverse impact on the municipal road projects by changing the scope, delaying the project or affecting the quality of the project, knowing that it might delay financing new projects that could serve the local communities. Adding to this, there could be social, environmental and economic losses. The main purpose of this study is to evaluate the life cycle cost of the road projects and compare the estimated costs with the actual costs for a sample of municipal road projects in the West Bank, in order to know the factors behind the actual cost increase above the estimated cost for these projects, and then analyze the results, in order to reach proper solutions and recommendations. Good road networks are considered of great importance for the local economy for any city or town, because they play an important role in disbursement of public services and commodities, as well as in facilitating the movement of people. The success of any local government depends on the capability of policy makers to accomplish a balance between available resources and the needs to construct new facilities and maintain and repair the components of existing infrastructure (Tiong and Singh, 2005). Delay in construction projects is a global phenomenon and road construction projects aren't exception and usually accompanied by cost 3 overruns, which has a debilitating effect on customers - consultants and contractors - in terms of growth in the hostile relations, lack of trust and litigation, arbitration and cash flow problems and the general feeling of fear. A considerable share of road projects has rarely been accomplished in the specified time and cost, which has led to losses in revenues due to cost overrun and time schedule delay. As a result of cost overruns importance, to both the clients in terms of performance and to the contractors in terms of money, this has been a major source of frequent disputes and claims that may lead to lawsuits, which could result in more expenses and loss of revenue for the interested parties. Budget overruns if not controlled, may have the ability to impact negatively on project completion, strict management for different risks that might face road projects is required to avoid the devastating effects that they might have on the final cost of the project (Kaliba et al., 2009). The cost of roads construction includes design expenses, extraction of materials, construction equipment, maintenance strategies, rehabilitation and operations over the whole service life time. Economic analysis process, which is known as the Life Cycle Cost Analysis (LCCA), is used to evaluate the effectiveness of alternative cost based on the concept of Net Present Value (NPV). It is usually necessary to evaluate the sides of NPV in order to get the best life cycle cost (Babashamsi et al., 2016). However, 4 the intent of this research will be to concentrate on the part of LCCA that ends with construction. Finally, companies and institutions who are properly dealing with the factors of overrun when evaluating the cost of the project, and whom are seeking to ease the impact of these factors, can improve the accuracy of the cost estimations and program the budgets (Shain et al., 2009). 1.3 Research problem In the light of this introduction chapter and next literature review chapter, the main problem that this research aims to investigate is the overrun in the final cost of municipal road projects and the factors for exceeding the estimated costs of these projects. This research will study road projects implemented by municipalities in the West Bank. The research will evaluate the life cycle of projects that have overrun the estimated cost, to understand the way they are managed and implemented, and the factors that have led to failing to predict the right cost. On the other hand, there is a need to look at few examples of projects that succeeded to correctly predict the cost, and identify the factors why they have succeeded. This research also addresses the need to consider the social, environmental and economic factors caused by failing to correctly predict the cost of the project as a result of delays and changing the scope of the project. 5 4.4 The Significance of the research Failing to estimate the cost of a municipal road project results in financial difficulties facing the municipalities which might end up deciding to change the scope of the project or reducing the budget for upcoming projects. It also has a huge impact on the society that is being served by the project, since in some cases delays might happen. Therefore, it is important to study this problem, understand the factors that might cause it and come up with proper suggestions to reduce it. 1.5 Research questions This research is designed to answer the following questions: 1. What is the extent of the presence of the problem of cost overrun for municipal road projects in the West Bank? 2. What is the impact level of factors that are related to the project life cycle on the cost overrun of municipal road projects? 3. What is the impact level of external factors that have caused the cost overrun in municipal road projects? 4. What is the impact level of economic, environmental and social factors that have caused the cost overrun in municipal road projects? 5. What methods should be followed in the planning phase to avoid cost overrun of projects? 6 1.6 Research hypotheses The following hypotheses have been identified to be verified and tested: The main hypotheses of this research are: HP1: There is no significant difference in the cost overrun percentage due to project characteristics (municipality area, project financing, municipality classification, and contractor classification). HP2: There is no significant relationship between the impact level of factors that are related to the actions and decisions made during the different project life cycle phases and the project characteristics (municipality area, project financing, municipality classification, and contractor classification). HP3: There is no significant relationship between the impact level of factors that are related to the actions and decisions made during the different project life cycle phases and project size, the percentage of time overrun, external factors, as well as economic, environmental, and social factors. HP4: There is no significant relationship between the cost overrun percentage and project life cycle, project size, the time overrun percentage, external factors, as well as economic, environmental, and social factors. 7 1.7 Research objectives The main objective of this study is to investigate and analyze the factors and circumstances that cause the difference in the estimated cost and the actual final cost of the municipal road projects in the West Bank. Other objectives of this research include: 1. Determine appropriate work methodology for the success of municipal road projects. 2. Suggest instructions and precautions to be implemented by municipalities and institutions involved in municipal roads projects (e.g., Ministry of Local Government (MOLG), and the Municipal Development and Lending Fund (MDLF)), when predicting the cost of road projects. 1.8 Thesis Structure The thesis consists of five chapters. Chapter One introduces the thesis subject and objectives, research questions and objectives, and significance of this research. Chapter Two displays literature review and summarizes research to provide needed background and information to understand the research subject, and to achieve it is main objectives. Chapter Three displays the methodology followed in this research and procedures to use to determine the style and methods of collecting information and data from municipalities in the West Bank. Chapter Four illustrates the designed tools for data collection that include questionnaires and interviews illustrates the 8 descriptive and inferential results of research variables and provides test results for the hypotheses, and discusses the results. Chapter Five provides conclusions with a set of recommendations and suggestions for future research based on the results of the hypotheses testing. 9 Chapter Two Literature Review 2.1 Chapter overview The main concern of this chapter is to provide the needed background and information to understand the research subjects. This chapter reviews key definitions and concepts for life cycle cost of infrastructure projects in general; and road projects at specific, and the overrun of the cost that might happen in these projects. Next, it outlines the causes and danger of overrun in the cost of infrastructure projects. This chapter also presents a set of case studies conducted on the subject of cost overrun in road projects in developed and developing countries. Next, the chapter presents conducted research on local case studies on the subject of projects cost overrun. Finally, the chapter ends with presenting studies on cost overrun of road projects at municipalities at specific, as well as on factors of success of implementing road projects. 2.2 Key definitions and concepts of life cycle cost of road projects Life cycle cost, by definition, means “the total cost of the initial project plus all anticipated costs for subsequent maintenance, repair, or resurfacing over the life of the road” (Chan, 2007). As a result, when used to study the financial feasibility of the road projects, road engineers are able to choose the road type and design with the lowest cost in the long run. 10 In general, life cycle cost of road is usually categorized into three major components: agency cost, user cost, and external cost. Agency cost is the cost directly paid by the construction agency for the project, which includes the initial construction/rehabilitation and future maintenance costs of road. User costs are social costs incurred by the road users, which include user travel delay cost during construction, maintenance and rehabilitation events. External costs pertain to the remaining indirect costs incurred by the non-user public. Its boundary is not well- defined, but pollution damage cost, noise-pollution cost, agricultural crops damage from pollutants and visibility losses are examples of external costs. Basically, they are referred to “externalities” of road construction that are not reflected in market prices but incurred by the non-user public )Chan, 2007). Life cycle cost of projects (LCCA) is a key component of the infrastructure management process, and it is used extensively to support network- and project-level decisions. LCCA is an analysis technique that builds on the well-founded principles of economic analysis to evaluate the overall long- term economic efficiency between competing alternative investment options. It incorporates initial and discounted future agency, user and other relevant costs over the lifetime of alternative investments. It attempts to identify the best value (the lowest long-term cost that satisfies the performance objective being sought) for investment expenditures (Santos and Ferreira, 2013). 11 2.2.1 The definition of cost overrun in road projects Cost overrun, especially in the infrastructure projects, is considered as a worldwide phenomenon, and it effects the relationship between the owner (government or municipality), contractor, and project manager, Molenaar (2005) and Creedy et al., (2010) found that A lot of projects have significant cost overruns. In the study of Bordat et al. (2004), a formula has been presented in order to calculate the project cost overrun as follow: Cost overrun = Final Bid Amount - Original Bid Amount Furthermore, Afetornu et al. (2006) defined the cost overrun of the constructed road projects, as “the additional cost beyond the planned estimated cost of the project”, while Nega (2008) defined the cost overrun as “the difference between the finial actual cost of a construction project at completion and the contract amount agreed by and between the client (the project owner) and the contractor during signing of the contract”. Wakjira (2011) defined the cost overrun as “the increase of the final actual cost of a construction project (usually expressed as a percentage of original contract amount) at the completion of the project over the original contract amount, agreed by and between the client (the project owner) and the contractor. 12 Referring to the analysis of cost overrun in the Palestinian road construction industry, Mahamid (2011) defined the cost overrun in road construction projects as “a deviation that may be expressed as a percent difference between the final cost of the project (actual cost) and the contract award amount (estimated cost)”. 2.3 Causes and impacts of cost overrun in the road projects The costs of the construction, maintenance and rehabilitation of the highway construction projects are rising dramatically, which make it important for highway agencies and municipalities to use the tools that help them to make proper decisions, follow good management practices, and have an accurate cost estimation (Babashamsi et al., 2016). Any failure in planning, designing and executing the construction project may lead to budget overruns and work delay. Having an accurate data and surveying plans to be used in the procedures of planning the project is essential to estimate an accurate construction cost so annual budget can be predicted and the resources can be allocated efficiently. Thus, accurate planning and design of a project results in avoiding ending up with a budget that is smaller than the required costs, which lead to delaying the project or not achieving the required standards and quality (Chou, 2011). When the final cost of the project ends up being different than the early cost estimates of the project, the project might be significantly affected, which might end up with failure of the project. Therefore, it is extremely 13 important to understand and be able to predict the factors that might influence the final project costs, which might occur during the period between project initiation, concept development, and the completion of the project (Shane et al., 2009). Cost and schedule overruns can occur due to a wide range of causes on various types of projects. If project costs or schedules exceed their planned targets, client satisfaction would be compromised. The funding profile would no longer match the budget requirement and further slippage in schedule could result. The resulting effects would be detrimental, especially in the case of developing countries whose wealth measure is greatly dependent on their performance in infrastructure provision through the construction industry, especially on road construction projects, which constitute a major component of the industry (Kaliba et al., 2009). Publicly funded projects, at specific, are highly effected by the increase in project costs, since the public funds are allocated for a limited number of projects and an increase in one of them will lead to another project being effected, and in some cases leads to change of scope to other projects to afford that cost overrun (Shane et al., 2009). There are two types of factors effecting cost overrun, internal factors and external factors (Shane et al., 2009). Internal factors are cost overrun factors that can be directly controlled by the project’s sponsoring agency or owner. While numerous internal factors can lead to underestimation of project costs during the planning and design phases of development, nine 14 primary internal factors are well documented. These include bias, delivery, procurement approach, project schedule changes, engineering and construction complexities, scope change, scope creep poor estimation, and additionally inconsistent application of contingencies. The external cost overrun factors are those factors over which the owner has little or no direct control over their impact. However, the owner needs to consider these when estimating project costs. During the planning and design phase of project development, external factors such as local government concerns and requirements, fluctuations in the rate of inflation, and market conditions, can lead to underestimation of project costs (Shane et al., 2009). 2.4 Developed countries case studies There are many published research papers that had clarified and explained the main factors that led to increase in the cost of projects in general. These papers indicated that the effects of factors on public projects is larger than the effects on the projects of private ones, and that is because the fund of the public sector is available for a limited number of projects, and if any project exceeds its budget, other projects will be down or the budget of these projects will be reduced. In addition, the studies made on a wide range of projects came out with result that the final costs of many projects were larger than the budgeted cost that was expected and released during initial planning, preliminary engineering, final design, or even at the start of construction of “megaprojects”. Such studies suggested and mentioned 15 that there is a true need to develop a plan to face cost overruns (Shane et al., 2009). The negative consequences caused from the difference between the initial and the final costs are significant. Many factors could have influence on the final cost of the projects along the whole duration of these projects, starting from project initiation concept development until the completion of such projects. Furthermore, the author found that the economic, societal, and political challenges play a major role in the complexity on engineering projects. Such challenges have a big influence on the cost on many projects, and many owners including municipalities, fail to correctly predict the scope of these challenges (Shane et al., 2009). In the transportation sector, managers and stakeholders started to pay attention to the cost overrun phenomena of transportation projects at the levels of national, state, regional, and local projects. Additionally, many owners of projects in the United States face a major difficulty in managing and controlling the budget of their own projects over the time span between the start and the end of such projects, since over this time span, there are many factors that can influence a project’s final costs (Shane et al., 2009). After making interviews with 20 transportation agencies by Shane et al. (2009), 18 cost overrun causes were identified to include 11 internal factors and 7 external factors. 16 The internal factors were found to include: 1. Bias which is the systemic tendency shown to be overoptimistic about the main parameters of the project. This is also seen as the purposeful underestimation of project costs to ensure that a project stays in the construction program. 2. delivery/procurement approach affects the allocation of the risks in the project between the agency/owner and the contractors, and such risk is related to project delivery approach and to the question of risk allocation. 3. project schedule changes, especially extensions, caused by budget constraints or design challenges, cause unexpected increases in inflation cost effects, even when the inflation rate is expected accurately. 4. Engineering and construction complexities caused by the location or purpose of the project, will make preparing early design plans very difficult and result in disputes between the supervisor and contractor, as well as errors in the implementation phase of the project. 5. Scope changes, that should be controllable by the owner, can result in project costs being undervalued. These changes may include changes in project construction limits, size, and location, as well as changes in design and/or measurements of key project objects and components. 17 6. Scope creep is the tendency for certain small changes in design to compound in order to increase project costs. Although individual changes in scope can only have small cost impacts, the implementation of these slight changes, which are often not necessary to the facility's intended operation, may result in major cost increases over time. 7. Poor estimating can lead to underestimation of project costs. Design plans must be in a manner which can be interpreted, validated, confirmed and corrected. Poor estimation involves general mistakes and omissions from planning and estimating procedures and techniques, as well as general inadequacies and poor results. 8. Inconsistent application of contingencies causes confusion as to exactly what is included in an estimate's line items, and what is covered by contingency amounts. Contingency funds are usually intended to cover a range of future incidents and problems not clearly defined or to compensate for a lack of project identification during the preparation of early planning or programming estimates. 9. Faulty execution by an owner in managing a project could lead to project cost overruns, such as the inability to make timely decisions or actions or to provide information relative to the project. 10. Ambiguous contract provisions dilute responsibility and cause misunderstanding between an owner and project design and construction contractors like providing too little information in the project documents. 18 11. Contract document conflicts lead to mistakes and uncertainty when bidding and, later, during execution of the project, change and rework orders. The external factors were found to include: 1. local concerns and requirements to mitigate the project effects on the local community, local social climate, and on the natural environment, as well as agreed improvements or adjustments to scope usually included. 2. Effects of inflation is a key factor in the underestimation of costs for many projects, knowing that time value of money can adversely affect projects specially when project estimates are not communicated in year-of- construction costs. 3. Scope changes, considered as external factors in this context are those changes not controllable by the owner that may lead to project cost escalation being underestimated. 4. Scope creep, in this context is the result of several accumulating external small scale changes, that can be attributed to the evolving demands basically from municipal authorities or the residents. 5. Market conditions, inaccurate assessment of the market conditions will lead to incorrect estimate of project costs. Business dynamics impact project costs similar to the consequences during the planning process and during the implementation process. Changing market conditions during the 19 construction of a project which decreases the number of bidders, affect the workforce and can interfere with the project schedule and budget. 6. Unforeseen events are cases such as flooding, hurricanes, tornadoes or other weather-related events cannot be expected and usually not controllable by the project owner. These are typically called "acts of God." 7. Unforeseen conditions such as unknown soil conditions may have effects on the foundations of construction, compaction, and structure and can lead to cost overruns. By defining such factors, the supporting efforts made to understand these factors will be more easier, and this understanding will lead to develop new strategies, methods and tools for better cost estimation and management. Also, after defining these factors, this will empower estimators, owners, and contractors to be able to specify each factor and how to deal with. Moreover, understanding such factors will allow to take the appropriate decision to fight factor impacts, and in the same way, project participants can take many actions to control and avoid as much as possible the effects of these factors on the long-life of the project (Shane et al., 2009). The issue of cost overruns and the issue of timeline delay for large-scale infrastructure projects are considered as the biggest problems face large countries like Canada. Many large-scale projects provide an evidence that the probability for projects to face cost overrun and delay problems increases when the scale of the project increases. The author suggested 20 three main explanations for cost overruns and delays, which are technical challenges, over-optimism, and strategic misrepresentations (Siemiatycki, 2015). Technical challenges include scope changes and change orders, problems coordinating a large cast of contractors and subcontractors, increased labor or material costs, inaccurate forecasting, and poor monitoring of projects. The problem with megaprojects is when stakeholders believe that such projects should use less resources and less time than planned; for sure, delays and over budgets will occur. At the same time, promoters of megaprojects may deliberately misrepresent the budget and schedule to ensure approval of projects from which they will gain – financially, professionally, or politically (Siemiatycki, 2015). Referring to the study of Odeck (2004), the Norwegian road sector found that cost overruns occurs in smaller projects more than large projects, which means more management and efforts should be put on small projects to avoid cost overruns. The Norwegian road sector study also indicated that some other factors might cause cost overrun, such as the completion time of the project and the region where the project is conducted. Surprisingly, neither project type nor work force type seems to highly influence the level of cost overrun. As for the geographical location and type of the transportation projects and the relation with the cost overrun of the project, and according to a study conducted by (Creedy et al., 2010) using the regression analyses, it was 21 found that there is a lack of strong correlation between the geographic location of the projects and the project cost overrun. These finding contradicts with the findings of Drew and Skitmore (1992), which argued that the density of population and the extent of the geographic area were important factors contributing to cost overrun for competitive bids in building projects. This difference might be due to the different between highways projects and building projects. The highway projects analyzed by Creedy et al. (2010) were located in one area, Queensland, Australia and not a broader region as was presented by Drew and Skitmore (1992). In addition, another finding indicated that there is no strong correlation found between highway project type and project cost overrun. Another study on a broader transportation research base of analyzing rail, fixed-line, and road projects was conducted by Flyvbjerg et al. (2002), where the results of the study showed that the type of transportation project had a statistical effect on the cost overrun. If there was a difference, it might be attributed to Flyvbjerg’s use of a much broader range of project types and that the research was conducted on an international scale. Likewise, there was no correlation found between owner project risks and project cost overrun. However, the author found that correlation exists between the indexed highway programmed cost and the increase in cost overrun project in budgeted programmed cost, where the size of the percentage cost overrun decreases (Creedy et al., 2010) 22 In contrast, another research, carried out by the USA Transportation Research Board in 1992, evaluated construction cost overruns on 468 transport projects completed for the Washington State Department of Transportation, indicated evidence of cost overruns. The results were expressed as a percentage of the original contract amount, which increased with the increase of size of the project (Hinze et al., 1992). In addition, this finding is also inconsistent that found by Williams (2003), who analyzed transportation projects in both the U.K. and the United States. The researcher argued that there is a log linear relationship between the contract size and cost overrun. The reason for the appearance of this inconsistency was attributed only to the contract elements of projects and the size of projects (Williams, 2003). 2.5 Developing countries case studies Like the rest of the world, developing countries are among the countries that suffer from the phenomenon of cost overrun in road projects. In this section, a number of studies on this subject from three developing countries, Zambia, Ghana, and Jordan, are presented below. Based on the study case of Zambia’s road construction projects (Kaliba et al., 2009), cost overrun was mainly caused by extreme weather conditions such as heavy rain and floods causing to change the scope of the project. In addition, cost overrun was attributed to the cost of protecting the environment, technical challenges and local government pressures. These factors need to be managed and predicted to be able to face them and 23 correctly prepare for their financial effects early in the planning phase. For the schedule delays, it was found that such delays were affected by financial problems that might face the government (especially in developing countries), changes in drawings, tools and machines unavailability, poor supervision, bad coordination on site between the different parties in the project (owners, consultants, and contractors). Another study was made to identify the reasons which lead to cost overrun in projects in Ghana (Chileshe and Berko, 2010). The results of the study showed that this is caused by a number of critical factors. The study argued that most of the cases related to project cost overruns were caused by general factors related to technical difficulties, poor management, social and financial conditions. Also, the study showed that the most specific factors include the delay in monthly payment to contractors, inflation, schedule slippage, underestimating project activities correct cost, falling to professionally and completely understand project design plans and tender documents and finally design errors. The study mentioned above focused on the main reasons which lead to cost overrun in projects supervised by the sector of road construction in Ghana. The study showed implementing the projects with the required quality according to the official specifications and codes and sticking to the budget offered by the government was and still a big issue that faces the government and road projects agencies in Ghana. The study argued that the community in Ghana look at government and road agencies as corrupt and 24 ineffective parties in general. The clients, consultants and contractors who filled the questionnaire for the study agreed that the main reason caused overrun cost is due to delays to monthly payments to contractors, and therefore the problems mentioned above made the issue of finishing projects in time without the cost of overrun almost impossible (Chileshe and Berko, 2010). Generally, in public sector, money spent mainly on project change orders, results in reducing the numbers and size of the future projects that can be completed during any fiscal year. To prevent this phenomena municipalities must monitor the process of spending money on different projects (Al-Hazim and Salem, 2015). The documents and the final reports for several sample projects implemented in Jordan over the years 2000 to 2008 were collected, then analyzed (Al-Hazim and Salem, 2015), knowing that all the projects were administered by the same organization, which is the Jordanian Ministry of Rural and Public Works. The results of the analysis made could provide assists to highway officials in their design, planning, scheduling and projects completions. The study gave 19 factors that might cause cost overrun in road construction projects. It summarized the results that were considered as major causes of cost overrun through more than 25 large projects in Jordan during the indicated period. 25 According to what was documented, the most important reason that led to cost overrun was terrain conditions. These conditions include difficulties in reaching the work site, difficulties in the work type, land acquisition issues, delay in relocating utilities, and the lack of civil services near the work site, which were not included within the work plan and cost studies. The second main reason in cost and time overrun was weather conditions. These two reasons were the main reasons indirectly leading to additional causes for cost overrun. These include for example, new variation orders and their costs, mistakes in design, emergency working (Al-Hazim and Salem, 2015). 2.6 Local case studies from the Palestine Researches and studies on delay of projects and cost overruns in Palestine are few despite the significance of the construction sector in Palestine. It is noted that the parties of project (owners, consultants, and contractors) don’t give the time and cost overruns the importance in the evaluation phase at the end of project (Al-Najjar, 2008). A study conducted by Mahamid (2013) had investigated the occurrence frequency of time overrun causes in road construction projects in the West Bank in Palestine from contractors’ viewpoint through a questionnaire survey. The field survey included 34 contractors, where 52 factors affecting time overrun were identified during the research. The survey concluded that the top ten frequent factors are segmentation of the West Bank and limited movement between areas, political situation, progress payments 26 delay by owner, lack of equipment efficiency, difficulties in financing project by contractor, personal conflicts among labors, poor communication between consultant with other subcontractors, conflict between contractor and owner/supervisor, award project to lowest bid price, unreasonable project time frame by the owner. According to Al-Najjar (2008), the shortage of control of cost overruns and timeline delay might be as a result of:  Lack of professional monitoring of different project activities during the implementation phase;  The distribution of delay and cost overruns responsibilities between the three parties (contractors, consultants and owners);  The contractors who were surveyed believe that the political conditions are the main reason of this problem. According to Albatsh (2015), the author indicated that the top ten causes which contributed to delays in Palestinian construction projects from the viewpoint of project parties (owners, contractors, and consultants) are: referral of bids to the lowest price, incorrect and inappropriate bid pricing, lack of sufficient cash for project implementation (financial difficulties), contractor failure to regulate the cash flow of the project, irregular cash flow for the project on owner's side, delay of due payments (according to progress), unavailability of required equipment when demanded or delayed availability behind schedule, the kind of tenders in which the selection 27 process to negotiate lower prices or other criteria, adding a significant changes to the project by the owner after starting the implementation phase of the project (additional work, modifications to the design), and mistakes during the process of implementation (intentionally or unintentionally) which require readjustment. 2.7 Studies on cost overrun of road projects in municipalities It is very important to analyze and monitor the phenomenon of cost overrun in road projects in municipalities since it has a high impact on the municipal yearly budget and it effects the funding of future projects. In this section, a number of studies on this subject are reviewed and presented. The challenge in the planning phase of these projects is to predict an accurate cost for the project, so it could be considered by handled to the decision-makers parties in the municipality to correctly allocate municipality funds in the most prioritized way. The best estimation cost for a project is the estimation that is approximately close to the final cost of that project to help to protect the municipality from cancelling future projects to fund old ones (AbouRizk et al., 2002). The authors found that, most of municipalities underestimate the inherent uncertainty associated with estimating project costs, and this generally leads to serious deviations from established budgets (overruns or underruns). When accountability is based on overall performance of a group of projects, overruns and under runs tend to cancel each other out, 28 yielding an acceptable level of budget performance. Moreover, when scrutiny is on a project-by-project basis, the inability to establish accurate estimates when projects are approved by decision makers (i.e., at the concept or preliminary phase) becomes more pronounced. Such expectations in terms of estimate accuracies need to be tempered to reflect what is achievable. Over-riding issues that can improve estimating accuracy include proper scope definition and control, tying the level of estimate to the level of engineering effort expended and not just the design report produced, establishing and maintaining the currency of databases of cost and understanding the influence of market conditions on these costs, and recognizing that elements of uncertainty are abundant in road construction. The last issue could be best managed and controlled through undertaking proper risk analysis techniques. Moreover, modeling uncertainty can be achieved through simulation techniques, and development of contingencies should be integrated within this process. Generally, it was found that improvements were obviously needed in how engineers develop estimates. Until these improvements are implemented, however, it is prudent to be realistic in gauging uncertainty in cost estimating (AbouRizk et al., 2002). The study of Mulenga and Bekker (2015) focused on uncovering the causes of cost overrun on Municipal Infrastructure Grant allocated to municipalities by National Treasual in South Africa funded projects in the OR Tambo District Municipality. The data were gathered by using a survey 29 questionnaire of 69 potential factors and other sources of evidence such as project documentation. A total of 65 respondents, out of a potential 115 sampled, representing service providers and sector departments involved in OR Tambo District Municipality, responded to questionnaire. Of the 69 potential factors, 21 factors were found to have significant impact on cost overruns. Data gathered from other sources such as project documentation and archival records confirmed the significance of the 21 factors. Main causes of cost overrun were found to include inadequate planning, inadequate funding, and discrepancies in the procurement processes and policies. The study recommended improvements in project planning, adjustments in the project implementation process and policy as the main focus areas to reduce cost overrun. 2.8 Factors of success for implementing road projects The definition of the success of any project is associated of whether the project had achieve the aim of the client based on what was planned. The successful project is that accomplished and finished in the agreed time with the estimated budget with the required quality according to the codes and specifications. To call any project as a successful project, project management techniques and tools should professionally be followed and used. Project management is defined as managing the available different resources, workers, money, equipment, machines, materials and methods to ensure projects success (Chileshel and Berko, 2010). 30 The definition of the project/construction management is the process of guiding a project throughout its life cycle. Modern managerial knowledge in addition to understanding of the design and construction processes are the bases of construction management. Every construction project has its own requirements, aims, objectives and constraints such as a required time schedule to be followed (Spinner, 1997). Oberlender (1993) argued that the modern managerial knowledge and the understanding of the design and construction processes form the bases of the management of road projects. The success of any road construction project depends on adopting the right strategies to be followed when managing such projects. The strategies for success in any road construction project are implemented in the management of the project time, cost, and quality and material management (PMBOK, 2013), (Kehinde et al., 2017). A group of proactive measures should be adopted in the planning phase of project. Some of the common planning strategies are: efficient planning, planning for management of site and supervision of the project; appropriate planning and arrangement of project; organized regulatory mechanism; and planning for considering proper methods for construction (Azis et al., 2012). 31 The organizational strategies that contribute to the success of projects, including road project need to include: appropriate prominence on previous experience; regular coordination between the associated parties; increasing human resources in the industry; and complete administration of contracts (Ahsan and Gunawan, 2010). Regular meetings on development, employing proficient subcontractors and suppliers, attributing less weight to prices, and more weight to abilities and earlier performance of contractors to improve the contracts and their procedures are some reactive and organizational strategies (Azis et al., 2012). Using channels for perfect information and communication is a proactive and organizational strategy, as well as utilization of latest technology is a proactive and reactive strategy. Undertaking preconstruction planning regarding the procedures and resources of the project is a proactive, reactive, and organizational strategy (Azis et al., 2012). 32 Chapter Three Research Methodology 3.1 Chapter overview This chapter displays the case study methodology followed in this research and the procedures used in collecting the data from municipalities in the West Bank, and conducting analysis using that data. In order to investigate and analyze the factors and circumstances that cause the difference in the estimated cost and the actual final cost of the road projects implemented from 2016-2018 by municipalities in the West Bank, there is need to study a sample and investigate the factors causing this phenomena from the perspective of the municipalities representatives. This chapter presents the research strategy, research design, study sample, location of study, and analysis tools used in the research. 3.2 Strategy of research In this research, different types of research are used to analyze the data and get to the results of the study desired, which can be classified into the following three types: Exploratory research: It uses contextual study methods that are useful in recognizing the viewpoints of a subject and helps to interpret information in mind and perception states (Saunders et al., 2009). Such research is useful in defining issues and generating ideas for implementation (Neelankavil, 2015). As the name suggests, it merely aims to "explore" the 33 study discussions and does not mean providing the last and unquestionable answers to unanswered questions. Normally, this type of research is aimed at thinking about an issue that has not been clearly identified yet. It is aimed at identifying the shape and nature of the problem. Exploratory research is not intended to provide definitive evidence, but it allows having a higher understanding of the issue (Dudovskiy, 2016). In this study, the research explores the factors that lead to the overrun costs during the life cycle of municipal road project. Explanatory research: This research type (referred to also as causal research) aims at identifying the degree and nature of the triggering circumstances and result connections with a specific end goal (Brains et al., 2011). Causal research can be performed to determine the impact of specific changes on existing standards, various processes, and so on (Zikmund et al., 2013). Causal research focuses on researching a situation or a particular issue to clarify the modality of interaction relations (Given, 2008). In this type of research, the researcher aims to demonstrate or explain the relationship between two aspects of a phenomenon or circumstance. Descriptive research: This research type is concerned with how a matter could be interpreted as an effort to determine, represent or discern what it is (Saunders et al., 2016). Descriptive research is intended to spotlight on problems or issues through a data accumulation process that empowers to explain the circumstances more comprehensively than could be anticipated 34 without using this technique (Fox and Bayat, 2007). This type of research is intended to explain more than the relationship test. This research aims to describe situations, circumstances or events systematically, to provide knowledge about these projects, or to explain attitudes to certain issues. 3.3 Design of research Each scientific research has a specific approach followed by the researcher during the study, where the approach based on this study is a qualitative approach, quantitative approach, and mixed methods procedures. Qualitative approach: Such approach involves data collection, evaluation, presentation, and document writing qualitative methods that vary from the conventional quantitative approach. Purposeful sampling, open-ended data collection, text or image analysis, knowledge representation in figures and graphs, and subjective interpretation of the results qualitative approaches. A qualitative approach is one in which information statements are often made by the investigator mainly based on constructivist perspectives (Creswell, 2014). Quantitative approach: Different hypotheses or theories are tested in this method and empirical data are gathered to support or disprove the hypotheses. Data obtained using methods to assess attitudes such as questionnaires and then analyzed using programs to test statistics aspects and hypotheses (Creswell, 2012). 35 Mixed methods approach: This approach is characterized as that dealing with inquiry, including collecting both quantitative and qualitative data, coordinating the two data types, and using unmistakable outlines that may include philosophical presumptions and hypothetical frameworks. The fundamental premise of this type of investigation is that the combination of qualitative and quantitative methodologies offers a more complete understanding than either methodology alone (Creswell, 2014). 3.3.1 Sampling design of research The first task in this research is to establish a sample to investigate overrun cost road projects implemented by municipalities in the West Bank within three years (2016, 2017, and 2018). The sample need to be taken from all governorates of the West Bank, including all different categories of municipalities in the West Bank classified by MOLG (classes A, B, and C), as presented in Table 3.1. 36 Table 3.1: The Sample of projects No. Name of municipality Municipality classification Number of studies projects Jenin Governorate 1 Qabatiya B 1 2 Az Zababida C 2 Tubas Governorate 3 Tubas A 4 4 Tammun B 2 5 Aqqaba C 2 Tulkarm Governorate 6 Anabta B 3 7 Zeita C 2 Nablus Governorate 8 Nablus A 3 9 Beit Furik B 3 10 Huwwara C 4 Qalqiliya Governorate 14 Qalqiliya A 3 12 Azzun C 2 Salfit Governorate 13 Salfit A 3 14 Biddya C 2 Ramallah and Al Bireh Governorate 15 Ramallah A 3 16 Beirzeit B 4 17 Al Mazra’a ash sharqiya C 1 Jericho Governorate 18 Jericho A 1 49 An Nuwei'ma and 'Ein ad Duyuk al Fauqa C 1 Jerusalem Governorate 20 Al Eizariya B 2 Bethlehem Governorate 24 Bethlehem A 3 22 Beit Jala B 1 23 Battir C 2 Hebron Governorate 24 Hebron A 1 25 Yatta B 4 26 Al Karmil C 5 Total 63 37 3.4 Research methodology flow chart The research methodology flow chart, presented in Figure 3.1, displays the various consecutive stages of the research to achieve its objectives. This research methodology comprises of four main stages, starting from the literature review, and ending with results and recommendations. Figure 3.1: Research Methodology Flow Chart. 38 3.5 Data collection methods This study relies on information collected through documents from the sample municipalities in the West Bank, structured interviews, and questionnaires. 3.5.1 Documents In order to achieve the research goal, a sample of road projects which has to provide sufficient statistical and objective information about the life cycle costs of these projects is to be selected. The required data, especially that related to the cost, has to be collected from official records and documents from the municipalities. Because of the nature of the road projects, the municipalities would be the most accurate, inexpensive, and objective source for the required data )Ahsan and Gunawan, 2010). 3.5.2 Interviews The interviews are considered of the most important tools used in qualitative research. There are many types of interviews used in scientific research, including structured interviews, semi-structured interviews, and unstructured interviews. This research relied on structured interviews to collect information. The questions are asked in a set with standardized order and the interviewer will not deviate from the schedule of the interview or probe beyond the answers received. 39 To use the method of structured interview, some of the benefits and strengths that support their use in this research include the ease to replicate as they use a fixed set of closed questions that are easy to quantify. This ensures that performance and reliability testing is easy. Structured interviews can be conducted relatively quickly, meaning that many interviews can take place in a short time (Mcleod, 2014). 3.5.2.1 Design of interviews Interviews are conducted with several parties who have an active role in the life cycle of road projects, including design offices and consultants, some of the financiers of these projects, including Ministry of Local Government, Municipal Development and Lending Fund, and Ministry of Public Works and Housing, as well as some engineers with expertise in the field of roads, and academics. The following questions are addressed and investigated in the interviews: 1. Can the cost overruns be considered acceptable? And why? 2. Is there a percentage of the project cost that can be considered to be unacceptable? 3. What are the most important reasons that lead to increased costs?  In the planning and design phase  In the tendering phase. 40  In the implementation phase 4. What are the measures that can limit the increase in costs in road projects?  In the planning and design phase.  In the tendering phase.  In the implementation phase. 5. Does the contractor classification and efficiency affect the cost increase in road projects? 6. In what kind of financing is the phenomenon of cost increase more common? And why? 7. Is there an environmental and economic impact due to the increase in the costs of road projects? 8. What are the environmental and economic impacts resulting from increased costs for road projects? 9. What method is proposed to be used to track the progress of work during implementation to avoid cost overrun? 10. What are the reasons for the success of some road projects by not exceeding the estimated cost? 41 3.5.2.2 Interview content validation Before interviewing the selected interviewees, content validation was conducted by involving three highly reputable academics, targeted sector two field experts and one post-graduate researcher (see Appendix A). They were asked to arbitrate the interview protocol's standard, accuracy, precision, orientation, order, context, language, and time frame. 3.5.2.3 Interviews analysis The interviews will be analyzed through thematic analysis, which is considered as the most common method in the analysis of qualitative research resulting in structured interviews. Thematic analysis has many characteristics such as versatility, simple learning process, and useful approaches to qualitative analysis. It is carried out in many phases; familiarization with information, generation of initial codes, a quest for topics between codes, the examination of topics, classification, and naming of topics and final reporting (Braun and Clarke, 2006). The steps of the analysis are summarized by thematic analysis as follows: Familiarization: The first step is having the data identified. Until analyzing individual items is started, it is necessary to get a detailed overview of all the collected data. It may include transcribing audio, reading the text, making initial notes, and simply going through the data to get to know it. 42 Coding: Next, the data need to be coded. Coding involves highlighting parts of the text –usually sentences or phrases– and having shorthand labels or "scripts" to identify their content. Generating themes: Next, look over the created codes, identify patterns among them, and start coming up with themes. Themes are generally broader than codes. Reviewing themes: The researcher has to make sure that the themes are useful and accurate representations of the data. Here, the data set is compared with the themes against it. Defining and naming themes: This involves formulating exactly what is meant by each theme and figuring out how it helps us understand the data. Naming themes involves coming up with a succinct and easily understandable name for each theme. Reporting: A brief report on each topic is to be written, according to the opinions of the people interviewed. 3.6 Survey Surveys offer quantitative or empirical summary of a population's patterns, behaviors, or views through the analysis of a population sample. In this approach, quantitative data (numerical data) are collected using a tool such as the questionnaire and then to be statistically analyzed to explain the 43 patterns from in response to answers to the research questions and hypotheses (Creswell, 2014). 3.6.1 Questionnaire In this research, the questionnaire is used as a research tool to collect data as part of the descriptive and quantitative approach, which is an instrument used in a survey that allows knowing the reasons for overrun cost in road projects, that this research aims to determine. The questionnaire is suitable for many reasons, such as to cover large responses at different locations, saving time and cost, and to analyze standardized data without personal interaction in a way that affects the questionnaire credibility. In addition, without any confusion, respondents should answer and understand the questions (Denscombe, 2014). 3.6.2 Questionnaire design The researcher has established a closed question structure to answer by selecting from a variety of options or from a three-point Likert scale to assess the factors and circumstances that cause cost overruns in the municipal road projects, where the respondent selects only one option that represents the case. The questionnaire is designed considering the outcome of the review of relevant literature from academic papers and the other surveys that are related to the topic investigated in the study. After that, the researcher presents the draft questionnaire to experts in the construction 44 sector and academics. The questionnaire's last revision includes the following: The first section: The purpose of this section is to collect general information about the road project which the study targets, including name of the municipality, name of the project, location, the date of completion of the project, size, project cost according to the bid, actual final cost, estimated calendar, days actual calendar, project financier, and classification of the project contractor. The second section: In this section, the factors causing the overrun cost are divided according to the phase of the project life cycle and the external and environmental factors affecting the project. Project phase related factors are divided into three phases: the planning and design phase, including 10 items, the tendering phase including 11 items, and the implementation phase including 19 items. In addition, the external factors include 6 items, and the economic, environmental and social factors include 10 items. 3.6.3 Questionnaire validity To ensure the validity of the questionnaire and that it is suitable for access for research purposes, the researcher uses different types of validity tests; the content validity and the construct validity through the correlation coefficient. 45 3.6.3.1 Content validity The questionnaire was judged by involving three highly reputable academics, two experts in the filed municipal roads, and one post-graduate researcher (see Appendix A). The opinions of the arbitrators were taken into consideration and the necessary deletion, modification, or addition were made in the light of the proposals submitted. Consequently, the questionnaire came out in its final form as shown in Appendix B. 3.6.3.2 Structural validity To study the structural validity, the correlation coefficient was used. Table 3.2 shows the correlation coefficient for each with item its factor. All coefficients are found to be significant at a significant level of 0.05, which means that there is a high correlation between item and its factor, so these item can be represent their factors. 3.6.4 Questionnaire reliability To check the reliability of the data, the researcher utilized Cronbach's Alpha tool. The reliability tool is considered as consistency measure to indicate when the measurements are repeated twice with the same respondents, the results would essentially be the same. The range of the values for Cronbach's Alpha ranges between 0 to +1.0, and the closer to the value to 1 the higher degree of internal consistency will be. 46 Table 3.2: Construct Validity through the Correlation Coefficient Planning and design phase Tendering phase Implementation phase Items Corr. coff Items Corr. coff Items Corr. coff Items Corr. coff D1 0.865 T1 0.655 IM1 0.756 IM12 0.808 D2 0.823 T2 0.680 IM2 0.807 IM13 0.739 D3 0.606 T3 0.863 IM3 0.763 IM14 0.797 D4 0.812 T4 0.825 IM4 0.748 IM15 0.716 D5 0.840 T5 0.841 IM5 0.781 IM16 0.783 D6 0.652 T6 0.840 IM6 0.320 IM17 0.796 D7 0.823 T7 0.829 IM7 0.441 IM18 0.671 D8 0.661 T8 0.719 IM8 0.521 IM19 0.730 D9 0.758 T9 0.812 IM9 0.717 D10 0.638 T10 0.665 IM10 0.286 T11 0.383 IM11 0.613 External factors Economic, environmental and social factors Items Corr. coff Items Corr. coff Items Corr. coff E1 0.823 I1 0.507 I7 0.709 E2 0.868 I2 0.861 I8 0.667 E3 0.922 I3 0.893 I9 0.653 E4 0.923 I4 0.844 I10 0.508 E5 0.920 I5 0.818 E6 0.820 I6 0.711 All Correlation between items and factors are significant at level 0.05 See Appendix C for a definition of each items. Table 3.3 illustrates that the Cronbach's Alpha values for all factors are higher than 0.70. Additionally, Cronbach's Alpha for the entire study equals to 0.971 which indicates that the entire questionnaire has a high level of consistency, and in turn has a high level of reliability. 47 Table 3.3: Reliability Statistics Cronbach's Alpha No. of Items Factors 0.914 10 Planning and design phase 0.925 11 Tendering phase 0.933 29 Implementation phase 0.942 6 External factors 0.892 10 Economic, environmental and social factors 0.972 56 Total 3.7 Data Analysis The data obtained have been analyzed using SPSS (Statistical Package for Social Sciences) for quantitative analysis. The results are the presented using tables and charts, an illustrated in Chapter Four, in a detailed manner. The quantitative data are analyzed through a different statistical tools as follows: 1. Descriptive statistics (mean, standard deviation, frequencies). 2. One-way analysis of variance (ANOVA), which is used to analyze the differences between the characteristics variables and the questioner dimensions. 3. Sheffe test, which is used to find the source of paired differences between groups. With significance level 5%, a P-value less than 0.05 is considered statistically significant. 48 It is to be noted that the researcher has used the scale in this study was a three point-Likert scale, where three main classes are considered for easier response interpretation. Table 3.4 illustrates the distribution of mean value for each of the corresponding response classes (Abdel Fattah, 2008). Table 3.4: Distribution of mean value for each of the response classes Mean Range Response Class Less than 2.66 Low 2.67- 1.33 Moderate More than 1.33 High 49 Chapter Four Data Analysis and Results 4.1 Chapter overview This chapter presents the findings considering the mixed approach, and analyzing collected data and information. Descriptive and quantitative analyses are conducted through the use of SPSS program. This assists to test research hypotheses. Qualitative analysis of the interviews is conducted using thematic analysis approach. Such analyses will assist in reaching the results of the research. 4.2 Interview analysis Fifteen interviews were conducted with several individuals who have an active role in managing and supervising road projects and have a deep understanding of the life cycle of road projects. These include representatives of including design offices and consultants, financiers of these projects, including Ministry of Local Government, Municipal Development and Lending Fund, and Ministry of Public Works and Housing, some engineers with expertise in the field of roads, and academics. Table 4.1 shows the organizations and job titles for those who were interviewed. 50 Table 4.1 Targeted organizations and list of interviewees No Sector Organization Job position Years of experience 1 Governmental institutions Ministry of Local Government Project manager 20 2 Municipal Development and Lending Fund- MDLF Field supervisor 15 3 Ministry of Public Works and Housing Head of road supervision department 10 4 Contractors Al Amjad Arabian Company Project manager 11 5 Dar Al-bina’ for Trading and General Contracting Company Project manager 21 6 Consultants Projective office Roads specialist 25 7 Al Diyar Consultants Company Project manager 26 8 Universal Group for Engineering & Consulting Senior civil engineer 36 9 Designers Diyar consultant company Director general 39 10 Badrasawi office Designer 10 11 Academics Palestine Polytechnic University Lecturer 17 12 An-Najah National University Assistant professor 12 13 Municipalities Jenin Municipality Civil engineer 10 14 Tulkarm Municipality Project manager 15 15 Nablus Municipality Civil engineer 16 The interviews were conducted with the persons indicated in Table 4.1 to answer research questions in order to reach the desired goals, whether in an oral and a written form. Specific questions were asked while interviewing each of the interviewees, on the general factors that cause cost overrun in road projects, factors that might appear at each phase of the project life cycle that lead to cost overrun, and factors that may limit the phenomenon of overrun costs. In addition, the interviews questions included what procedures might be used to implement the project without any overrun in costs and still have appropriate quality. After interviewing the persons indicated in Table 4.1, the thematic analysis method was used to get to the results required for the research, adopting several steps to reach that goal, as explained in Table 4.2. 51 Table 4.2: Codes, issues discussed and central themes Code Issue(s) discussed Central theme Cost overrun Procedures to reduce overrun cost Phenomenon of cost overrun Percentage of cost overrun Allowed rate of cost overrun Poor planning Follow the project life cycle Factors of cost overrun Design errors Bid defect Wrong expectation Implementation mistakes Type of financing Entities that have a primary role in the project life cycle Stakeholders Supervision Owner Contractor classification Economical factors Maintaining the safety of lives, citizens properties and satisfaction of the population Economic, social, and environmental factors Social factors Environmental factors Methodology Successful job tracking methodology and minimizing cost overrun Work methodology Detailed design Audit for working documents Follow up Efficiency of employment 4.2.1 Theme 1: Phenomenon of cost overrun The opinions of interviewees on the phenomenon of cost overrun in road projects implemented through the municipalities of the West Bank is split into two opinions. The first, is that this phenomenon is acceptable as long as the percentage of the increase is less than 25% of the total original bidding price which, according to the Palestinian Public Procurement System (in page 157, 2014), can be directly accepted by the supervision team if there was justified causes. The second opinion is that this phenomenon is unacceptable regardless of the legal justifications because it reflects a weakness in the management and planning of these projects, and that cost overrun effects the strategic plans of the municipalities, since it reduces the number of future projects that could serve the community. 52 4.2.2 Theme 2: Factors for cost overrun The interviewees identified the factors for cost overruns in road projects, and for each project life cycle phase. They indicated that there is an impact on cost overrun percentage, as follows: The planning and design phase: One main factor for the cost overruns at this phase is not conducting enough background study for the project. Another factor is the absence of a qualified planning department in some municipalities, where in these cases, members of the municipal councils intervene in making planning decisions while not being qualified for this. These factors lead to making wrong decisions that cause a defect in the design of the project, which leads to an increase in the cost of these projects. Therefore, defects and errors will be present in the design, due to the fact that the design is not based on sufficient and accurate information. Further factors for cost overrun in this phase are designs which are not audited before adoption, soil tests not being conducted, or engineering offices designing roads without having enough expertise or qualified engineers. These factors cause mistakes and increase the total cost of the project during the implementation phase. 53 The tendering phase: According to the interviewees, the main factor for the increase in costs at this phase is due to the lack of clarity in the items of the BOQ, and the fact that sometimes there is an inaccurate quantity calculation. The implementation phase: The factors for cost overrun in this phase include the lack of qualified personnel to find and fix design errors, unexpected events and circumstances during this phase, or the lack of coordination with electricity and water providers in cases when the project includes rehabilitation or expansion of existing water and electricity networks. For example, lack of coordination can lead to re-digging and backfilling of already completed work. 4.2.3 Theme 3: Stakeholders The interviewees considered that the project stakeholders had an impact on cost overrun in the road projects at all phases of the life cycle. The financier or the owner of the project may cause cost overrun if they fail to successfully and effectively plan and manage the project. The interviewees also stated that municipality funded projects tend to suffer from cost overrun more than projects funded by foreign donors since projects funded by foreign donors are required to have a highly detailed and accurate plans and be implemented under the supervision of highly qualified team of engineers and according to the international codes. 54 Having a qualified and efficient supervision team is important to prevent or limit cost overrun. Since having such a team means being able to successfully monitor the project activities, identify errors and mistakes during the implementation phase and being able to early make the right decisions to prevent such errors and mistakes, which eventually will help to stay in the limits of the allocated budget and limiting cost overrun in the project. As for the contractor, the classification and technical capabilities of the contractor should not affect the cost and quality of the project since the contractor signs a contract which details the prices of each project activity and the codes and specifications that should be taken into consideration to perform project activities within the required quality. However, if the contractor is technically unqualified and financially struggling, this may cause delay in the project timeline and may cause less adherence to the code and specifications, which will result in disputes between the owner and supervision team with the contractor, and might result in fines on the contractor. According to the opinions of most of the interviewees, the method of selecting the contractor that depends on the lowest price is a common factor for increasing the costs, and that the contractor must be chosen on the basis of technical qualification also, not only bidding price. 55 Finally, having honest, professional communication and transparent relationship between all parties will help to successfully implement the project with better quality and lower cost. 4.2.4 Theme 4: Economic, social, and environmental factors Given the importance of the environmental, economical, and social factors on the cost overrun in road projects, the opinions of the interviewees were taken on the impact level of these three factors. One main example given was pollution resulting from road works. In order to keep the environment healthy and safe, the pollution resulting from project activities must be controlled. However, in many cases contractors fail to estimate the costs of this process, adding to this in some cases the timeline of the project is extended which means additional costs in the process of maintaining a healthy and safe environment. As for the social factor on increasing the costs, for example, complaints from the citizens because of the pollution, as well as the demand to prepare alternative access for the impacted citizens, and disrupting the movement of people in the region, might lead to cost overrun. Failure to satisfy the environmental factor or social demands will lead to the dissatisfaction of the citizens, and consequently the contractor can be fined. 56 As for the economic situation, it has the greatest impact among the three factors, since the financial challenges that might face the government and some municipalities could lead to delays in payments given to the contractor, and eventually leading to the failure to finance the project activities by the contractor, which will result in cost overrun and delay in the timeline of the project. 4.2.5 Theme 5: Work methodology According to the opinions of all interviewees, the reason for the success of any project is due to a clear and professional methodology for the project from its planning phase to the completion. This methodology includes the following:  Successful plans that takes into account all requirements for the nature of the project.  Conducting sufficient soil investigation tests such as in-situ moisture content, specific gravity of soil, particle size distribution, compaction test, and California Bearing Ratio (CBR) test.  Preparing professional and fully detailed design plans to prevent any misunderstanding and disputes about project plans between the owner/supervision team and the contractor.  Preparing clear and comprehensive tender terms for all work activities including accurate values for the quantity and price of each project activity. 57  Auditing the tendering process (financial and technical evaluation of the contractors applying for the project) by a transparent and qualified engineer.  Monitoring work activities by an experienced and appropriately qualified supervision team.  Implementing the project through a technically and financially qualified contractor. 4.3 Descriptive analysis Descriptive analysis was conducted to understand the road project work environment and the degree of cost overrun in road projects in municipalities. The majority of projects conducted by municipalities suffer from cost overrun; approximately 50% of the projects. Table 4.3 shows the total number of road projects for each municipalities, that were implemented during the years (2016-2018), as well as the number and percentage of projects that had experimented cost overrun for each municipalities. 58 Table 4.3: Municipal road projects and share of projects with cost overrun No. Name of municipal Total number of road projects Number of road projects with cost overrun Percentage of road projects with cost overrun (%) Jenin Governorate 1 Qabatiya 3 2 66.67 2 Az Zababida 1 1 200 Tubas Governorate 3 Tubas 6 4 66.67 4 Tammun 4 1 15 5 Aqqaba 2 1 55 Tulkarm Governorate 6 Anabta 3 3 100 7 Zeita 4 1 25 Nablus Governorate 8 Nablus 6 3 50 9 Beit Furik 4 3 75 15 Huwwara 5 4 80 Qalqiliya Governorate 12 Qalqiliya 6 3 50 11 Azzun 2 1 50 Salfit Governorate 13 Salfit 6 3 50 14 Biddya 3 1 33.33 Ramallah and Al Bireh Governorate 15 Ramallah 5 4 80 16 Beirzeit 7 4 57.14 17 Al Mazra’a ash sharqiya 3 2 66.67 Jericho Governorate 18 Jericho 6 2 33.33 29 An Nuwei'ma and 'Ein ad Duyuk al Fauqa 3 2 66.67 Jerusalem Governorate 25 Al Eizariya 2 1 50 Bethlehem Governorate 22 Bethlehem 3 3 100 11 Beit Jala 3 2 66.67 13 Battir 2 1 50 Hebron Governorate 24 Hebron 24 2 8.33 25 Yatta 4 4 100 26 Al Karmil 6 5 83.33 Total number of projects 123 63 51.22 59 4.3.1 Analysis of survey response The number of the collected sample projects questionnaires was 63 for those projects with cost overrun, of which 47 were valid, after assessing the completeness of the answers. 4.4 Projects characteristics Through the questionnaire, the researcher observed certain characteristics of road projects that included four items as shown in Table 4.4, which contain the frequency and percentage for each variable listed according to the survey categories. Table 4.4: Results of analyzing qualitative project characteristics Percentage % Frequency Options Variable 51.1 24 North region of the West Bank Municipality Area 29.8 14 Central region of the West Bank 19.1 9 South region of the West Bank 23.4 11 2016 Project completion date 38.3 18 2017 38.3 18 2018 29.8 14 Self-funded Project financing 61.7 29 Governmental 8.5 4 External 38.3 18 A Municipality Classification 29.8 14 B 31.9 15 C 53.2 25 First class Contractor classification 44.7 21 Second class 2.1 1 Third class Table 4.5 shows that the mean of project cost in the sample is 1,118,959 ILS, while the maximum project cost in this sample is 18,480,000 ILS, while the minimum project cost is 78,000 ILS. Also that the mean of project size in the sample, measured by road length, is 1,463 meter. The maximum project size in this sample is 4,500 meters, while the minimum 60 project size is 300 meters. However, the mean of cost overrun percentage in the sample is 26.9%, while the maximum cost overrun percentage in this sample is 139%, and the minimum cost overrun percentage is 1%. The mean of time overrun percentage is 87.8%. Table 4.5: Results of analyzing quantitative project characteristics Maximum Minimum Std. Deviation Mean Variable 18,480,000 78,000 2670174 1,118,959 Project cost (₪) 4,500 300 1,051 2,463 Project size (m) 139 2 17.4 26.95 The percentage of cost overruns (%) 285 27 51.5 87.76 The percentage of time overruns (%) 4.5 Result of research questions In this section, the researcher displays the result of research questions. 4.5.1 What is the impact level of the factors that are related to the actions and decisions made in the different phases of the project life cycle on the cost overrun of municipal road projects? To answer this question, the researcher calculates the means and standard deviations values for the study sample responses to understand the impact level of factors related to the actions and decisions made in the different phases of the project life cycle that have caused cost overrun in municipal road projects. The results are shown in Table 4.6. 61 Table 4.6: Mean and standard deviation values of the occurrence of the factors in life cycle phases for road projects in municipalities Rank Factors Mean Std. deviation 1 Planning and design phase 1.88 0.58 2 Implementation phase 1.76 0.49 3 Tendering phase 1.69 0.51 Project life cycle 1.77 0.47 The result from Table 4.6 shows that means and standard deviations values of the sample responses of the impact level of factors related to the actions and decisions made in the different phases of the project life cycle that have caused of the cost overrun in municipal road projects is 1.77 and 0.47 respectively, which indicate a moderate impact level of the factors that are related to the actions and decisions made in the different phases of the project life cycle on the cost overrun. Table 4.6 illustrates that the impact level of factors that are related to the planning and design phase has the largest impact level of on cost overrun, followed by the implementation phase and the tendering phase, respectively. The following discusses the main factors that have caused the cost overrun as a result of the actions and decisions made in each phase of the life cycle of municipal road projects. 4.5.1.1 Planning and design phase To determine the main factors that have caused the cost overrun in the planning and design phase of municipal road projects, Table 4.7 illustrates the calculated mean and standard deviation for each item used to evaluate the attitudes of respondents towards factors that have caused the cost overrun in the planning and design phase. The results show that the impact 62 level of the factors related to the planning and design phase of their projects caused a moderate impact level on cost overruns with a mean of 1.88. Table 4.7: Mean and standard deviation values for the study sample responses towards factors related to the planning and design phase Rank Item No. Item Mean Std. dev Effect Level 1 25 The project is located within rough terrain area with high slopes 2.00 0.692 Moderate 2 2 Preparation of design drawings and tender documents was not conducted by a specialized engineering office adequately classified by the Engineers Association for the size and complexity of the project 1.96 0.806 Moderate 3 8 Inaccurate cost forecasting 1.96 0.721 Moderate 4 6 Insufficient soil tests when conducting soil investigations for the design phase 1.91 0.747 Moderate 5 3 The degree of complexity of the project 1.91 0.747 Moderate 6 9 Modifying the original project design after the contractors submitted their financial statements 1.89 0.814 Moderate 7 7 Mistakes in project design 1.85 0.780 Moderate 8 4 The project detailed design drawings were not adequately prepared 1.81 0.798 Moderate 9 5 Use of aerial photos instead of surveying plans prepared by a professional surveying office for preparing design drawings 1.77 0.813 Moderate 10 1 The design engineer was unqualified 1.74 0.820 Moderate All items 1.88 0.58 Moderate Table 4.7 illustrates that all the factors have a moderate impact level. The factor “The project is located within rough terrain area with high slopes” has the highest mean value of 2.00. Then the factor “Preparation of design drawings and tender documents was not conducted by a specialized engineering office adequately classified by the Engineers Association for the size and complexity of the project” and “Inaccurate cost forecasts” has a moderate impact level with a mean value of 1.96. However, the factor 63 “The design engineer was unqualified” have got the lowest mean value of 1.74. Followed by the factor “Use of aerial photos instead of site plans prepared by a professional surveying office for preparing design drawings” which got 1.77. 4.5.1.2 Tendering phase To determine the main factors that have caused the cost overrun in the tendering phase of municipal road projects, Table 4.8 illustrates the calculated mean and standard deviation for each item used to evaluate opinions of respondents towards factors that have caused cost overrun in the tendering phase. The results show that the impact level of the factors related to the tendering phase of their projects caused a moderate impact level of the cost overrun with mean of 1.69. Table 4.8: Mean and standard deviation values for the study sample responses towards factors related to tendering phase Rank Item No. Item Mean Std. deviation Effect Level 1 11 No consideration for the timing of tender release and the starting of the project, especially at the start of the winter season 2.02 0.675 Moderate 2 1 Awarding the project to the bidder with the lowest price 2.00 0.780 Moderate 3 2 Unreasonable project time frame 1.85 0.751 Moderate 4 8 Neglecting the technical evaluation of contractors during selection phase 1.77 0.729 Moderate 5 25 Assigned project timeframe by donor is insufficient 1.72 0.615 Moderate 6 6 The contract terms are vague and it was not explained sufficiently 1.60 0.681 Low 7 4 Client delayed in awarding notice to proceed 1.60 0.712 Low 64 8 7 Conflict in the contract documents 1.55 0.746 Low 9 5 Scope of work unclear 1.55 0.686 Low 25 3 Delay in project commencement by the client 1.51 0.655 Low 22 9 The contractor was not classified by the National Contractors Classification Committee 1.40 0.648