Impact of Exceptional Events on Cost Performance of Highway Projects in Kenya:

Abstract

The implications of cost overruns in road infrastructure projects are wide ranging. The most notable effect being the strain on the resources due to additional costs over and above the budgeted costs as well as reduced benefits to the intended users. In some cases, these costs are passed on to the road users. The problem in this study is that highway construction projects in Kenya experience huge cost overruns. However, the contribution of exceptional events to cost performance of highways projects is not well understood. Further, the current standard forms of contract have not been clear on how to address the aftermath of exceptional events considering the uncertainty of the occurrence. Therefore, this study was conducted to address these concerns. The main objective of the study was to assess the impact of exceptional events on the cost performance of highway projects in Kenya with a case study of Kenya National Highway Authority (KeNHA). The study was guided by specific objectives which include: to determine the effect of global pandemics on the cost performance of highway projects in Kenya; to determine the influence of economic recession on cost performance of highway projects in Kenya; to determine the effect of exceptional climatic conditions on the cost performance of highway projects in Kenya; to determine influence of mitigation measures on the cost performance of highway projects in Kenya. The research design adopted was both qualitative and quantitative. The target population was active KeNHA projects within Nairobi Metropolitan area where 14 projects were considered. From the target population, a sample size of 42 respondents was selected. The respondents were drawn from three levels of workmanship in the projects which included a project manager, project contractor and site engineers. In this study, emphasis was given to both primary data and secondary sources. The primary data was collected using structured questionnaires. Secondary data was sourced from journals, published reports and articles. Data collected was analysed with the aid of Statistical Package for Social Science (SPSS) Version 20. The raw data was edited and then entered in the SPSS computer program by assigning symbols in a process referred to as coding. Thereafter, the data was analysed with the output being presented in form of frequencies, descriptive charts and graphs. The findings showed that exceptional events had a significant effect on cost of infrastructure projects in Kenya. The correlation and regression analysis indicated that global pandemic, economic recession, climatic conditions and mitigating factors had significant effect on cost of projects. The study concluded that all the variables were relevant in explaining variation in cost of projects. From the regression model it was noted that the correlation of variables was explained by R2 of 90.3% and adjusted R2 of 90.0%. This means that the exceptional events would cause the variation of cost performance of the project by over 90%. This study therefore recommends the improvement of this model by including more variables that are relevant in explaining the variation. This study also recommends further research to include studies in other government departments on other factors other than exceptional events that affect cost performance of projects.