The Cost Reduction Technique In Construction Construction Essay

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Many construction projects in Malaysia have experienced delay in construction. Failure to complete a project either by the original planned time or budget, or both, ultimately results in project delay. The time and cost for performance of a project are usually the essence of employer and the contractor. This is because late completion of projects can deny employers the benefits or profits of the project and may also expose them to serious financial and economic risks such as high interest rates and loss of market opportunities. On the contractor's side, delay in completion entails additional cost such as extended home office and site office overheads, labour and equipment standby costs and so on. This may results in cost overrun. Thus, it is important to predict and identify problems in the early stages of construction and diagnose the main causes and implement the most appropriate and economical solutions to prevent further negative impacts of delay and cost overrun. The cost reduction technique is one of the methods that can be implemented in construction industries nowadays.


In construction, delay could be defined as the time overrun either beyond completion date specified in a contract, or beyond the date that the parties agreed upon for delivery of a project. It is a project slipping over its planned schedule and is considered as common problem in construction projects. To the owner, delay means loss of revenue through lack of production facilities and rent-able space or a dependence on present facilities. In some cases, to the contractor, delay means higher overhead costs because of longer work period, higher material costs through inflation and due to labor cost increases.

The problem of previous delays in the previous construction industry is a global phenomenon and the previous construction industry in Malaysia is no exception. Completing projects on time is an indicator of efficiency, but the construction process is subject to many variables and unpredictable factors, which result from many sources. These sources include the performance of parties, resources availability, environmental conditions, involvement of other parties, and contractual relations. However, it is rarely happen that a project is completed within the specified time.

Due to a lot of problem about delay and cost overrun in construction industry it will affect the total cost for the construction. So that the cost reduction technique can be apply into the construction industry. Certain delay causes by material or whatever is it so it can be reduce it. This will decrease the total cost of the construction.


The construction industry in Malaysia is the most important sector that gives income to our country. Nowadays, many projects are tending to delay and cost overrun while doing the project. This is because of many factors come from different parties such as contractor, client, architect and other. For instance increasing in price material, a lot of variations order and so on. This will affect the cost of the project. Therefore some technique must be applied to reduce the cost. This paper aim is to find out the best stage to using cost reduction technique in construction industry in Malaysia.


The objectives of this paper are as follows:

To identify the stage that can be apply the cost reduction technique in construction.

To identify the types of cost reduction technique that can be apply at every stage in construction industry.

To identify the advantages and disadvantages of using the cost reduction technique in construction industry.


How many stages have in construction?

What is the cost reduction?

What are the cost reduction techniques in construction?

What are the types of cost reduction?

Why we need cost reduction technique in construction?

How cost reduction technique will affect the construction industry?

What are the advantages and disadvantages of the cost reduction?

What are the barriers to the cost reduction in development of construction industry?


The scope of this paper involves the research about the two stages in construction only which is tendering stage and execution stage. This paper also is only focusing on the cost reduction technique in local and international construction.


Several research methods are chosen to obtain data and achieve the objectives outlined. This implemented method is divided into 4 stages as a guideline in collecting the related information.

1.6.1 Literature Review

The literature review are conducted to obtain information from secondary sources such as books reading, conference papers, newspapers, encyclopedia, case law, standard contract forms, journal articles and pamphlet. Websites are used to obtain information in getting primary sources. The literature reviews are conducted in this research because this method helped to explore the concepts of the research topics and gather the appropriate and current information needed. Problems and questions that arised will be listed after the research is conducted and will be resolved through other follow-ups methods.

1.6.2 Questionnaire

Questionnaires are conducted to obtain information on primary sources. Questionnaire forms are distributed to various respondents in getting written feedbacks to achieve the objectives of this research. The printed questionnaire forms will be distributed to the respondents in all over the country. Information from the questionnaire that is collected back is then being analyzed.

1.6.3 Interviews

Interviews are carried out on the contractors and representatives from several construction companies. From the interviews, explanations, opinions, views and actual experiences can be obtained from the respondents. The interviews are conducted to determine the appropriate techniques that can be used to reduce the cost in construction projects.

1.6.4 Data Analysis

The information obtained from interviews and questionnaire forms will be analyzed so that they can be combined into simpler forms. The information collected will be analyzed using statistical methods. The information will be displayed and presented in tables, charts and description.


Delay and cost overrun problem is the thorny question in construction industry not only in Malaysia but also all over the world. The cause of delay and cost overrun in construction stage arises from countless factors. The problem cannot be solved thoroughly, if these factors are not identified and restricted or eliminated. However, the restriction of time and finance doesn't allow project manager to solve all influencing factors, so it is necessary to identify the critical factors.

This study developed the framework which is very practical to find out the stage that always causing the serious delay and cost overrun problems in construction building stage. The impact level of these factors on construction duration can be different from this project to another project, but the method to evaluate them is similar. So this approach can be applied to almost construction building.


1.8.1 Chapter 1 - Introduction

The first chapter describes the introduction of the research. The discussions are related to the issues and the facts of the research problems. This chapter also describes the goals, research objectives, research questions, scope, methodology, the importance of the research and summary of the thesis work.

1.8.2 Chapter 2 - Literature Review

The second chapter focuses on the delay and cost overrun. Among that are the meaning of the delay and cost overrun in the construction industries. In addition, it also states the reasons for the delay and cost overrun and the effects on the construction industries. The scope of this chapter describes the specific discussions of the research needs.

1.8.3 Chapter 3 - Literature Review

The third chapter focuses on the theories and concepts related to the stages in the construction industries. This chapter will describe several techniques that can be used to make reduction of the cost. It will be describe in stages according to the stated stages classification. The scope of this chapter describes the specific discussion of the research including the advantages of using the cost reduction techniques.

1.8.4 Chapter 4 - Methodology

Chapter four is the methodology stage that is the data collection methods. It covers the design of the questionnaires, interviews and observation methods that are described in this chapter. This chapter also includes method of interviews, management when the questionnaires were carried out and methodology for setting the sample size of the respondents. Justification for the choice of location of the study area is also described in this chapter. Flow chart for the methodology of the study is also included here.

1.8.5 Chapter 5 - Analysis of Data

Chapter five is the most important part in this research. It explain stages of collecting information, analyzing and findings from the data. An explanation of the study can be proved and are used to determine whether the goals and objectives are achieved. The research can be proved with the aid of observations conducted while doing the study. For instances, the photos taken while the research is carried out can help the readers a lot in explaining the research itself. The data processing is carried out with the aid of the computers. The data will be analyzed to get the findings of the research.

1.8.6 Chapter 6 - Conclusion and Recommendation

The last chapter discusses the findings of the research. It covers the problems and potentials faced during the research. The formulation of the findings is derived from the data analysis, recommendations and conclusions.