Investigating the Factors Contributing to Construction Cost Overruns during COVID-19

The global crisis precipitated by the novel coronavirus brought forth considerable psychological distress and financial strife, notwithstanding governmental economic relief. This situation highlighted the degree of dependency among international markets by demonstrating the ripple effects from disturbances in one industry to another. Within this context, the construction sector endured significant hardship, facing operational disruptions, health and safety concerns, project deferrals, cancellations, and financial discrepancies. While extensive research has been conducted on the repercussions of the pandemic on the construction sector, the specific area of cost escalation has been less explored. This research endeavors to bridge this knowledge gap by exploring the contributory factors to cost escalations within the construction domain during the COVID-19 health event. A methodical inquiry was initiated through an online questionnaire targeting construction engineers and management personnel across the United States. From this, 124 complete responses were harnessed to construct an analytical model. The results from this analysis indicated that increased labor expenses, inflationary pressures, a hike in material costs, intensified demands from vendors and producers, the financial burdens of implementing COVID-19 testing, and the presence of medical staff on-site, as well as the additional expenditure on personal protective equipment and the ambiguity in determining COVID-19 as an allowable or non-allowable delay within contracts, were pivotal in causing budget overruns in construction projects during the pandemic. The outcomes of this investigation offer critical knowledge for decision-makers and project overseers within the construction field, delivering a clearer understanding and preparation for efficiently navigating the complexities introduced by a pandemic.