A System Thinking Approach on How to Reduce Cost Overrun in the Construction of Industrial Buildings

Asia-Pasific Region System Dynamics Conference of the System Dynamics Society

14 Pages Posted: 3 Jun 2019

See all articles by Davied Insja

Davied Insja

Tarumanagara University

Lukas B. Sihombing

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering

Date Written: February 22, 2017

Abstract

It is obvious that the performance of construction competitiveness hinges on project delivery cost. Many approaches have been used to reduce the effect of the potential factors of cost overrun on project delivery cost. In this study, the system approach has been employed and validated. An inferential statistical analysis was conducted to analyze seventy-four factors during the primary study. Then they were classified into thirteen risk events and sixty-one risk sources. Utilizing the Delphi method, thirteen risk events became ten risk events and thirty-six risk sources. Furthermore, with the factor analysis method, thirteen risk events became nine risk events, and twenty-five risk
sources. The holistic role of professionals in the construction of industrial buildings was illustrated with the aid of a causal loop analysis, showing a cause and effect relationship. Therefore, based on the findings, twenty-five risk sources and nine risk events could reduce cost overrun in the construction of industrial buildings. The intervention category, which has the most influence on the reduction of cost overrun, occurs during the planning stage to take into account material contingency.

Keywords: system thinking, risk, construction of industrial buildings

JEL Classification: L21, L52, L74

Suggested Citation

Insja, Davied and Sihombing, Lukas B., A System Thinking Approach on How to Reduce Cost Overrun in the Construction of Industrial Buildings (February 22, 2017). Asia-Pasific Region System Dynamics Conference of the System Dynamics Society, Available at SSRN: https://ssrn.com/abstract=3386461

Davied Insja

Tarumanagara University ( email )

Jl. Letjen S. Parman No.1
Jl. Tanjung Duren Utara No. 1
Jakarta, IN DKI Jakarta 11470
Indonesia

Lukas B. Sihombing (Contact Author)

University of Indonesia (UI) - Faculty of Economic, University of Indonesia (UI) - Department of Civil Engineering ( email )

Kampus Baru
Depok, West Java 16424
Indonesia

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