Mitigating Owner-Related Cost Overrun Risks in Construction Projects: A Case Study of the Libyan Construction Projects Industry

Construction cost overruns remain a persistent challenge that negatively affects project financial performance, resource utilisation, and stakeholder confidence. In developing economies such as Libya, major contributors to cost-overrun risk often include owner-related managerial, procurement, and governance deficiencies. This preliminary study investigates the critical owner-related factors associated with construction cost overruns in the Libyan construction industry and identifies measures that may support improved cost-control performance.

A structured questionnaire was developed following an extensive review of the construction management and project-risk literature. The study identified and incorporated thirty-six owner-related cost-overrun factors into the survey instrument. The questionnaire targeted key stakeholders, including project owners, contractors, and consultants. The study paid particular attention to major construction companies and government-approved organisations involved in the Libyan construction sector. Of the 55 questionnaires distributed, 42 valid responses were received, representing a response rate of 76.4%. Data were analysed using the Statistical Package for the Social Sciences (SPSS) software. Factors were ranked using arithmetic mean scores, while standard deviation values were employed as a secondary criterion to differentiate factors with identical mean scores and assess the consistency of respondents' perceptions.

The findings indicate that respondents perceived limited owner experience in project planning and governance, ineffective selection of consultants and contractors, frequent design modifications, unrealistic schedule compression, owner-initiated scope changes, and changes to technical specifications during project execution as the most important owner-related contributors to cost overruns. Other highly ranked factors included procurement practices, contractor-evaluation processes, owner intervention during project implementation, and reliance on lowest-bid tendering approaches. The results also highlight perceived challenges relating to transparency, governance, and decision-making processes.

Given the relatively small sample size, the findings should be interpreted as context-specific evidence reflecting the perceptions of surveyed professionals rather than as fully representative of the entire Libyan construction industry. Nevertheless, this preliminary study provides valuable empirical evidence from an under-researched context and suggests that improvements in owner competencies, procurement practices, and risk-management processes may help mitigate cost-overrun risks in Libyan construction projects