The impact of change orders on contractor’s cash flow in Jordanian building projects

Dissertant

Murad, Zayd Majid

Thesis advisor

Jrew, Basim
Qasim, al-Tayyib

Comitee Members

Malkawi, Bassam
Hiyasat, Muhammad A. S.

University

Isra University

Faculty

Faculty of Engineering

Department

Department of Civil Engineering

University Country

Jordan

Degree

Master

Degree Date

2015

English Abstract

Most construction projects in Jordan suffer from cost overruns and time delays due to several factors, chief among these factors is change orders, which play a significant relevant vital role.

Due to cost overruns, negative cash flows occur and consequently affect the project cash flow.

Change orders in construction projects are very common and likely to occur from different sources, by various causes, and at any stage of the project.

These facts underline the urgent need for decision tools to evaluate the possible impact of change orders on a contractor’s cash flow proactively.

This research aims to develop a classification impact index model that is based on the possible impact of change orders on a contractor’s cash flow mainly in building projects in Jordan.

This research has identified and categorized the most important factors and sub-factors that have direct or indirect impact on a project’s cash flow.

Moreover, this research developed a new methodology to analyze, evaluate and quantify the possible impact of change orders on project cash flow.

The Analytic Hierarchy Process (AHP), as an expert based system, integrated with the Multi Attribute Utility Theory (MAUT), were used in this research to develop the classification impact index model due to the lack of needed data, particularly since most of these data was not found at most of the contacted construction companies.

And if found it was in different formats that are difficult to use.

Project financing schemes, contract type, and the characteristics and nature of change order are the main factors identified with the relative weights 44%, 30%, and 26% respectively.

In this research, MAUT was used to provide the utility values for the different attributes related to the identified factors and sub-factors that affect change orders and their impact on project cash flow.

In this research, a new methodology was developed to evaluate and quantify the impact of change orders on project cash flow from a contractor’s perspective.

This methodology is based on integrating project profitability indicators with earned value analysis.

This integration shows the possible impact in the early stages, which gives decision makers a proactive tool to reserve their right to make claims or negotiate a change order based on a clear vision regarding the possible impact of such a change order on specific duration of the project and also on the project as a whole.

In this research, the developed classification model and the new methodology were implemented on a real case study to test and investigate their significance, and validated by conducting face- to- face interviews with contractors and experienced construction practitioners in the industry.

After presenting the models and explaining how they work, the experts were asked to evaluate the applicability and validation of the developed model and methodology.

The results obtained from the experts demonstrated a high level of support for the developed model and the new methodology.

Main Subjects

Civil Engineering

Topics

• Buildings
• Jordan
• Economic aspects

No. of Pages

134

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-651543