Time and Cost Overruns in Power Projects in Kenya: A Case Study of Kenya Electricity Generating Company Limited

Abstract

Time and cost overruns in infrastructure development projects during implementation continue to pose great challenges to developing
countries. Research has found that many factors impede the successful completion of projects on time, within budget and of good quality. This study sought to investigate the factors that significantly contributed to time and cost overruns in power projects implemented by KenGen, to evaluate their relative ranking and to quantify their impacts. The study was based on a questionnaire survey conducted with persons drawn from contractors, consultants and KenGen, who are involved in the implementation of one or more of the four projects in the study. Analysis of 33 significant variables from the survey revealed eight underlying factors contributing to overruns, namely, contractors’ inability, improper project preparation, resource planning, interpretation of requirements, definition of the work involved, timeliness, government bureaucracy and risk allocation. As regards ranking, government bureaucracy topped the list while risk allocation was shown to have been the least significant. There was also a perception that these factors would recur in KenGen’s future projects in a similar implementation environment. By closely relating the factors to the variables, it was observed that they resulted in overruns in the projects by varying magnitudes. The projects had time overruns ranging from –4.6% to 53.4 %, while the cost overruns varied between 9.4% and 29%. These revelations should enable planners to take stock of past performance and incorporate the lessons learnt in future project planning and implementation. Because the variables and underlying factors are likely to recur in future projects, their occurrence needs to be anticipated and appropriate strategies and mechanisms designed in order to overcome or minimize their potential impact. Recommendations are given to assist the Government of Kenya (GoK) and KenGen on how project management could be improved when future projects are planned and implemented. The findings of this paper can be used as a reference by project owners, managers and agencies in developing their own project management strategies.