Factors Affecting Construction Project Cost in Post Covid-19 Scenario

Abstract

The COVID-19 outbreak has indeed affected the construction sector in one way or the other across the world and this has also caused a number of issues that caused a transformation in how projects are structured and managed as well as costs. This research aims to analyze the factors that contributed to the increase in construction costs that were noted after the COVID pandemic, accompanied by several others where the conflict increased building costs. Through extensive literature review, industry reports and empirical data, this study brings out the key factors which have caused the surge in construction prices. These factors include Timeliness and relevance, Economic repercussions, Management of risk and adaptation, and Innovation in technology. Further, the research also looks into how these increases in construction costs have affected the various stakeholders in the construction ecosystem. These stakeholders include government agencies, investors, developers, and contractors. In addition, the study provides insights into the long-term implications of the post-COVID construction cost increase on project planning, risk management, sustainability measures, and the sector\'s resilience. Finally, these research findings contribute to a more in-depth understanding of the intricate dynamics defining the post-pandemic construction industry. Furthermore, it offers recommendations that may be put into practice to successfully navigate the ever-changing cost landscape in a complex economic situation.

Introduction

• The construction industry is complex and cost-intensive, where small mistakes can result in major financial losses.

• Cost estimation is a critical pre-construction activity.

• COVID-19 severely disrupted this sector, causing supply chain issues, labor shortages, and changes in project timelines.

2. COVID-19 Effects on Construction

• Construction projects were heavily affected by lockdowns and policy changes.

• Traditional cost estimation methods became unreliable due to volatile market conditions and unpredictable project schedules.

• The pandemic exposed the need for collaborative, adaptive, and technology-driven cost assessment approaches.

3. Research Objective

• To analyze how COVID-19 has transformed construction cost estimation practices.

• To identify new challenges and propose more resilient and flexible methodologies for future cost estimation.

• Research focuses on four key areas:

  • Timeliness & Relevance

  • Economic Repercussions

  • Risk Management & Adaptation

  • Innovation in Technology

4. Methodology

• A mixed-methods approach was used, including:

  • Literature review

  • Surveys (using 24 factors grouped into 4 categories)

  • Statistical analysis using SPSS

  • Case studies

Survey Design:

• 24 key factors identified.

• Each factor rated on a 5-point Likert scale.

• Data collected from 223 construction professionals.

• Results compared pre- and post-COVID.

5. Key Findings

A. Timeliness & Relevance (TR):

• Mean scores: 2.39–2.57 → Suggests low agreement on efficient response to delays and health protocols.

• Pandemic delayed projects and raised costs due to new safety regulations and supply chain issues.

B. Economic Repercussions (ER):

• Mean scores: 2.48–2.59

• Highlighted increased material costs, labor shortages, and financing challenges.

C. Risk Management & Adaptation (MRA):

• Mean scores: 2.46–2.56

• Indicated lack of proactive risk strategies and weak adaptation to cost-related disruptions.

D. Innovation in Technology (IIT):

• Mean scores: 2.40–2.61

• Responses suggest limited effectiveness of tools like BIM, automation, and virtual collaboration in improving cost efficiency.

Conclusion

Through this study, the objective that was sought was to determine and analyze particular aspects that have led to a rise in costs of construction in the pandemic era. The COVID-19 pandemic has greatly affected many businesses across different sectors. Changes in logistics, manpower availability, overall budget, and even delays added to the problems within the construction industry. This study aimed to determine the underlying reasons for excessive expansion in the project finances, which included excessive project timelines, increased safety measures, material scarcity owing to supply chain issues, increased project wages as a result of lack of manpower, and new regulations alongside the changes in economic health. These conclusions were drawn through a quantitative survey alongside qualitative interview with industry experts and key informants. The results of the analysis suggest that there are a number of issues which have both directly and indirectly affected cost containment within construction projects. There is evidence that most companies have not performed cost containment properly. For example, regulations regarding the use of new innovative safety instruments have been overly strict. This, however, did manage to stabilize costs along with government spending, investment in advanced digital project management, and flexible employment policies. The latter, on the whole, allowed for innovative approaches to cost control in the industry.

References

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Copyright

Copyright © 2025 Arsalan Fayaz, Muhammad Tariq Bashir, Abdul Wahab. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.