Abstract:
An accurate budget is important for all construction stakeholders, but it is difficult to
maintain the budget within the initial estimation. The contractors’ financial stability
tends to complete the projects within the budgeted cost without destructing the
contractors’ cash flow. The major impact for the contractors’ budgeted cost overrun in
construction projects has happened with the material and labour costs. Therefore, it is
necessary to find the contribution of material cost and labour cost to the contractors’
budgeted cost in construction projects to minimise contractors’ budgeted cost overruns.
This research aims to analyse the impact of material and labour costs on contractors'
budgeted costs in building construction projects, Sri Lanka. Hence, three-building
construction projects were selected, and documentary review was the main data
collection tool to find the required data. Sensitivity Index (SI) in Sensitivity Analysis was
adopted for data analysis. As research outcomes, the average contribution of material
cost to the cost of civil work was assessed as 60%, whereas the cost of labour was
indicated as 35%. Moreover, plastering, tiling and painting works were identified as the
main civil work categories that can highly influence the material and labour cost
overruns in Sri Lankan building construction projects and ultimately would impact the
contractors’ budgeted cost. Therefore, contractors should pay special attention to the
budgeted cost of these work categories when preparing the initial budget
