Identifying the Causes of Hidden Costs in Construction Projects: A Qualitative Study from the Perspective of Project Managers

Abstract

Hidden costs in construction projects represent a critical yet underexplored dimension of cost management. Unlike visible cost overruns, hidden costs are not directly traceable to specific budget lines, making them difficult to identify and control. This study aims to identify and classify the causes of hidden costs in construction projects from the perspective of project managers. Adopting a qualitative exploratory approach, semi-structured interviews were conducted with 13 experienced project managers, site managers, and project control experts in Tonekabon, Iran. Through thematic analysis, 72 initial codes were extracted and organized into 18 sub-themes and 6 main themes. The findings reveal that hidden costs emerge from six interrelated domains: managerial factors (weak planning and control, delayed decision-making, poor stakeholder coordination), technical and design factors (incomplete drawings, design changes, inaccurate estimation), execution-related factors (rework, poor quality, reduced productivity), financial factors (payment delays, increased indirect costs, weak cost control), contractual factors (ambiguities, changes and claims, disputes), and resource and supply factors (supply disruptions, resource waste, price volatility). The study demonstrates that hidden costs are not caused by isolated factors but rather emerge through the interaction and transfer of effects across multiple project phases. The paper concludes with practical recommendations for project managers, including implementing cause-tracking cost control systems, strengthening pre-construction coordination, and formalizing change management processes.