Assessment Of The Factors Mitigating The Effective Preparation Of Cost Estimate At The Design Stage

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Assessment Of The Factors Mitigating The Effective Preparation Of Cost Estimate At The Design Stage


Abstract


This research assesses the factors mitigating the effective preparation of cost estimates at the design stage Accurate cost estimates are crucial to the effective realization of construction projects This research is aimed at examining the factors affecting accuracy of pre-lender cost estimate in Abuja, with a view to improving the predictive ability of clients, consultants, and contractors for better estimating. 84 questionnaires were sent out, 28 to con tractors, 28 to clients, and 28 were sent to the consultant firms respectively. 25 questionnaires were received from each of the respondent categories, representing 89% using the simple random sampling technique.

The collected data were analyzed using the Relative importance Index. The study found out that a statistically significant relationship existed between the clients, consultants, and contractor on the essential factors affecting accuracy of pre-tender cost estimate. It was concluded that: Experience and skill level of the consultants ranked with overall Ru of 0.9, project teams experience on the construction type 0.87, clear and detail drawings and specification, completeness of cost information, accuracy and reliability of cost information are the most significant factors affecting accuracy of pre-tender cost estimate were other paramount factors.

The most appropriate cost estimating method at the design stage according to the respondents ranking is subjective estimating with Ru of 0.78 and parametric estimating 0.46 and synthetic estimating 0.52. It was recommended that Clients should always engage the services of skilled quantity surveyors to undertake the consultancy services in cost estimating process.


Chapter One


Introduction

1.1 Background of the Study

Teachers’ Estimating is one of the most important functions of a successful project. Accurate estimates optimise good contracting as well as the process of calculating and analysing all the costs that will enter into a particular job to arrive at a set total. In nearly all contract types, the preparation of a realistic cost estimate is a necessary part of any construction project. Estimating is the process of calculated guessing by looking into the future costs of a project before work on it has begun. It occurs before construction has started, and even before tendering for the construction project starts. The estimator or the quantity surveyor is responsible for these estimates which serve to ensure the project will have a successful financial outcome. These estimates also influence the decisions made for budgeting and assist in clients’ decisions for contractor selection. Construction estimate is the amount envisaged to finish a construction work. It is the probable amount that is computed to complete a construction work. It is the prediction of the amount of a project based on available data at the time of prediction. Cost estimate was defined by business dictionary (2013) as an “approximation of the probable cost of a product, program, or project, computed on the basis of available information. So the more information is provided on a project, the more the estimate tends to accuracy. It is important in many ways. According to business dictionary (2013), “four common types of cost estimates are: Planning estimate is a rough approximation of cost within a reasonable range of values, prepared for information purposes only, budget estimate an approximation based on well-defined ground rules, firm estimate a figure based on cost data that is renewable enough for entering into a binding concrete, not-to- exceed/Not-less-than estimate the maximum or minimum amount required to accomplish a given task, based on firm cost estimate. There are more benefits in estimating the cost of a potential construction Job that is not estimating before commencement. Cost estimate, to a client, is necessary in cash flow management. To an investor, it is necessary to support evaluation of project feasibility and to assess the scope of work. To a consultant, construction cost estimate can serve as a basis for job performance measurement (Baccarini 2004), in contract or selection, as an exhibit in construction contract disagreement, and in post work evaluation of completed jobs (work audit), and to a contractor, it is the determinant of job procurement (in bidding for construction jobs).


1.2 Statement of the Problem

The demand for more construction of all type coupled with tight monetary supply has provided the construction industry with, a big challenge on how to estimate the cost of construction project.

The problem of late involvement of quantity surveyor, inadequate details in the contract document, poor communication between the design team, inaccurate drawing and specification, inadequate data, unavailability of current rates of construction resources, inflation and charming in technology, finally consequent loss of project has brought about loss of client confidence in consultants, added investment risk, inability to deliver value to clients and disinvestment in the construction industry. As a result of this, it is found necessary to create solution to such problems through this research as to improve on the quality of the factors that affect the preparation of the cost estimate at the design stage.


1.3 Objective of the Study

This study was conducted with the following objectives:

  1. To assess the factors mitigating against the effective preparation of cost estimate at the design stage.
  2. To explore and review factors that mitigates the effective preparation of cost estimate at the design stage.
  3. To recommend solutions to increase the effective preparation of cost estimate at the design stage.

1.4 Research Hypotheses

Hypotheses One
  • Ho: There is a statistically significant relationship existing between the clients, consultants, and contractor on the essential factors affecting accuracy of pre-tender cost estimate.
  • Hi: There is a statistically significant relationship existing between the clients, consultants, and contractor on the essential factors affecting accuracy of pre-tender cost estimate.
Hypotheses Two
  • Ho: Experience and skill level of the consultants ranked with overall project teams experience on the construction type, clear and detail drawings and specification, completeness of cost information, accuracy and reliability of cost information are the most significant factors affecting accuracy of pre-tender cost estimate.
  • Hi: Experience and skill level of the consultants ranked with overall project teams experience on the construction type, clear and detail drawings and specification, completeness of cost information, accuracy and reliability of cost information are not the most significant factors affecting accuracy of pre-tender cost estimate.

1.5 Significance of the Study

The significance of this research is to promote good estimating to sustained profit as errors and carelessness can be costly in terms of loss of profit and project abandonment,


1.6 Scope and Limitation of the Study

This research focused on the cost estimate at the design stage of public building project within Federal Capital Territory Abuja. In this process of this research project, there were various forms of setbacks which had a great effect on the process of this research project. One of such set back is the inability to get the appropriate and reliable information and it book found from librarian visited, also the high cost of transportation to the various information centers visited and place where the questionnaire where given out, as well the reluctance shown by these whom the questionnaires were given to.

The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


1.7 Definition of Terms

Cost Estimation:

A cost estimate is the approximation of the cost of a program, project, or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values.

Project:

A piece of planned work or activity that is completed over a period of time and intended to achieve a particular aim.


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows:

  1. Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  2. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  3. Chapter three deals on the research design and methodology adopted in the study.
  4. Chapter four concentrate on the data collection and analysis and presentation of finding.
  5. Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was the assessment of the factors mitigating the effective preparation of cost estimate.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in the assessment of the factors mitigating the effective preparation of cost estimate.


5.2 Summary

This study was undertaken to the assessment of the factors mitigating the effective preparation of cost estimate. The study opened with chapter one where the statement of the problem was clearly defined. The study objectives and research hypotheses were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analyzed and presented the data collected in tables and the hypotheses were tested using the chi square while the fifth chapter gives the study summary and conclusion.


5.3 Conclusion and Recommendations

Effective cost estimate is a topic with high priority. In this research work we have found out that there is a statistically significant relationship existing between the clients, consultants, and contractor on the essential factors affecting accuracy of pre-tender cost estimate and that the experience and skill level of the consultants ranked with overall project teams experience on the construction type, clear and detail drawings and specification, completeness of cost information, accuracy and reliability of cost information are the most significant factors affecting accuracy of pre-tender cost estimates.

And in conclusion clients should always engage the services of skilled quantity surveyors to undertake the consultancy services in cost estimating process.


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Frequently Asked Questions


What factors affect the cost estimate of a project?

At early stages of the project, the cost estimate is subject to changes driven by the project’s design, scope and requirements. Project leadership needs to participate in budget and stage gate approval decisions independently from, but with consideration to the cost estimate.

Who should be involved in the cost estimation process?

All individuals involved in the cost estimating process must have clear responsibilities and the accuracy of the cost estimate should be monitored as a key performance metric for the project. Projects must have the right people involved in the cost estimation process at the right time to deliver a robust cost estimate.

What is the recommended cost breakdown for cost assessments?

The recommended cost breakdown is consistent with the IPA Best Practice Benchmarking guidance document. Building a credible and robust cost estimate is reliant on a good foundation of evidence supported by high quality data. The less robust the evidence and data available, the more uncertainty a cost estimate will have.

What are the different roles and functions in cost estimating?

Roles and functions can be broadly split into three categories: those who produce the cost estimate, those who assure the cost estimate and those who own the cost estimate: Produce – Project design, delivery and cost estimating teams produce an effective cost estimate by working in collaboration. 

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