An investigation into factors that affect the accuracy of cost estimates for bulldings : case study of private residential and office projects in the city of Nairobi

Abstract

The purpose of all pre-tender estimates is to provide an indication of the probable cost of the new construction. Decision-making at the early stages of a project, initial appropriations and economic feasibility studies are based upon the preliminary or pre-design cost estimates. It is apparent that predicting costs accurately is a problem in construction industry especially at tender stage. The methods used to predict project building costs include the unit method, floor area method, approximate quantities, elemental analysis and pricing of bills of quantities before tender. This research sought to determine the magnitude of the influence of cost estimating methods used in the prediction of construction costs. It also identifies other factors that cause inaccuracy and their magnitude of this effect on overall accuracy. The study hypothesis is that cost estimates do not accurately project pre-design stage costs used as a guide for investment decision making process. This work adopts a survey research design and concentrates on private residential and office buildings in city of Nairobi. The population of which is the number of projects handled by professional quantity surveying firms. The resultant data is then analysed by the SPSS software to derive correlation, regression and resultant statistical parameters. This research examined the problem of the quality of conceptual estimating. It assessed the usage of historical and empirical information which had been used in the pre-tender cost estimates, and ascertained whether it is possible to get an 'appropriate initial assessment of the expected accuracy and reliability of a cost estimate. This is then compared with successful bidder or the lowest tender figure awarded the contract. The findings of this research is that pre-design cost estimates as currently used in the industry do not significantly project the actual construction costs and this negates their reliance as a guide for investment decision making process. The research recommends that a more elaborate database be developed and other building parameters such as building type, and project scope, which the study found significant should be incorporated. The study concluded that the building type and scope/size of projects arc the major determinants of cost estimating functions. The study recommends that the quantity surveying critical on the type and scope size of the office and residential buildings when doing their cost estimations