A Survey of Cost Estimating Practices of Construction Contractors
Chapter One
Aim and Objectives of the study
The aim of the study is survey of cost estimating practices of construction contractors.
The objectives of the study are as follows:
- To identify the techniques used in cost estimating by the construction contractors.
- To identify the causes of inaccuracy in construction contractors cost estimates.
- To determine cost estimating risks influencing construction project estimates.
Chapter Two
Literature Review
Conceptual Framework
The Nigerian Construction Industry
In Nigeria, like most developing countries, the construction industry plays a dominant role in the economic activities of the country. According to Olowo – Okere (1988) the construction industry accounts for about 60 percent of the Nation’s capital investment and 30 percent of the Gross Domestic Product (G.D.P). Furthermore, the construction industry is said to have contributed about half of the total stock of fixed capital investment in the Nigeria economy (Olaloku, 1987).The industry also generates employment opportunities which place it second to the Government in the employment of labour (Husseini, 1991). When the construction industry was booming in the 1970’s, the country’s economy experienced similar effects during that period. However, from early to mid 1980’s, the industry experienced a jolt and its effect was felt in all spheres of national life (Isiadinso, 1988).
Buhari (1991) reported that the lull in construction of early 80’s was not limited to Nigeria alone. The lull also occurred in Western Europe and America. But the parent companies of these big timers in our midst were not only able to stay afloat the stormy ocean but were able to expand their sales. They were able to do this by initiative, creativity and research.
Consequently, the Federal and State governments resorted to taking foreign loans as a quick solution to the problem. However, some of the measures taken by Government in order to revitalize the economy have further aggravated the situation.
One obvious implication of this development is that the cost of imported raw materials and subsequently of the finished products has substantially increased (Husseini, 1991). These substantial increases as reported by Mbachu and Nkado (2004) have obvious negative implications for the major players and the industry; undermining the viability and sustainability of the industry.
The Roles of Contractors and estimator in Construction cost
There are diverse interests in the construction industry, we have actors like the clients, consulting agent and contractor, but we are going to discuss about the role of the contractor.
The Contractor and Estimator
Omole (1986) further reveals that the major task of Contractors is to assemble and allocate the resources of labour, equipment and materials to the project in order to achieve completion at maximum efficiency in terms of time, quality and cost.
Construction estimators are imperative to this process and play a central role in every construction project, regardless of its size. An estimator provides an estimate for the client. The estimate outlines details of the costs that the client will incur for the project.
When explained, the construction estimation process seems simple, however, it is a complex process that must balance many factors and considerations and produce accurate estimates. An estimate determines the success of the project. Inaccurate estimates often cost clients more money and contractors incur losses.
When formulating a construction estimate, cost estimators know that the conditions and circumstances can change at any time, which sends them back to the drawing board. When this happens, projects experience delays and changes in the cost of construction.
Construction cost estimators must always use their skills and experience to account for uncertainties during the project, and that is no easy task. The work of a construction estimator, therefore, extends to known and unknown factors. With this in mind, the estimator then arrives at the closest possible costs for a construction project.
For accurate and seamless estimation, construction cost estimators must first consider the size of the project, as well as its scope. With this in mind, the estimator can tall all the materials necessary for the project and in what quantities they are required. Moreover, this then helps the estimator consider the market price of the materials.
Secondly, estimators assess labor required for a project and the labor costs. This is derived from an estimate of the length of time the project will take to complete. Both of these roles are crucial and help outline the final costs of a project. The accuracy of the cost estimate impacts the success of the contractor working on the construction.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
In this chapter, we would describe how the study was carried out.
Research design
This study employed the descriptive survey design in order to gain insight into the survey of cost estimation practices of construction contractors. It also availed the researchers to probe into the world of the respondents and access their views about western programmes on television.
Sources of Data
The data for this study were generated from two main sources; Primary sources and secondary sources. The primary sources include questionnaire, interviews and observation. The secondary sources include journals, bulletins, textbooks and the internet.
Population of the study
A study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description (Prince Udoyen: 2019). In this study the study population constitute of all the 172 construction companies in Akwa Ibom.
Sample and sampling techniques
The sample for the study was 80 construction companies drawn from the population using random sampling technique. The number of Contractors were 127 were randomly selected through simple random selection method. The sample was made up of both male and female contractors.
CHAPTER FOUR
DATA ANALYSIS, RESULTS AND INTEPRETATION
This chapter deals with the presentation and analysis of data obtained from the administration of the instrument (questionnaire) of the study. The data are arranged following the order of the research questions that guided the study.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
Conclusion
Conclusively, the survey of cost estimating practices of construction contractors as opined by the three key players in the construction industry is cost of materials. Since Quantity Surveyors are cost experts they are in the unique position to examine these factors and take care to estimate, include contingencies in the budget, plan for, and mitigate the adverse effects of these factors on the project cost. Contractors should give an economic approach to construction work such that they would be able to identify the dominating factors leading to high cost estimates of construction in Nigeria and apply the proffered solutions to minimizing same so as to restore client’s confidence in consultants, reduce investment risks, and generally boost the viability and sustainability of the industry.
Recommendations
The following recommendations are deduced from this study:
- Much focus should be placed on the major factors affecting construction cost in order to reduce the cost of construction cost, enhance construction performance and generate confidence within the construction industry.
- Quantity Surveyors should become more alive to their responsibilities as cost experts ensuring that they make use of correct estimation methods.
- There should be thorough crosschecking of estimates based on updated price information in order to avoid any wrong estimation.
- There should be proper coordination and communication among various parties working on the project in order to improve management, control problems and reduce any avoidable delay.
- Contractors should come up with a clear plan and strategy before starting a project. Early project planning and scheduling of labour, equipment and cash, combined with a good bidding strategy, will help to obtain efficient work at a proper price.
- Contractors should take responsibility to make use of the proffered solutions to minimizing cost of construction.
REFERENCES
- Aibinu, A.A. and Jagboro, G.O. (2002) The Effects of Construction Delays on Projects delivery in the Nigerian Construction Industry. International Journal of Project Management 20, 593 – 599
- Asamoah, J. (2002) Satisfying the Energy Hunger in West Africa: A Progress on West Africa Gas Pipeline. African energy, Brooke Patrick Publications, Johannesburg, http//www.africanenergy.co.za
- Buhari I.B. (1991) Inflation and the Nigerian economy. The Nigerian Quantity Surveyor. 8-9
- Cooke, B. and Williams P. (2003) Construction Planning, Programming and Control, 2nd edition. Palgrave, New York.
- Elinwa, U., and Buba, S., (1993): Construction Cost Factors in Nigeria. Journal of Construction Engineering and Management. 119, (4) 698-714.
- Eyo – Ita – Eyo, (2001) Nigerian Cement Industry is Pathetic. THISDAY People, Leaders and company limited. http:www.thisdayonline.com
- Fisk, E.R. (1997) Construction Project Administration, 5th Edition. Prentice Hall, New Jersey
- Frimpong, Y., Oluwoye, J. and Crawford, L. (2003) Causes of Delays and Cost Overruns in Construction of Ground water Projects in Developing Countries; Ghana as a case study. International journal of project Management 21, 321 –
- Husseini A.A. (1991) Construction and the National Economy. The Nigerian Quantity Surveyor. 20 – 21
- Isiadinso, E.I.; (1988) ‘The needs and Problems of the Building industry in Nigeria – A Quantity Surveyor’s View. Research Institute Seminar, Nigerian Building and Road Research Institute.