Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
Assessment of Factors Affecting Cost Estimation on Project Cost Management in Construction Firms along Quezon Avenue
This study aims to determine if a failure to perform a good cost estimation would result to a poor project cost budget management plan cycle. A good project cost estimation would be needed in a construction firm and construction company, because this would be mainly the basis of the cost of the project.
This study is also intended to determine whether the objectives are attained by considering the data that we garnered by means of conducting a survey in some of the Construction Company or Construction Firms along Quezon Avenue. This would help our group to determine if the data that we garnered are within the scope of our objectives because it might give us a result that are far off from our objectives.
Project Cost Management is very essential to a construction firm or construction company. It is also a method that uses technology to quantify cost and profitability through the full life cycle of big business level activities. Cost management is all about how well they plan and control the budget of a certain project or business. Some activities namely Planning, Estimating, Budgeting, Financing, Funding, Managing and Controlling Costs are needed for them to device a good Cost Management. Cost Management covers all the cycles that are presented in a project, thus there are steps that needs to be followed like preparing an initial planning phase towards measuring the actual cost, performance and project completion.
Resource planning is an initial phase of a project in which you need to declare the project activities and project resources in a construction site. It is also known that by inspecting the site you would know what are the resources needed in the site most and this would determine what are the physical resources needed the most in a project. If the types and quantities of such resources are known, then the associated costs can be determined. Thus, this also means that time, material, labor and equipment would follow.
Cost Estimating is a method in which you estimate or project on how much this project would be in terms of project activities. Analogous Estimating can be used in such a way that you would use the actual cost of a previous construction company given that project is considered similar with the other, thus this could be a basis for a good estimation towards a current project. Another way is by means of using a parametric model in which a project is represented by a mathematical expression. Lastly estimation can be refined when the project’s data are already available.
Cost Budgeting is a process in such that whenever the cost estimate forms together with a project schedule, then Cost Budgeting takes place. The needed budget for a certain project would be projected in terms of periodic table and the total cost of the project would be projected.
Some problems that are mostly encountered by a construction firm or construction company are the lack of good estimation process, due to this case the cost budget planner cannot maximize the use of money because the estimate is not aligned with the budget. In addition if the cost estimate is a failure it could cause some major damage to the budget of the company, because instead of using the money wisely and economically, the money would be used to compensate the amount of money because the amount of money that is estimated is not accurate, thus in terms of using the excess money to gather enough workers in order to finish the project ahead of the scheduled time and if the money is not budget properly the project would not be operational due to lack of money.
REVIEW OF RELATED LITERATURE
Cost estimation is considered to be one of the most significant processes in project cost management. It is the initial stage of the project cost at various project development stages. (Hendrickson, 2008). As utilized in the development process of the project, project cost estimate consists of all capital expenditures, including constructing and landscaping but does not usually consists of capital support expenditures. (California Department of Transportation, 2009).
Cost estimating is employed as one of the fundamental tools in order for the management to be successful. It is significant to analyze the cost assumptions in estimating through using a series of expertise of gaining precise cost estimating that corresponds with the construction and design details once a base line budget is established. (National Institute of Building Sciences, 2014). Profitability is based on accurate and complete cost estimation in the construction business.
According to Rajapakse (2017), the cost estimate is a part of project cost management that is needed to evaluate the cost of a construction project. Owners of the project would like to know the general cost prior to starting a project. Below are the types of expenditure that determine the project general cost:
a.) Material cost – Concrete, reinforcing bars, pre-cast walls, doors, windows, etc.;
b.) Transportation cost – Cost of transportation of materials such as transmit mixer, dump truck, steel rebar truck, etc.;
c.) Labor Cost – Cost of labor includes wage for skilled workers, masonry workers, carpenters, rebar workers, supervisors, and other laborers; and
d.) Professional Cost – Cost of employing consultants, designers, and other construction professionals.
Cost estimation is composed of two categories: planning the project and designing the project. (California Department of Transportation, 2009). Planning the project is used as the basis of the project, programming, alternative identification and analysis, and approval of estimated cost. Designing the project is used to outline the project cost and is likewise used for construction documents set for the list of bid item.
According to Hendrickson (2008), cost estimates of the project may be looked at various outlooks due to various conventional requirements. In spite of multiple types of cost estimates utilized at various project stages, cost estimates can be best categorized into three vital categories in accordance with their purpose. Furthermore, design, bid, and control are the three basic functions of a construction cost estimate. A bid estimate is utilized for organinzing the financing of a project.
- Design Estimates – For the project owner or its construction professionals, the cost estimates types encountered run parallel with the project planning and design as follows:
- Screening estimates (or order of magnitude estimates)
- Preliminary estimates (or conceptual estimates)
- Detailed estimates (or definitive estimates)
- Engineer’s estimates based on plans and specifications
For each of the above-mentioned various estimates, the amount of design information available typically increases. (Hendrickson, 2008).
- Bid Estimates – A bid estimate given to the project client for competing to bid composed of direct cost of construction including supervision of the field, likewise an amount added to the cost price to pay the cost of overhead and profits for the contractor. For bid estimates, the direct cost of construction is typically obtained from a combination of the approaches below:
- Quotations of subcontractor
- Quantity takeoffs
- Procedures of construction
- Control Estimates – For supervising the project during construction, a control estimate is obtained from available information to create:
- Estimate of budget for financing
- Cost of budget after contracting but before construction
- Estimated completion cost during the construction progress.
In summary, design estimates show the design progress in project planning and designing phases. Bid estimates often show the contractor’s eagerness to win the bidding by having a well-established cost estimating procedures. And in control estimates, an initial phase for cost control during the construction must be adopted by both the project owner and the contractor. A budget estimate must also be adopted by the project owner as early as possible to make out decisions for the financing the provision for a long term period. (Hendrickson, 2008).
In the Philippines, a detailed cost estimate is used by particularly all contractors because it has the lowest margin of error or range of accuracy among all types of estimates when it comes to cost estimating of materials, labor, equipment, subcontract work, overhead, and profit. Moreover, detailed cost estimate is a careful calculation of quantities and costs of all the materials, labor, equipment, etc. that is specified in the contract based on specifications, plans or construction drawings, codes and standards, procedures, and bidding documents. (Fajardo, 2000).
Factors Affecting Cost Estimation
According to Jacob (2015), There are numerous factors that must be anticipated when doing cost estimation. Of which, the market condition has affected the most on the estimation. There are many sub-factors of cost estimation such as price of materials, quality, availability, labor cost, performance and number of competitors.
- Material prices
Material prices are one of most shifting factors in the current market. (Faculty of Civil and Environmental Engineering, 2015). As many sub-factors such as availability, quality and size of order play a vital function in the price of a material. Construction materials range from large items such as concrete, reinforced bars, timber, gravel, electrical and plumbing fittings to smaller materials such as screws and nails. Buying materials cost is affected by the skill of the manufacturer to produce it. If the material is purchased from the manufacturer at the time when the orders of material are high, then the price would be higher than if it is bought at a time period when the orders of material are low. (Jacob, 2015).
The quality of the materials utilized must be taken into consideration as a higher quality material is used the cost likewise rises when cost estimating. Low quality materials cause higher construction cost than expected because of the materials loss during construction. This results from a lack of standards for materials and systems of management. (Jacob, 2015).
When raw materials like timber or stone can be easily found in the surrounding area, the estimation cost diminishes. However, if the material is in supply shortage, the cost will rise and the material sustainability likewise contributes to the estimation. If the material is commonly found, then the total cost will be cheaper than if the material was rare. (Jacob, 2015).
- Labor prices
Manpower is an asset that is required for any construction project. If there are a lot of laborers, then the cost to hire them would fall outside the estimation. However, if there are too few laborers, then the construction will not be finished on time. (Jacob, 2015).
In the performance of the contractor and the sub-contractors, the skill of communication must always be exercised otherwise it may result in conflicts between the contractor and the other groups, the material selection task may also be neglected and in general a poor management. (Jacob, 2015).
The availability of both skilled and unskilled manpower allows a management to be effective as it allows the manpower to be distributed in accordance to the most appropriate allotment of the job. If the manpower is well-managed, it can decrease the cost of labor and give bigger profits. (Jacob, 2015).
- Number of competitors
The number of competitors allows the client to get a contract bid for the cheapest price. When there are numerous contractors looking to get equal contract, they attempt to undertake the job for a cheaper project bid. If the project is a large job, a small contractor cannot get the job as he is inadequate to start a large project according to his contractor category. (Jacob, 2015).
When there are more competitors bidding for the project, the client will be saving costs as many contractors will be attempting to win it by lowering their construction cost which mean smaller profit. However, if there are no other bidders for the project, the contractor can charge a higher bidding price than if it had competition. The only possible solution for the client is to either look for a competition for the one contractor or end up an agreement. (Jacob, 2015).
Cost engineers and estimators are accountable for establishing ‘cost estimates’ that are utilized as criteria to construct business decisions. However, product cost prediction is a daring task. The achievement of an estimate needs a lot of experience, data, knowledge and abilities of various techniques and methodologies. (Rios et. al., 2016).
According to Akinci (1998), cost overrun creates an important financial problem to both contractors and project owners. However, despite the problems involved, the construction industry history is full of projects that were completed with important cost overruns. Contractors used to be able to cover their cost overburdens with their markups. However, with decreasing markups, even the overburdens of marginal cost can instantly eradicate their profits and even result to an overburden of cash. Thus, contractors need to know the sources of major problem causing cost overburdens early to be proactive in handling them.
Monitoring and Updating Cost Estimates
Monitoring and Maintaining must be done in all project cost estimates. (CDT, 2009). After the initial cost estimate, the timely record of cost estimate updates is guided by the following factors:
• Annual updates – All cost estimates have to be ensured present and updated every once in a year. If there are no changes with the cost estimate, the annual cost estimate update should base on the costs of unit utilized for different items in the cost estimate. An annual cost estimate update is only needed if the cost estimate is not brought up to date for any of the following listed factors. (CDT, 2009).
• Programming cycle – A present cost estimate is necessary at the initial stage of every programming cycle in order for the upcoming programming record shows present cost estimates. Particularly all programming records are drawn up on a cycle biennially. The mounted amount utilized in every programming record creates a modern form against which upcoming cost variations are contrasted. (CDT, 2009).
• Approval of project development reports – The reports of project development authorizing a project to go far in the process of project development require the project cost estimate development and inclusion. (CDT, 2009).
A process centered virtual approach to support cost estimating along product life cycle
The engineering and scientific principles application to the cost estimates creation along a product life cycle is one of the basic aspects of Cost Engineering. Cost estimates are used as fundamental basis to create design decisions in the stage of development and likewise to create business decisions in OEMs and their supply chain cooperation. The achievement of an estimate requires experience and knowledge of different abilities and methodologies. Key aspects on its creation are the adoption of a cost estimating process, the availability of the needed data and the proper management of the information used during the process. The collaboration between the OEM and its supplier can be facilitated by having a better common understanding of how the cost estimates have been created. The cost estimating process used is then a fundamental piece of trust. (Rios et. al., 2016)
Estimating the costs of a reengineering project
According to Sneed (2006), estimation of project costs accurately is vital necessity to creating a reengineering project. Existing systems are usually reengineered due to cheaper amount to reengineer them than to rework or to reject them. Nevertheless, to create this decision, management has to know what cost will the reengineering make. This contribution illustrates an eight step tool supported process for computing the time and the amount required to reengineer an existing system. (Sneed, 2006).
Construction Project Management
According to Wang (2011), project management of construction projects become more and more important especially nowadays that competition in the construction market is getting higher and the profit margin of construction companies are getting smaller. The control of construction project cost becomes very important in project management. Construction project management is a systematic, comprehensive, dynamic subject, requiring construction project manager to regularize and standardize the organization, goal, quality, safety, and cost of construction project. In this paper, in order to achieve the project cost control effectively and create greater economic benefits, construction project management content, measures and cost control measures were studied.
Global Issues and Challenges
This paper examines the global issues and challenges the project cost management profession is facing. This relates to professionals in the fields of quantity surveying, cost engineering, project controls and project managers providing cost management services. The global construction industry is littered with many examples of high profile projects that have experienced significant time and cost overruns and this is a reflection of similar problems at all project levels. However, these high profile projects attract awareness in the wider community and highlight the need for more effective cost management and project controls. (Smith, 2014).
Reporting Project Costs and Risks
According to Nalewaik (2009), owners rely on project reports in order to make decisions. However, reporting often lacks for this purpose. For example, there may be too much or too little information, which confuses the Board or executives. Data may be misrepresented, incomplete, unrecognized, not validated, or simply inaccurate. Owner oversight of projects requires accurate, timely, and relevant status reporting, yet all too often it is not provided. This paper identifies common pitfalls in project reporting, discusses the differences between accounting and project management software capabilities, and provides guidelines for developing periodic, consistent, useful reports to upper management.
Control of Engineering Project Cost Management
At present, there is a series of problems in project cost management of Chinese construction enterprise, to a certain extent, which affected the development of the construction industry China. Lean model experimental analysis which comes from lean production and management, has become the guiding ideology for a new round of management revolution. In this paper, the connotation of lean model experimental analysis has been a starting point. Combined with the characteristics of engineering project cost management about Chinese construction enterprise, demonstrate the importance of lean model experimental analysis to the project cost control, promote the development of the building industry and the international competitiveness of Chinese. (Yan & Peng, 2014).
Cost management is the process of planning and controlling effectively the costs involved in a business. It is considered one of the more challenging tasks in business management. Cost is of prime importance in planning, constructing and designing a project. This is true at present due to rampant escalation. Enough knowledge in Construction Cost and Budget implications may result in avoiding time consuming and costly process of reviewing or redesigning the project. (Dunkerley, 2014).
According to Goubau (2014), cost management is viewed as a managerial process generating information to support decision-making, stimulating cost reduction, valuing improvement and continuous improvement in the organization. Composing the systems of this process is:
1. Cost estimating processes;
The aim of this process is to estimate the cost of products and processes involved in production. This means, complete understanding of the design, contacts and production in order to properly model the utilization of materials by transformation and flow activities.
When the cost estimating process is implemented in the construction industry, usually begins by creating a budget in the early stages of the project. This budget producing phase is highly important due to its part in the main project as well as reference for production planning and control.
Project cost estimating is a very complex task due to the inherent uncertainty and variability in construction. This is why feedback from the cost control is of crucial importance, so the cost estimating process can increase the quality of the information available in the cost plan, which will be in further use by the cost estimating process.
2. Cost planning and control processes.
Cost planning means refining the initial cost estimate and providing a project cash flow, build on extra information that is generated along the project (like the deadlines of payments for the main material supplier) which is formed on production plan. These additional processes should support the decision-making in a dynamic way, in order to raise the possibility to accomplish the business goals.
The cost control involves monitoring actual cost performance and identifies business opportunities. The aim of this control is not just comparing the current and estimated performance, but also concentrates on value generation.
Having all this in mind, would deliver greater quality in the cost management by becoming proactive and enabling the company to face the dynamic, uncertain and complex construction environment that exist in many projects.
Cost management must be seen as a process and its implementation requires innovation, automation, learning, involvement and commitment from people.
The cost control is a process that should be continued through the construction period to ensure that the cost of the building is kept within the agreed cost limits.
The Cost Manager or Quantity Surveyor is a vital member of the design and construction team. They specifically focus on the management of construction cost and value and plays an essential role in the financial and contract management of construction projects. (Towey, 2013). Project Owners should hire an independent professional and unbiased Cost Consultant, who has no conflict of interest, to overview the cost of the project from start through to completion of the final account.
According to Hanid M., Siriwardena M. and Koskela L. (2013), cost management can be generally considered as a set of techniques and methods for controlling and improving a company’s activities and processes, its products and services, to achieve cost effectiveness (cost reduction, value improvement and substitution) by collecting, analyzing, evaluating and reporting cost information for budgeting, estimating, forecasting and monitoring costs, in order to assist decision making.
The process of bidding a project in project cost management is significant. (Jiantao D. et. al., 2014). Today the construction industry before was planned economy by waiting, depend on, inquire for, in spite of profit and loss guidance, in order to finish the task as the target, to the competitive mechanism development of economy of the market under the present guidance. Thus, bidding of project has tuned into an important way of market building for the activity. Currently, in a fierce competition where every person must survive and develop, a person has to grab the opportunity, in accordance with the market, adding up the hype of the activity and to strengthen the managing enterprise of construction for effective management. (Jiantao D. et. al., 2014).
According to Zhou (2014), one of the basic components of cost management is costing. Cost management excellency relies on correct and accurate system costing in business. By this statement, the study initially focuses on the costing practice of companies in China, and then focuses on the practice of cost management. The study mainly analyzes the following five features: primary function of system costing in business, cost elements of product content, allocating cost, costing methods of product, and methods of cost management utilized by the companies in China.
The construction project’s life cycle goal of cost management is to minimize the cost. In line with managing cost on the life cycle of a construction project, to assure the current control of cost in construction, the previous scheme’s emphasis is the strength and depth (Zhieng, 2013). The project’s need for future operation should be taken into consideration in the phase of design to improve the advancement of the design. Statistics stated that the construction project cost in the previous stage is from 7% to 12% of the life cycle cost, and the cost of construction for construction stage is from 27 % to 28%, and the operation and maintenance or O&M cost in the future if from 60% to 66% (Zhieng, 2013). This signifies that the future cost of O&M has a large proportion. Thus, in order for the funds of input attain the best result, the decision has to take the construction project’s life cycle into a complete consideration, and emerge cost of construction and future cost as the cost of life cycle to be managed. (Zhieng, 2013).
According to Lianguang (2013), in the bidding phase, the client should be assisted by the construction cost engineers in making the document to bid and quantity take-off sheet (or initial bid and other series documents), after the bid opening, they can help the client assist in analyzing the tenderers’ quoted prices, which can give fundamentals for making the contract terms related to cost of construction. The cost engineers have to make the construction cost terms be as reasonable as possible, and lessen the conflict of interest caused by the terms, then prevent the compensations that are not necessary.
Management cost is one of fundamental elements of project management and significant tool to manage and develop project performance cost. One of the roles of project cost management is to keep the project budget minimal. Managing the cost poorly often causes project cost overrun. (Azis et. al., 2013). Furthermore, they also stated that cost is the most important part of the life cycle of the project that needs to be taken into consideration. Thus, it is very vital to keep control and management of cost from the project initial stage as deficiency of cost management results to project cost overrun. (Azis et. al., 2013).
According to Seetharaman (2015), in an agile project, time and cost have the same concern for if at any point, extension of time is needed, the cost will be instinctively increased. Project managers need to consider time and cost from the initial stage of the project up to the last stage to give a product quality at the same time within the planned budget and time.
The process of work and cost of construction are important for controlling the process of construction work. These factors can be impartially assessed, are nearly relevant, and can be completely controlled, which can be done possible to study the present process of problem, countermeasures to work out, and predict the developing processes and costs of construction. For the process of integrated cost and the cost of construction, earned-value management system was developed. (Jin Kim, S. & Kim, T.H., 2013).
Big Issues in Traditional Cost Management
- Failure to Forecast
Forecasting is one of the key functions of cost estimation in construction projects. Forecasting has been discussed as part of attempts to improve accuracy in estimating. Traditionally, it is common for building owners to decide on relatively detailed issues at the beginning of the project delivery process for the preparation of tender documents. There is a high possibility that the detail issues in the design at this early stage will change along the project delivery process, hence causing a considerable amount of waste in terms of time, information provided, and waste created during construction due to design faults (Elfving et al., 2005).
- Failure to Pinpoint Improvement Opportunities
Current practices have witnessed many estimators being keener on getting projects to be funded and built (Flyvbjerg, 2008) rather than getting the forecast right. In addition, early commitments to design solutions have established cost at the initial stage. It is also highlighted that making a wrong decision at this stage is extremely costly further down the development process where product modifications and process alterations are more expensive. This situation may significantly increase resource consumption and generate waste (i.e., waiting and rework) (Elfving et al., 2005, Koskenvesa et al., 2010) and also reduce the product flexibility.
- Costs are shaped by Action Rather than Result from Action
Conventionally, cost control techniques are used during the design stage to enable the architect to be kept fully informed of the cost implications of all his design decisions, and throughout the construction period in order to rectify mistakes resulting by the action of the parties at the early stage of the project (Seeley, 1983). This situation, which set strategies based on the client’s requirements, earlier on before the project started is referred to as the ‘cost result from action’ thinking and arguably leads to increased inaccuracy, creation of waste and also failure to achieve cost reduction.
- Relative Neglect of Value Consideration
When browsing through the index in books (Brook, 2008, Hillebrandt, 2000, Seeley, 1983), which are related to cost management, a missing discussion in value aspect can be witnessed. Traditionally, value has not been addressed in construction cost management, although many feel that the important criterion of value should be taken into consideration. The only problem is that they do not know where and how to do it.
- Poor Support for Inter- Organizational Cost Management
Currently, many-tiered supplier networks exist in traditional supply chains (Cooper and Slagmulder, 2004), where the connection between key supplier’s suppliers, key supplier’s other customers, customer’s other suppliers’ and customer’s customer (Dubois, 2003) exist. These many-tiered supplier networks create a major addition in transaction cost until it reached the final customer, and it is believed that customer carries mostly the burden of cost accumulation in traditional supply chains (Kulmala et al., 2002).
- Negative Influence on Behavior
Several forms of negative influence from cost management systems on behavior have been identified in literature, ranging from claim culture to manipulation of bids and performance measurements. Attitudes that relate to the occurrence of claims in the administration of contracts show that the industry has a culture that is opportunistic, prone to conflict and resistant to change (Rooke et al., 2003). People draw on whatever resources they can to make the best out of a bad job in order to get by and get things done to make extra profit or money (Rooke et al., 2003). There are contractors who expend more effort on generating profit from claims than from improved construction methods (Rooke et al., 2004).
- Budgeting in Dynamic Situation
Having a budget in a business unit, have created negative scenarios among employees in an organization because each and every activity involved in the product delivery process will be benchmarked with a budget. This will disempower the front line, discourages information sharing, and slow the response to market developments until it’s too late (Hope and Fraser, 2003). The usage of budget, which is at first to force performance improvements, have led to a breakdown in corporate ethics where information is only funnel to those with a “need to know” and not the rest of the team (Hope and Fraser, 2003).
The consequences of the big issues in cost management do include inaccurate price of a project/product, suboptimal solutions, quality defects and rework, reduced growth of labor productivity (Koskenvesa et al., 2010), reduced product flexibility, increased resource consumption, making wrong decisions, cost accumulation to the customer, cash flow problems and bad financial planning. These big issues have exposed significant weaknesses in the traditional cost management approaches. Based on the literature review findings, it seems that many parties have realized these problems that have existed in the current cost management system. Yet, hardly any of the initiatives that have been put forward seems sufficient as such for achieving a needed overhaul of the function, role and philosophies of the cost management system. Transparency of the cost and the thinking out of the box are required in order to improve. In addition, structural changes such as improvement in training and education towards the purported changes and revision of the procurement policies are suggested as well.
According to Olukyode (2015), maintaining a steady projection of cost on construction projects had been until now an issue of serious concern, both to the investors and contractors of the project. Cost deviation from baseline plan of cost had been widespread on construction sites. The factors affecting this problem cannot be taken for granted. This research study thus measures the significant factors affecting cost of the construction project with a perspective to improving the delivery and materials procurement of the construction project.
Estimating a project is significant in Project Cost Management in which every construction site has its own estimator, because it gives roughly the needed budget for their project planner to properly allocate the money and resources to answer the needs and wants of a construction company. This study aims to investigate how a company would react towards a good estimate, thus allocating its budget with a profound knowledge to fully use the estimators rough cost of the project. This research would also determine whether a construction site can comply with all the activities that needs to be done, while planning and allocating money resources. For them to save their upmost economy and to use it for extra man power to finish the project ahead of time which is very essential and time efficient to a construction site. This study does not only focus to construction site that is being handled by a sole proprietorship but also by a corporation, thus by expanding the scope and limitations of this research it would adherent the proper way of allocating budget and resources to make full use of their money.
This part of the research paper shows how essential the methods to be used such as what are the materials needed to conduct this study, the scope covered by this study, the target construction sites, in which a survey would be passed on to determine whether we achieve our own objectives. Furthermore, conducting a survey to different construction companies along Quezon Avenue would help us to complete the requirements of this research paper.
3. Development of idea that in every construction sites estimate is essential in budget allocation in a good project cost management.
2. Gather evidences that estimate greatly affects a Good Project Cost Management.
1.Compiled all the data such as RRL that would best suit the effect of Good Estimate to a Good Project Cost Management.
Phase II: Sampling and Data Gathering
4. Determining the number of construction firms located along Quezon avenue.
6. Determining how responsive the respondents are in this study
5. Sampling method to be used
8. Distributing the questionnaire to the construction firm.
9. Collection of Data garnered method.
7. The Design of the research study.
Phase III: Results, Computation Analysis of Data, and Conclusion
10. Descriptive computation analysis of budget allocation and estimation
13. Graphical representation of data
12. Descriptive statistical analysis in identification of the different errors that affects budget allocation and estimation
14. Conclusion and implication of the analyzed data
10. Detailed analysis of how budget allocation and estimation is done
Phase IV: Determination of how the people involve in budget allocation and estimation manage in the construction sites along Quezon avenue.
15. Determining how the person in charge of budget allocation and estimation manages
Phase 1: Development of idea on how Estimating can affect a good Project Cost Management
Doing a research about how estimating can greatly affects a construction site’s performance towards a good Project Cost Management. This phase would determine whether a certain constructions sites have a good Project Cost Management in terms of accurate estimate within their site. On the other hand, on what would be the effect of a bad estimate towards a company, it would be determined by using the data garnered throughout the research. Estimate is an approximate calculation or judgement of the value, quantity or extent of something.
This phase has a step by step procedure in which this steps needs to be followed to complete this part. Collection of data and related studies about estimating and about construction project management, some research books would be much appreciated to gain more knowledge about the topic. As we go along, our group might find some ideas that would help strengthen our stand and prove our claims that a good estimate would yield to a good project cost management.
Phase 2: Sampling and Data Gathering
Collection of various data based from the scope of the objectives in a systematic way would lead outcomes in which it would answer the questions that are related to this research study. In this study the target variables are mainly the project manager, project planner, cost budget planner and the Estimators who conducts the estimate in a project site in the construction sites that are located along Quezon avenue, thus having them interviewed would give us knowledge and insights about how an estimator estimates. Each respondent would have different preferences when it comes to budget allocation and estimation. After which, will be evaluated after making the research design.
Second phase will be focused outside the room such as interview and questionnaire survey. This phase would serve as the actual state of phase in which we would garnered our data through active interactions within the people whom we wish to interview and give the questionnaire survey. It is wise to know into which site location would we wish to conduct our interview and distributing our questionnaire survey. And, after performing the collection of data, this we would likely determined whether it is somehow included in our scope of the study. The next phase will be continued right after the evaluation of the collected data.
Phase 3: Results, Computation Analysis of Data, and Conclusion
The next step towards to attain the specific goal is by means of collecting data and information through a survey questionnaire that is being distributed to each construction site located in Quezon Ave, thus results will be interpreted in terms of using central measures of tendency, in which Mean, Median and Mode will be determined from the results gathered. The questionnaire contains a scale of 1 to 5 in which it would determine how agreeable or how high is the corresponding standards of the subjected person who would answer the questions.
Phase 4: Determination of how the people involve in budget allocation and estimation manage in the construction firms along Quezon Avenue.
Through hard work and dedication, our group manage to gather the data that are needed to know whether a good estimation would affect the performance in a construction site. The results of this research would depend on what are the knowledge that are garnered during this research, thus it would be also the deciding factor of this research whether if estimating materials to be used are at top notch and cost efficient in a construction site.
Statement of the Problem
A common problem that construction companies encounter is the lack of funds, making some of their project non-operational. This is due to uncertainties encountered during the construction progress and not accounted for during the cost estimation process. This research is done to determine the factors affecting the cost estimation of construction projects on project cost management and the impact to the construction sites along Quezon avenue.
In doing the research firm, the researchers would like to answer the following questions
- What are the factors that affect cost estimation on project cost management?
- How do the factors affect the construction project in terms of cost estimation?
- What are the common factors that affect the cost estimation according to selected construction firms?
- How can a construction firm deal with the factors affecting cost estimation?
Main Objective of the Study
To measure the factors affecting the cost estimation of construction projects to its project cost management.
Specific Objective of the Study
- To determine how construction companies deal with the impacts of the unaccounted issues during cost estimation.
- To determine the effectiveness of the project cost management in the construction site.
- To find out if cost estimation is a factor in providing a good project cost management in a construction site.
Significance of the Study
This study will benefit the quantity surveyor of construction firms along Quezon Avenue, Quezon City with respect to project cost management in the construction sites. This will help them develop a better cost estimation considering the impacts of the factors affecting project cost management. With the better understanding of the factors, it will prevent wastage of time, money, and materials for a quality and productivity improvement of the project.
Scope and Limitations
This study aims to measure the factors that affect the cost estimation on project cost management in construction companies along Quezon avenue, Quezon city. The aspects examine the effects on market condition, the gathering of data through surveying selected construction firms, and the impacts of these factors to the construction site.
The coverage of this study is only limited along Quezon avenue. This study is only focused on the cost estimation because it is considered as one of the most important processes of project cost management. Cost estimation requires to be complete and accurate in order to gain profit in the construction business. Focusing on other processes of project cost management would widen the study as well as longer time would be spent on analyzing them one-by-one.
Hendrickson, C. (2008). Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects, and Builders.
California Department of Transportation (2009). Project Development Procedures Manual.
Rajapakse, R. (2017). Construction Engineering Design Calculations and Rules of Thumb.
Fajardo, M. (2000). Simplified Construction Estimate.
National Institute of Building Sciences (2014). Whole Building Design Guide.
Joseph, J. (2015). Factors Affecting Cost Estimating.
Faculty of Civil and Environmental Engineering (2015). Factors Affecting Construction Cost Performance in Project Management Projects: Case of Mara Large Projects.
Sneed, H.M. (2006). Estimating the Cost of a Reengineering Project.
Akinci, B. (1998). Factors Affecting Contractor’s Risk of Cost Overburden.
Rios, J. et. al. (2006). A process centered virtual approach to support cost estimating along product life cycle.
Nalewaik, A. (2009). Challenges Reporting Project Costs and Risks to Owner Decision makers.
Smith, P. (2014). Project Cost Management – Global Issues and Challenges.
Wang, S. (2011). Study on Construction Project Management and Cost Control.
Canadian Center of Science and Education (2015). Relationship between Factors of Construction Resources Affecting Project Cost.
Anderson, S. et. al. (2007). Guidance for cost estimation and management for highway projects during planning, programming, and preconstruction.
Liu Yan and Zhang Peng (2014). The Control of Engineering Project Cost Management of Construction Enterprise Based on Lean Model Experimental Analysis.
Mahamid, I. (2015). Factors affecting cost estimate accuracy: Evidence from Palestinian construction projects.
Towey D. (2013). Cost Management of Construction Projects
Dunkerley J. (2014). Why Do We Need a Good Construction Cost Management?
The Chartered Institute of Building (2013). Cost Control in Building and Construction
Goubau T. (2014). How to Improve the Cost Management in Construction Projects
Hendrickson C. (2008). Project Management for Construction
Hanid M., Siriwardena M., Koskela L. (2013). Big Issues in Cost Management
Jiantao, D. et. al. (2014). The Research of the Engineering Cost Management Based on the Experimental Simulation
Zhou, Y. (2013). Costing Methodologies and Cost Management Practices: A Survey of Chinese Companies.
Zheng, X. (2013). Study on the Cost Management of the Construction Project’s Life Cycle.
Lianguang, M. (2013). Study on the Cost Management of Project Items in the Whole Process.
Azis, A. et. al. (2013). Cost Management of Large Construction Projects in South Malaysia.
Seetharaman, B. and Mansor, Z. (2015). The Development of Agile Cost Tool.
Jin-Kim, S. and Kim, T.H. (2015). A Study on the Integrated Construction Cost Management Method with Reflection of the Characteristics of Public Construction Works in South Korea.
Olukyode, O.F. et. al. (2015). An Assessment of Major Factors Affecting Construction, Project Cost in Nigeria.
Cite This Work
To export a reference to this article please select a referencing stye below:
Related ServicesView all
DMCA / Removal Request
If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please: