Accuracy of estimating techniques

for predicting residential

construction costs a case study of
an Auckland residential construction
company

Mohammad Barzandeh
Student ID: 1296939

A Report for Industry Project CONS 7819

Submitted in partial fulfilment of the requirements for the Degree of Bachelor of
Construction, Unitec New Zealand

Department of Construction

ABSTRACT
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. The estimator is responsible for these
estimates which serve to ensure the project will have a successful financial outcome and these
estimates also influence the decisions made for budgeting and assist in clients decisions for
contractor selection.
This research will determine the current practice of a case study companys accuracy in
estimation and will also identify the associated issues with the preparation of the estimates
which can lead to inaccuracy.
The methodology for this research has been a triangulation from an extensive literature
survey review and analysis, then followed by a document analysis of the case study
companys project accuracy over the last 5 years and then analysis which is an interpretation
of the authors understanding.
The findings have indicated that there are inaccuracies which can be from a range of factors
identified in the literature as crucial indicators for deviations from the intended budget. This
includes for the selection of provisional sum expenditures, historical data validity, factors
affecting the accuracy of the estimate and model house base rate.
The conclusions that have been drawn are that there is only one method of estimation being
used in the case study company and when a house becomes an architecturally design house,
the model house base rate seems to become invalid completely. The historical data is not
being regularly updated with feedback processes and the learning curve of the estimator
reviewing each project after completion seems to be limited as the inaccuracies are being
carried forward onto the new projects. The estimators judgement is identified in the literature
as one of the most important factors to estimation; however, the data collected indicated that
an inexperienced estimator has made decisions that have resulted in ramifications.
Keywords:

Estimation, accuracy of estimating, estimating techniques, factors affecting

accuracy, historical data, feedback processes, construction costs

ii

CONFIDENTIALITY STATEMENT
The author of this report has agreed that all project names and the case study companys
name will be kept confidential. This has been made possible by replacing the project names
with Project 1, Project 2, Project 3, etc.
The information gathered during this study is under the sole ownership of the researcher, and
access to the information has been limited to the researcher and the supervisor.

iii

ACKNOWLEDGEMENTS
This research project would not have been possible without the help of my research
supervisors, Chris Prigg and Kathryn Davies. Chris Prigg and Kathryn have provided
guidance and support with a great deal of patience to aid in the completion of this project and
that help is greatly appreciated. I would also like to thank my family for their support, and my
employer for allowing me the time to undertake this research project.

iv

TABLE OF CONTENTS
Abstract.................................................................................................................................................. ii
Confidentiality Statement ................................................................................................................... iii
Acknowledgements .............................................................................................................................. iv
List of Tables ....................................................................................................................................... vii
List of Figures..................................................................................................................................... viii
List of Abbreviations ........................................................................................................................... ix
1.0

INTRODUCTION..................................................................................................................... 1

1.1

Background ............................................................................................................................. 1

1.2

Rationale ................................................................................................................................. 1

2.0

LITERATURE REVIEW......................................................................................................... 2

2.1

Introduction ............................................................................................................................. 2

2.2

Definition of estimating .......................................................................................................... 2

2.3

Definition of accuracy............................................................................................................. 3

2.4

Purpose of cost estimating ...................................................................................................... 4

2.5

Forms of cost estimating ......................................................................................................... 5

2.5.1

Conceptual (preliminary) estimate .................................................................................. 5

2.5.2

Detailed (definitive) estimates ........................................................................................ 6

2.6

Use / Value of historical data .................................................................................................. 6

2.7

Factors affecting the accuracy of estimating........................................................................... 7

2.8

Feedback and review of accuracy ......................................................................................... 14

2.9

Provisional and prime cost sum expenditures ....................................................................... 15

2.10
3.0

Conclusion ........................................................................................................................ 16
METHODOLOGY ................................................................................................................. 17

3.1

Introduction ........................................................................................................................... 17

3.2

Research design .................................................................................................................... 18

3.3

Data collection ...................................................................................................................... 19

3.4

Sampling ............................................................................................................................... 20

3.5

Data management.................................................................................................................. 20

3.6

Reliability and validity .......................................................................................................... 21

3.7

Research ethics...................................................................................................................... 21

3.8

Conclusion ............................................................................................................................ 22

4.0

DATA AND DISCUSSION .................................................................................................... 23

4.1

Introduction ........................................................................................................................... 23

4.2

Data collection process ......................................................................................................... 24

4.3

Data management process..................................................................................................... 24

4.4

Issues with data collection .................................................................................................... 25

4.5

Data management and analysis ............................................................................................. 26

4.5.1

Project 1 - 2011 ............................................................................................................. 26

4.5.2

Project 2 - 2011 ............................................................................................................. 27

4.5.3

Project 3 - 2010 ............................................................................................................. 28

4.5.4

Project 4 - 2010 ............................................................................................................. 29

4.5.5

Project 5 - 2009 ............................................................................................................. 30

4.5.6

Project 6 - 2009 ............................................................................................................. 31

4.5.7

Project 7 - 2008 ............................................................................................................. 33

4.5.8

Project 8 - 2008 ............................................................................................................. 34

4.5.9

Project 9 - 2007 ............................................................................................................. 35

4.5.10

Project 10 - 2007 ........................................................................................................... 36

4.6

Similarities between data findings ........................................................................................ 37

4.7

Differences between data findings ........................................................................................ 39

4.8

Significant findings ............................................................................................................... 40

4.9

Conclusion ............................................................................................................................ 43

5.0

CONCLUSION AND RECOMMENDATIONS .................................................................. 44

5.1

Conclusions ........................................................................................................................... 44

5.2

Recommendations ................................................................................................................. 44

5.3

Limitations ............................................................................................................................ 45

5.4

Future research ...................................................................................................................... 46

7.0

REFERENCE .......................................................................................................................... 47

APPENDICES ..................................................................................................................................... 49
Appendix 1: Table 14: Literature Review Matrix ............................................................................. 49

vi

LIST OF TABLES
Table 1: Distributing the factors according to the references

Table 2: Short listed factors

12

Table 3: Ranked factors of significance

13

Table 4: Project 1 2011 data analysis

26

Table 5: Project 2 2011 data analysis

27

Table 6: Project 3 2010 data analysis

28

Table 7: Project 4 2010 data analysis

29

Table 8: Project 5 2009 data analysis

30

Table 9: Project 6 2009 data analysis

31

Table 10: Project 7 2008 data analysis

33

Table 11: Project 8 2008 data analysis

34

Table 12: Project 9 2007 data analysis

35

Table 13: Project 10 2007 data analysis

36

Appendix 1: Table: 14 Literature Review Matrix

43

vii

LIST OF FIGURES
Figure 1: Variation of the drainage element

37

Figure 2: Variation of the exterior joinery element

38

Figure 3: Project 10 2007 project accuracy over all elements

39

Figure 4: Variation of the elements

40

Figure 5: Variation of project accuracy

42

viii

LIST OF ABBREVIATIONS
GFA Gross Floor Area
QS Quantity Surveyor
GST Goods and Services Tax
P & G Preliminaries and General

ix

1.0 INTRODUCTION
This report looks at the accuracy of estimating techniques used when predicting construction
costs in the Auckland region. The report sets a focus on the techniques estimators use to
predict costs and how accurate residential construction estimators are with their estimating.

1.1

BACKGROUND

The proposed research will focus on estimation technique accuracy when predicting
construction costs in the construction industry.
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.

1.2

RATIONALE

There have been previous studies on the accuracy of estimating construction costs in
countries such as Australia, Nigeria, Gaza Strip, Pakistan, Germany, Saudi Arabia, and
Singapore; however, no such research has been done in New Zealand. The research carried
out overseas shows that estimating in many countries follows the same principles that apply
in New Zealand; however, some of the methods and construction procurement paths differ.
Also, many of the international studies investigate the construction industry as a whole and
do not focus on specific components. In this study, the residential construction sector has
been selected as the focus of an in-depth investigation of the techniques employed by a case
study company in order to check the accuracy of estimating in New Zealand.
This research plans to:

Undertake a study of the current estimating techniques in an Auckland residential

construction company;
Compare the results of the study with findings in the literature and discuss any
similarities or differences; and
Improve the estimators ability to calculate construction costs with the best accuracy
possible.
1

2.0 LITERATURE REVIEW

2.1

INTRODUCTION

This chapter provides a literature review which looks at the estimating techniques for
predicting residential construction costs and identifies how accurate these techniques are.
Supporting literature will be provided for the following research question:
How accurately do estimating techniques used in New Zealand residential construction
predict actual construction costs?
Key points have been identified from the literature and will be expanded on in the following
sections:

2.2

Definition of estimating
Definition of accuracy
Purpose of cost estimating
Forms of estimating
Use and/or Value of historical data
Factors affecting the accuracy of estimating
Feedback and review of accuracy

DEFINITION OF ESTIMATING

The estimated cost of a work is a close forecast of what the actual cost should be. The
difference between the estimated cost and the actual costs will depend on accurate use of
estimating methods. The forecast accuracy varies with each type; it can range from a detailed
estimate, which needs to be very close, to a conceptual estimate which is a ballpark figure
from which budgets are formed.
Estimating has been interpreted differently by various industry professionals. Akintoye
(2000, p 77) describes estimating as a process of predicting costs that are required for the
completion of the work. Cost estimating can be described as the technical process or
function undertaken to assess and predict the total cost of executing an item(s) of work in a
given time using all available project information and resources.
Morrison (1984, p 58) defines a quantity surveyors estimate as the deviation from the lowest
acceptable tender received in competition for the project. However, he then proceeds to
describe estimates for scheme plans prepared in the early design stage that go unaltered
before the invitations for tenders are sent out. In this case, the lowest tender bid cannot be
realistically compared with the estimate as the tender is for a different (updated) plan. This
2

makes the decisions made by the quantity surveyors ability to measure estimated
performance against lowest tenders reliant on the variability of the lowest tenders.
Enshassi, Mohamed, and Madi (2007, p 4) explain that estimating is an important step in the
construction process as the reliability of its estimate accuracy from conceptual to detailed
stages determines the success or failure of a project. Similarly, Odusami and Onukwube
(2008, p 1) explain that estimating cannot be a precise technical and analytical process, but to
an extent, is a subjective process where estimators consider factors relevant to the successful
completion of a project. Therefore, estimating in this sense is not based on the science of
construction forecasting, but on the experience and decisions the estimator makes regarding
factors that may influence the estimate when areas of uncertainty are evident. Furthermore,
Odusami and Onukwube (2008, p 1) also describe estimating for construction projects as an
estimate of the market price that is made up of quantities that may exist previously, currently,
or even after the event under consideration.
However, Aibinu and Pasco (2008, p 1257) do not describe the estimating process as a single
process, but as a cost-predicting exercise during the preliminary stage that comprises two
aspects: bias and consistency. The first aspect, bias, can be described as the mean difference
between actual tender price and the predicted one; whereas the second aspect, consistency, is
described as the degree of variation around the mean (the average).
Subsequently, all of the above definitions similarly describe cost estimating as being the
process of calculated guessing based on a look into the future costs of a project or product
prior to its commencement. Estimates are an approximation, and judging by the theories
discussed in the literature, will include uncertainty regardless of their form.

2.3

DEFINITION OF ACCURACY

The accuracy of an estimate can be assessed in different ways depending on whether the
figure for comparison is the tender, end product, or budgeted item. It is the degree to which a
measurement or calculation deviates from its actual price; therefore, estimating accuracy is an
indication of the degree to which the final price outcome of a project may vary from the
single point value used as the estimated cost of the project (Dysert, 2006, p 2). This level of
accuracy is influenced by factors which may be direct or indirect, and it is crucial to compare
the estimate with other projects of a similar magnitude and type for comparison of value in
order to set parameters of possible influences.
General accuracy is always important as figures outside of the range of estimated prices can
be deemed useless and dangerous. Early stage forecasts for engineering and construction
projects are extremely important to the client, contractor, and project team (Oberlender &
Trost, 2003, p 199). Early stage estimates are vital for business unit decisions that include
strategies for asset development, potential project filtering, and labour and plant commitment
for future projects. For the project team, the performance and overall success will most likely
be measured and assessed on the capability of actual costs to compare with the early cost

estimate. Inaccuracies in early estimates can point to lost opportunities, inefficient

development effort, and dropped expectation of returns.
Liu and Zhu (2007, p 94) state that the accuracy level of cost estimates at the pre-tender stage
is one of the most crucial indicators of effective estimation. In the case of underestimating,
the client may get an unpleasant shock when the tenders are drastically modified upwards. If
the estimate is an overestimation, then the estimator may lose the job or lose the clients
confidence. In theory, this statement demonstrates that the fine line between the overestimate
and underestimate is what the estimator is aiming for.
Morrison argues that it is impossible to measure performance at any stage of the design
process other than the tender stage. Therefore, accuracy is deemed to be the variation of the
initial estimate from the lowest acceptable tender bid. Accuracy of an estimate is measured
by deviation from the lowest acceptable tender received in competition for the project
(Morrison, 1984, p 58). This is not the lowest tender bid, but the lowest acceptable one; as
with tenders, there are notes, exclusions, inclusions, and conditions which can alter the
decision for acceptance.
Oberlender and Trost (2003) state that the accuracy of an estimate is dependant on the
following:
1.
2.
3.
4.

2.4

Who was involved in preparing the estimate,

How the estimate was prepared,
What was known about the project, and
Other factors considered while preparing the estimate.

PURPOSE OF COST ESTIMATING

Ashworth (2004, p 264) states that the purpose of estimating is to indicate probable
construction costs. This is an important factor that clients consider when deciding to build; it
determines the feasibility of a project, or even provides the basis for budget control during
tendering and construction. Estimating is used to encourage the client to push forward with
the scheme design of a project, and to get detailed working drawings drawn up; however, if
the estimate is excessive, it can steer the client away from the opportunity. Alternatively, if
the estimated costs are too low, it can result in an aborted design, losses, or even litigation
from the client.
Estimates are an excellent basis for negotiation as they set the benchmark for the costs that
are expected. Over-estimating or over-provision of funds for one project means fewer funds
are available for other business opportunities. Estimates form the basis for tender comparison
or negotiation (Odusami and Onukwube, 2008, p 1). If the negotiation for a trade is taking
place and no estimate has been made, the certainty that comes with defending an estimators
negotiation is lost.
4

As an estimate is an indicator of construction costs, the client can use it as an indicator of

probable costs from the early stages of construction in order to monitor costs and the
projects budget. It can also serve as a tool to enable the client to evaluate the tender process
and determine the most competitive bid.
Essentially, the estimate is intended to look into the future and create a cost which will
continue to be feasible and adequate at the time the project is completed. The aim of
construction price forecasting is to provide an estimate of the market price of construction
contracts. The estimates may be for an individual or for groups of past, present, or future
projects entering the contract market (Skitmore, 1990).
In summary, the purpose of cost estimation is to produce an accurate and reliable cost
estimate of a construction project. To achieve this, the estimator must keep in mind all the
factors affecting the estimate and be careful to neither over- nor under-estimate.

2.5

FORMS OF COST ESTIMATING

The types of estimates are varied by several factors imposed on the estimate: its purpose, how
much detail is known about the project, and how much time and effort is to be spent in
preparation of the estimate.
Ashworth (2004, p 265) lists and classifies these different types of estimating as:

Preliminary: an initial estimate to establish a benchmark for the project

Feasibility: to decide whether the project should proceed
Viability: similar to feasibility, an investigation of the project
Authorisation: a final cost plan which includes construction detailing
Final budget: a form of cost-checking the initial budget intended for the project
Control: during the construction stage, during the execution of work to check
progress.

Clough (1986, p 37) classifies construction estimating into two major types according to their
functions:

Conceptual (Preliminary) Estimates

Detailed (Definitive) Estimates

2.5.1 CONCEPTUAL (PRELIMINARY ) ESTIMATE

A conceptual or preliminary estimate is the first significant form of estimating made to
attempt to predict the future costs of the project. Also known as top-down, order of
magnitude, ballpark, feasibility, quickie, analogous, pre-design estimate, or preliminary
estimate (Clough, 1986, p 38), a conceptual estimate is usually performed as part of the
feasibility analysis at the start of a project. At this time, the estimate is created with minimal
data on the project scope, and is usually made without detailed design and specifications.
5

Therefore, the accuracy of the estimate has a higher fluctuation (lower accuracy) than of a
detailed estimation (Choon, 2008, p 69).
Hendrickson (2000, p 148) states, a preliminary estimate or conceptual estimate is based on
the conceptual design of the facility at the state when the basic technologies for the design are
known. A conceptual estimate is intended to provide the client with an indicative cost of the
project before making the decision to take the project to the next stage. The preparation of the
conceptual estimate requires a clear understanding of the clients requirements in order to
make sure that the client is expecting the costs.
2.5.2 DETAILED (DEFINITIVE) ESTIMATES
A detailed estimate, also known as a bid estimate or a quantity takeoff, needs to have
substantial detail in order to get the quantities which are otherwise not available in a
preliminary or conceptual estimate. These quantities are used against costs; indirect costs
such as plant, equipment, overheads, profit, escalation, and contingency are then added.
Choon (2008, p 69) describes detailed estimating as an analysis of the method of
construction to be used, the quantities of work, the production rate of resources, and the
factors that affect each sub-item. The key to the quantity take-off is a structured work
breakdown with a proper code of accounts for all work items. Dysert (2003, p 28) expresses
the same point of view that a detailed estimate is made up of components of a project
scope that is quantified and priced using the most realistic unit prices available. Furthermore,
detailed estimates are ideally formed to facilitate the final budget authorisation, bid tenders,
and cost control during the project construction. Also, detailed design is critically dependant
upon the completeness of the design. If engineering plans or other important information is
missing, the scope of the items covered will not be included in the estimate, and this will
result in going back to the use of a conceptual estimate.
Hendrickson (2000, p 156) states that a detailed estimate is created when the scope of work
is clearly stated and a more detailed design is in progress so that the essential features of the
building are visible, Essentially, this says that a detailed estimate is carried out after the
conceptual design has been approved and approximate quantities are supplemented by
detailed estimates.

2.6

USE / VALUE OF HISTORICAL DATA

The accuracy of construction costs are extremely dependant upon the source of quality
historical data and the amount of expertise possessed by the estimator. The limited
information available at the early stage of the project may indicate that the quantity
surveyor/estimator must make assumptions about design details of the dwelling which may
not eventuate as the design, planning, and construction progress (Liu and Zhu, 2007, p 98).

The accuracy of pre-tender building cost estimates are not improving over time (Aibinu
and Pasco, 2008, p 1265). This can be based upon the estimates of new projects being created
from historical data from previous projects. Therefore, over time, the inaccuracies of the past
projects are transferred to the new estimates.
Conceptual estimation methods are dependant upon having historical cost information on
which the estimates are based (Dysert, 2005, p 5). Dysert explains that for estimation
historical information is encompassed by the following methods:

Capacity factors
Parametric estimating models
End product unit costs
Analogy

Conceptual estimating methods are characterised as requiring considerable effort in data

collection, data analysis, and estimating methods before the preparation of the estimate even
begins. The preparation of the estimate takes very little time, but the collation of historical
data is a lengthy process and is only useful if updated and monitored regularly. Dysert goes
on to explain that historical information is only useful to some extent and where new
technology, construction methods, or an unknown factor is encountered, the reliability of the
historical data becomes void. In these cases, the expertise of the estimator should determine
the best alternative way to find a cost.
Typically, historical data is very useful and seems to be used for a number of estimating
methods. However, the viability of the historical data is only useful to some extent, and can
only be used for repetitions of work already done. New items which have not been previously
encountered stand outside the reach of the historical data.

2.7

FACTORS AFFECTING THE ACCURACY OF ESTIMATING

Factors that affect accuracy of estimating come from a large range of categories where
sometimes are very difficult to counter. Liu and Zhu (2007, p 99) categorise the factors that
influence the cost of a project as control factors and idiosyncratic. Control factors are those
that can be determined by the estimators to increase the performance of the estimation.
Idiosyncratic factors are factors that affect estimation but are outside the control of the
estimator; this includes the following:

Market conditions,
Project complexity,
Weather,
Size of contract,
Type of client,
Site constraints,
Resource availability, etc.
7

Elhag, Boussabaine, and Ballal (2005, p 541) state the most significant factors affecting
project costs are qualitative such as client priority on construction time, procurement
methods, and market conditions including the level of construction activity. This shows that
the most significant and considerable influences are indeed the idiosyncratic factors as
described by Liu and Zhu (2007), as these are out of the control of the estimator.
Dysert (2006, p 5) mentioned that there are many factors which influence the estimate
accuracy; i.e. the level of project scope, quality of the data, quality of the assumptions, the
experience and expertise of the estimator, techniques used, effort put into the preparation of
the estimate, and the market conditions. Other factors that are indirectly related to the
estimate but still have an influence are the ability to control the project and the ability to
make changes in the estimate for progression in the scope. The biggest factor that influences
project cost estimating practice is complexity of design; this is followed closely by the scale
and scope of construction (Akintoye, 2000, p 78).
Odusami and Onukwube (2008, p 34) identified and studied the influences that affect the
accuracy of pre-tender cost estimation. These included:

Expertise of the estimator

Quality of information
Project teams experience
Tender period
Market conditions
Design detail
Complexity of design
Availability of labour and materials

Table 1 has been constructed from an analysis of the literature to show the similarity in
discussion for the factors that affect the accuracy of estimating.

Shash and Ibrahim (2005)

Azhar and Farooqui and

Ahmed (2008)

Sum

Trost and Oberlender

(2003)

Akintoye (2000)

Enhassi and Mohamed

and Madi (2007)

Liu and Zhu (2007)

Elhag (2005)

Factors

Dysert (2006)

No

Odusami and Onukwube

(2008)

Table 1: Distributing the factors according to the references

Factors related to consultants, design parameters and information

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

21

Experience of the consultant /

estimator
Construction team's experience in
construction type
Number of estimating staff

Construction team's ability to control

the project
Impact of team integration and
alignment
Amount of involvement by the
project manager
Database of historical data
Completeness of cost information and
details
Accuracy and reliability of cost
information
Applicability of cost information

Inspection, testing, and approval of

completed works (type and number)
Frequency of construction variations
Relationship with
client/contractors/other design team
consultants (previous / present)
Submission of early proposals for
costing / cost planning

Procedure for updating cost

information (feedback systems)
Use of checklists to ensure
completeness and technical basis
Quality of the assumptions used in
preparing the estimate
Estimating method/techniques used
Consultant's/estimator's workload
during estimation
Time allowed for preparing the cost
estimate
Buildability of design

1
9

22

Absence of alterations and late

changes to design

Sum

Azhar and Farooqui and

Ahmed (2008)

Shash and Ibrahim (2005)

Trost and Oberlender

(2003)

Akintoye (2000)

Enhassi and Mohamed

and Madi (2007)

Liu and Zhu (2007)

Elhag (2005)

Dysert (2006)

Factors

Odusami and Onukwube

(2008)

No

Factors related to clients characteristics

23

Type of client

24

Client experience and expertise

25

Client's ability/payment record

26

Client's financial situation and budget

27

Project finance method/appropriate

funding in place on time
Partnering arrangements

28
29
30
31
32

Priority on construction time /

deadline requirements
Experience of procuring construction
Client requirements and expectations
on quality
Previous relationship and
communication level with the
partners

4
1

39

Location of project

40
41

Site conditions and topography of the

site
Site constraints

42

Site requirements

43

Project complexity

44

Construction method / technology /

construction techniques
Impact of project schedule

45

Project programme duration

36

1
2

38

35

37

34

Factors related to project characteristics

Type of project (residential,

commercial, industrial, etc.)

Type of structure (concrete, steel,

masonry, etc.)
Scale and scope of construction

Expected project organisation

Project size

33

10

46
47

49

50

Amount of specialist work

51

Tax and insurance

Sum

Azhar and Farooqui and

Ahmed (2008)

Shash and Ibrahim (2005)

Factors related to contract requirements and procurement methods

Type of contract

Tender selection method (open,

selected, negotiation, etc.)
Method of procurement (traditional,
design and build, etc.)
Form of procurement

48

Trost and Oberlender

(2003)

Akintoye (2000)

Enhassi and Mohamed

and Madi (2007)

Liu and Zhu (2007)

Elhag (2005)

Dysert (2006)

Factors

Odusami and Onukwube

(2008)

No

2
2

External factors and market conditions

52

60

Material
(price/availability/supply/quality/
imports)
Labour
(cost/availability/performance/
productivity)
Equipment
(cost/availability/supply/condition/
performance)
Availability and supplies of labour and
materials
Weather conditions
Impact of government regulation
requirements (policy)
Number of competitors in the market
Classification and level of competitors
in the tendering
Economic situation

61

Stability of market conditions

62

Bidding climate comprising of

competitiveness

53

54

55
56
57
58
59

11

Further to Table 1, Table 2 has been created to reduce the number of factors to the most
commonly mentioned (5 or more in total) in the literature, a total of 19 factors.

Type of client

35

Scale and scope of construction

37

Project size

39

Location of project

41

Site constraints

43

Project complexity

44

Construction method / technology /

construction techniques
Type of contract

46
52

53

54

61

Material
(price/availability/supply/quality/
imports)
Labour
(cost/availability/performance/
productivity)
Equipment
(cost/availability/supply/condition/
performance)
Stability of market conditions

8
6

Sum

23

Azhar and Farooqui and

Ahmed (2008)

Shash and Ibrahim (2005)

Trost and Oberlender

(2003)

Akintoye (2000)

Enhassi and Mohamed

and Madi (2007)

Factors

Liu and Zhu (2007)

Dysert (2006)

17

Experience of the consultant /

estimator
Construction team's experience in
construction type
Completeness of cost information and
details
Buildability of design

No

Elhag (2005)

Odusami and Onukwube

(2008)

Table 2: Short-listed factors

12

From here, a ranking of the literature has been made by determining the rating of importance
the authors of the literature give to the factors. The following table gives each factor a rating
of 1 to 16; the total score is then divided by the number of authors (the average) who included
the factor in their research. This refines the factors into an order of significance.

Trost and Oberlender (2003)

Shash and Ibrahim (2005)

Azhar and Farooqui and Ahmed (2008)

14

6.9

13

16

7.2

16

6.5

X
3
6

10
4
X

X
3
1

X
6
1

8
7
2

7
3
X

X
1
X

6
10
1

9.4
5.6
3.6

12

16

14

8.3

8
13
6

X
X
X

1
1
1

1
X
1
1

7
X
X

9
5
1

10
X
X

X
X
X

12
15
16

7.8
7.0
5.0

10

12

16

10.0

11

16

10

9.8

12

7.1

12

13

9.2

10

11

7.7

15

10

n/a

14

7.3

16
14
11

Project size

39
41
43

Location of project
Site constraints
Project complexity

44

Construction method /
technology / construction
techniques
Type of contract
Material
(price/availability/supply/quality
/imports)
Labour
(cost/availability/performance/
productivity)
Equipment
(cost/availability/supply/
condition/performance)
Stability of market conditions

Factors

17
23
35

Experience of the consultant /

estimator
Construction team's experience
in construction type
Completeness of cost
information and details
Buildability of design
Type of client
Scale and scope of construction

37

2
8

46
52

53

54

61

Sum

Akintoye (2000)

No

Liu and Zhu (2007)

Elhag (2005)

16

Dysert (2006)

10

Odusami and Onukwube (2008)

Enhassi and Mohamed and Madi (2007)

Table 3: Ranked factors of significance

13

From Table 3: Ranked factors of significance. The following ranked order of factor
importance has been established from the literature:
1. Scale and scope of construction
2. Project complexity
3. Type of client
4. Completeness of cost information and details
5. Experience of the consultant and/or estimator
6. Site constraints
7. Material (price/availability/supply/quality/imports)
8. Construction team's experience in construction type
9. Stability of market conditions
10. Equipment (cost/availability/supply/condition/performance)
11. Location of project
12. Project size
13. Labour (cost/availability/performance/productivity)
14. Buildability of design
15. Type of contract
16. Construction method/technology/construction techniques

2.8

FEEDBACK AND REVIEW OF ACCURACY

Feedback from a project is intended to assess the forecasting performance, and should have a
number of characteristics (Flanagan and Norman, 1983, p 18). Effective feedback has three
simple requirements:

Simple to use and capable of giving early indications of error

Capable of identifying any consistent bias in forecasts
Capable of highlighting situations in which there is not consistent bias

With this information gathered, a trend analysis can be carried out over the last few projects
to find where errors are occurring, and what the percentage of error is.
Research in pre-tender estimating practice shows that the knowledge of the estimator is a
major factor in identifying their expertise. This, therefore, affects the accuracy of the estimate
(Lowe, 1994, p 423). The application of feedback systems is there to improve the accuracy of
pre-tender estimates. The usefulness of reviewing the accuracy of previously completed
projects reflects a learning cycle that can benefit future improvement to estimating accuracy.
The following are considered to be prime examples of good methods of reflection to provide
records for future reference (Lowe, 1994, p 423):

Portfolios that keep track of important learning experiences (errors made)

Diary for self-reflection of own work carried out
14

Review of point-of-view of peers

Structured reflection and peer appraisal from
Collaboration to check for errors
Checklists and self assessments

Feedback and review of accuracy has a significant problem: the biggest barrier to learning
from experience is that too often the experience of the estimator will block them from future
learning. The impression received from estimators is that in many cases they are too
confident in their estimates to continue learning.
Previous research on building pre-tender cost estimating stresses the importance of giving
accurate estimates and minimizing estimating errors (Cheung, Wong, Skitmore, 2008, p
349). When it comes to estimating, there are two types of errors: overestimates and
underestimates. Both have ramifications, but estimators seem to be risk adverse and tend to
overestimate and in the clients eyes, this is more acceptable than underestimating which
can lead to under budgeting and losing money. This is where feedback and the review of
accuracy are so important; the use of contingencies over the historical data or cost allocated is
a risky operation, and refining the data available by review can improve accuracy.
Essentially, feedback systems are used to review, assess, and improve the data available for
future use to prevent the inaccuracies in the estimates being carried over onto new projects.

2.9

PROVISIONAL AND PRIME COST SUM EXPENDITURES

Estimates can comprise a provisional sum which is an indicative cost used for items in the
contract which hold uncertainty of the actual cost. However, the scope of the provisional sum
must be stated in order to validate any cost fluctuations that are on-charged to the client.
Morrison (1984, p 59) states that when the effects of a provisional or prime cost sum is
ignored, the estimating performance becomes remarkably inconsistent, as fixed price
expenditures require sufficient detail in order to be estimated accurately.
The use of a provisional sum is an effective form of cost expenditure; it does not
automatically improve the estimators accuracy, but instead, forms a basis for the estimate
being open to cost fluctuation for unknown risks in the project. Kaming, Olomolaiye, Holt,
and Harris (1997, p 92) describe the cost fluctuations in projects as a common result of
inflation. This is due to the demand exceeding supply, and with unprecedented events such as
economic booms, the inflationary effects increase substantially.

15

2.10 CONCLUSION
This chapter has provided a complete background for research on the accuracy of the
estimating process. The literature review shows that estimating has been recognised as a
crucial stage of a construction project. The success or failure of a project is reliant upon the
accuracy of the estimates from conceptual to detail.
Every professional may have a different interpretation of estimating. Estimating cannot be a
precise technical and analytical process; but to an extent, it is a subjective process. Estimators
consider factors relevant to the successful completion of a project, so essentially, estimating
is a process of calculated guessing by looking at the anticipated future costs of a project or
product before it actually commences. Estimates are an approximation and will, therefore,
include a fair deal of uncertainty.
Accuracy is defined as the degree to which a measurement or calculation deviates from its
actual price; therefore, estimating accuracy is indicative of the degree to which the final price
outcome of a project may vary from the single point value used as the estimated cost of the
project. This, essentially, is what every estimator in the industry is after: accurate estimates
which are close to the end result figure. However, from the literature, the accuracy of
estimating has not improved over the years as estimates are always influenced by direct or
indirect factors which may push them off the targeted budget.
The literature repeatedly mentions that feedback systems are an essential part of reviewing,
assessing, and improving the data available so that the new estimates do not have
inaccuracies carried forward from previous projects. This is, ideally, a process of learning
from mistakes, and seems to be a process neglected by estimators and their companies when
it comes to improving the accuracy of the estimating practice.
The literature review can draw conclusions that there are definite factors that affect the
accuracy of estimating; however, as these factors are identified, it becomes evident that the
practice and improvement of the estimating practice is a must; otherwise, the inconsistencies
will continue to be transmitted to new estimates.
This research will investigate whether estimating techniques in an Auckland residential
construction company case study accurately predicted actual construction costs, and will
attempt to fill in the gap in the existing literature theory of the current practices. The
methodology to achieve this is described in the next chapter.

16

3.0 METHODOLOGY
3.1

INTRODUCTION

This research intends to answer the question How accurately do estimating techniques used
for residential construction predict actual construction costs?
This research aims to determine the factors which affect the accuracy of estimating
techniques and identify how these factors influence actual construction costs by using a case
study of a residential construction company, and by answering the following questions:

What factors are seen as being the highest influencers for accurately predicting
construction costs?
What methods are used to predict these construction costs?
How often is the historical data and pricing structure updated through back-costing or
feedback after the completion of a recent project?
How accurately does the case study company predict construction costs, and what
influences the inaccuracies?

To answer these questions, a document analysis of the case study companys construction
cost records will comprise a comparative feedback of the estimated costs from preconstruction to the actual construction costs.
Throughout this chapter, the following subsections will further expand on the research
methodology used to investigate and answer the research question:

Research Design
Data Collection
Sampling
Data Management
Reliability and Validity
Research Ethics
Conclusion

17

3.2

RESEARCH DESIGN

In carrying out the literature review, a number of methods were encountered which contained
a mixture of quantitative, qualitative, and mixed methods. However, the most effective and
most commonly used method was a mixed approach of both quantitative data collection with
a qualitative analysis, or vice versa.
Typical studies would be from Odusami and Onukwube (2008) where a quantitative approach
was taken to identify the 21 factors which affect the accuracy of pre-tender estimation in
order of ranked influence. This is effective as it provides a statistical remedy for analysis
through a number of participants. Similarly, Akintoye (2000) uses the method of obtaining a
list of factors affecting the accuracy of the estimating process through an analysis of the
literature, and then sends out questionnaires to get a ranked list from the participants on
relative importance of the factors. This method of using mail-out surveys is effective on a
large scale where there have been case studies in the past with a large number of respondents
from whom to get a reasonable result.
Another method was used by Morrison (1984); instead of using the participants response to
the rank the importance of the factors, a total sample of 64 projects was used to compare the
effectiveness of the estimating practice (Morrison, 1984). This was first evaluated with a
plus-minus percentage outcome and then a deeper (qualitative) analysis of why there were
discrepancies and inaccuracies in the estimates made in the early stages of the design. The
method used by Morrison compares not one but a large number of case study projects over a
range of companies, and is an example of how to create a more accurate and reliable outcome
and analysis of the actual estimating practice. As mentioned above and in the literature
review, the most commonly used and predominant method is a mixed approach; this has been
selected as the most suitable for this research, and will consist of the following data collection
method:

Data back-costing (Document analysis/statistical study)

A case study serves as a connection between the theoretical knowledge found in available
literature and the reality that is the current practice in the industry. Critical case study
analysis will aim to find and organise the problem in a specific case; in this instance, a
residential construction company. The critical analysis will be used to evaluate and analyse
the presented problem, and to solve it. The purpose of the critical case study is to determine
the central issue of the problem, key decision makers, and to find an effective solution
whether it be a recommendation or suggestion or indicate a need for future study (Bell, 2007,
p 11).
This case study will focus on one residential construction company; it is identified as a
critical case study as the correlation of the literature knowledge and the industry practice
needs to be identified in order to answer the question of how accurately the estimating
techniques predict the construction costs. This is the first step in analysing the industrys

18

level of accuracy for certain estimating techniques, as an examination of a case study

company can provide a benchmark that can contribute to much greater research.
Gillham (2000, p 86) states that quantitative data has a special place in case study research
in so far as it extends the range of evidence on the topics under investigation and qualifies
what we have learnt from other sources. The statistics can be descriptive or inferential which
will bring the outcome to what may lie behind it or what explanations for its outcome are
visible. Because statistical significance is heavily dependant on the size of the numbers
involved, and this research is primarily for one case study, the best use to be made of the
findings will be to establish grounds for further research in the industry.
The literature pointed the way to selecting data collection requirements, as it used smaller
case studies to form the basis for larger statistical analyses of the industrys performance.
However, this method is only effective when the first case study is created as a baseline
observation; that is the purpose of this research.
Using a mixed method approach in the beginning stage will assist the research by quantifying
the range of influential issues seen in the literature, while the last stage will describe and
explore the issues by a first-hand statistical analysis of actual data.

3.3

DATA COLLECTION

This case study comprises a data back-costing comparative analysis.

Data back-costing / feedback comparative analysis
The data collection process is the data back-costing / feedback comparative analysis which
comprises a three-step process:

Obtain the estimate used to forecast the construction costs

Use the estimate as the comparison of the actual construction end cost
Display the difference of the estimate to the actual construction cost as a plus or
minus (+ -) percentage.

The purpose of doing a feedback analysis of each project is to take what has been explained
and identified in the literature as measures and factors affecting the estimating process, and
then see how they affect the accuracy of the estimates. Moreover, the estimates are not
effective if they are done at random for projects of different value, so the projects will need to
be grouped according to value of the most commonly encountered ones from $300,000 to
$650,000.

19

3.4

SAMPLING

Fellow and Liu (2008, P 159) state that the objective of sampling is to provide a practical
means of enabling the data collection and processing components of research to be carried
out whilst ensuring that the sample provides a good representation of the population; i.e. the
sample is representative. Ideally, the objective of sampling the plan is to draw conclusions
about populations (in this case it will be a sample of projects). This is achieved by drawing
conclusions from a portion rather than the whole; this would be called a census.
The first task was to identify the sample method to use to make selections from the
population. By looking into the options of types of samples available, the most effective and
suitable choice was made.
To select the most useful sample type, it had to be one that could facilitate a selection process
from the population as a whole, and also have a wide diversity in the types of projects that
could be studied. For example, random sampling is not ideal as it could end up with a lot of
the same types of projects. Therefore, the selected sample method is purposive sampling.
Purposive sampling is also referred to as judgemental sampling where typical projects are
used to represent the population (Fellow, Liu, 2008, p 160). This involves participants (in this
case projects) being selected that are standard or otherwise known as typical representations
of the population selected. It will be judged for selection through a number of factors:

Date of project completion (Data will be from the last 5 years)

Group range by project value ($300,000 - $650,000)
Mixture of both client-supplied plans and contractor-designed plans
Time of initial estimate

The next step was to establish the population/sample size (number of projects to be used): as
this is a case study, there is only one participant; but a number of projects is critical for an
effective analysis.

3.5

DATA MANAGEMENT

There is one type of data being collected: the data back-costing comparative analysis
(document analysis).
In terms of the data collected for the document analysis, this will be gathered and the project
names will be coded into a cover name to protect its identity (covered in section 3.8 Ethics);
the project value will be grouped with no specific project dollar amount indicated.
All data is stored on a private computer of the author, no other persons can access the data
unless authorisation is given. A hardcopy of the data collected and analysed is left with
Unitec to be stored securely for research purposes.

20

3.6

RELIABILITY AND VALIDITY

Reliability is generally related to the data that is collected, observed, or analysed as a

representation of the entire population, and not a one-off finding. Also, if this research should
be repeated in the future by another author, use of the exact methods and tasks should be
possible under the same conditions and rules (Denscombe, 2010, p 193). This shows that it is
testable at a later date for renewal of information to check if anything has changed.
Validity is concerned with the requirements/methods of the research; it determines if the data
collected and analysed has met all the requirements or expectations of the research carried
out. This could include the types of projects used, and whether every project is unique
enough to represent and cover all aspects of the analysis (Denscombe, 2010, p 193). This will
determine whether the methods are the most suitable and accurate.

3.7

RESEARCH ETHICS

Morals comprise the fundamental beliefs of people over what is right and what is wrong and
so, underpin behaviour human actions and interactions. (Fellows, Liu, 2008, pg 247).The
difference between right and wrong is the line which cannot be crossed when the documents
being obtained by the provider are being collected. The sensitivity of commercially
unavailable data is crucial, and human actions, behaviour, and the form in which the data is
expressed needs to be handled with the utmost care.
Prior to the data collection, this research project was evaluated in an ethics review assessment
by Unitec to ensure that the participant and the company datas commercial sensitivity were
protected with the correct measures of data collection and presentation.
Ethics is there to minimise harm and to ensure that the research participants are not subjected
to any risk or exposure due to improper methods of protecting privacy. The issue of privacy
was controlled by using the following method of presentation of data:

Prior consent was obtained from the participant company with all details of the
research assignment explained, and leaving no areas of uncertainty.
The participants and companys names were not to be published on any public
documents.
Company data would not be expressed in exact dollar values for each project used for
analysis; these were grouped into a category of $300,000 - $650,000, and the
comparative differences were only expressed as percentage values.
Project information would not be divulged in the report; projects would be expressed
as Project 1, Project 2, etc...
Before submission of the final report to Unitec, a copy was given to the participants to
look over and give approval to go ahead; any changes were discussed and agreed to.

21

The issue of right of access to this research will be only at the discretion of Unitec, as all
financial company data from the reviewed projects would be held for up to five years after
the report submission for research purposes only. The issue of data storage was controlled by
the researcher by storing the data in a confidential manner.
There was to be no form of misrepresentation or deception of use of data by the author; the
participant was made fully aware of the purpose, methods, and presentation of the research
prior to any data collection taking place. To ensure the research ethics codes were not
breached, the ethics guidelines were adhered to as stipulated in the information sheet,
participant consent form, and the right to request for access to data form.
The application for ethics approval form was also approved by the research supervisor and
the course coordinator prior to the research being conducted.

3.8

CONCLUSION

In the literature review, the most frequently used method for a project of this nature is
document analysis. Documents required for this project are; initial estimate, variation
schedule, and actual cost report.
A purposive sampling method was used, with typical projects used to represent the
population. They were judged under a number of criteria to shortlist the best suited projects.
Prior to the data collection, this research project was evaluated in an ethics review assessment
by Unitec to ensure that the participant and the company datas commercial sensitivity were
protected with the correct measures of data collection and presentation.

22

4.0 DATA AND DISCUSSION

4.1

INTRODUCTION

This research intends to answer the question: How accurately do estimating techniques used
for residential construction predict actual construction costs?
Section one
The data analysis in the following chapter was collected through document analysis of 10
different projects using the project value bracket of $300,000 to $650,000 over the last five
years. These documents were used as a fair representation of the companys portfolio of
work. The documents were obtained through permission from the managing director in order
for the companys estimating analysis to take place. The findings have been analysed in terms
of the research question and as confirmation of theory drawn from the literature.
The purpose of this chapter is to detail the data collection process carried out and describe the
data management process to a greater extent as mentioned in the previous chapter. The data
will be categorised by the project number and split into a deeper, defined, elemental
breakdown for closer analysis.
Section two
This section intends to discuss the data findings by using a linear analysis of the sampled
projects accuracy over the last five years of data collected. This chapter will also discuss the
following information between the findings:

Similarities between data findings

Differences between data findings
Significant findings
Actual data compared with literature

From here, the conclusions and recommendations for future research can be made in the next
chapter.

23

4.2

DATA COLLECTION PROCESS

The data collection process has been carried out as mentioned and described in the previous
section 3.3 with a document analysis. The document analysis comprises a three-stage
process which utilises the initial estimate, variation schedule, and actual cost report of a
project to transfer the data into a comparative table. The document analysis took place over a
four-week period at the discretion of the author after working hours. Before the documents
from the case study company were collected, ethics approval and permission granted from the
case study company were obtained. The case study companys name and project names were
replaced with codes in accordance with the ethics protocol.

4.3

DATA MANAGEMENT PROCESS

The data management process consists of the raw data being summarised into an elemental
cost breakdown. This is categorised into the following 17 elements used by the company to
group different costs in the project:
1. Foundations, excavations, and retaining wall
2. Floors
3. Fencing and landscaping
4. Decks
5. Driveway, paths, and patio
6. Exterior sheathing
7. Roof
8. Insulation
9. Exterior joinery
10. Interior linings and finishing
11. Electrical
12. Hardware
13. Interior joinery
14. Decorating
15. Plumbing
16. Drainage
17. Additional items including P & G
The elements are split into two areas, the first section being the budget which consists of the
variations and initial estimate. The second section is the actual cost which is tabulated from
the actual cost report. This data is entered into a spreadsheet where a + - percentage is
calculated; however, the costs are then hidden and only the percentage is shown on the report.
This enables a more detailed analysis of the project which can be thoroughly discussed later
in this chapter in accordance with the differences and similarities of the data to the literature.
The data management process has been compiled through a quantitative approach which
24

allows the author to highlight trends through the precise information that has been presented
in the data. The data was entered into the spreadsheet for analysis using the following
process:

4.4

Enter the initial estimate and variation schedule into the appropriate budget element
by:
o Deducting the New Zealand Goods and Services Tax (GST) to get to the net
cost in order for all costs to be of the same representation.
o Adding the costs cumulatively to arrive at an element total.
o Some projects which do not show in the budget required manual calculation
consisting of a dollar per gross floor area rate for each element
Enter the cost report into the correct actual cost element by:
o Taking the summary cost total of each coded item and adding it into the
element table.
o Where conflicting items are seen, judgement of the correct group to apply the
cost is made.
Final calculation of the + - percentage of cost deviation is calculated by dividing the
actual cost by the budget and rounding to two decimal places for each element, and
then summarising into a total project deviation total.

ISSUES WITH DATA COLLECTION

Data collection had barriers to a perfect analysis which consisted of the following areas that
limited the accuracy (minor) of the data comparison:

Missing information some projects did not have budget sheets which required
manual calculation of the budget; also, as the projects got older, the variation
schedules and cost reports lacked the detail required.
Conversion of GST from 12.5% to 15.0% when deducting GST from the estimates to
get to the net value; some variations were not shown if they were raised and paid
before 1 October 2010
The format and consistency of the variation schedules and cost reports seemed to
change with the old projects along with some variations of schedules that were not
existent, or if only a summary of the variations was available
Incorrectly coded items in the cost reports made it difficult to identify which element
the cost belonged to; for example, torch on membrane could be for a flat roof or a
mid-level deck; however, the cost was not separated out.
Some projects included the land which required some costs to be removed from the
calculation such as solicitor fees, land cost, interest on the land, etc.
Overlap of overheads in the cost reports when they should be separated into the
company overheads such as quantity surveyor fees or company labourer fees.

25

4.5

DATA MANAGEMENT AND ANALYSIS

4.5.1 PROJECT 1 - 2011

House type: Standard
Project duration: 13 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
-8.00%
15.12%
n/a
n/a
n/a
8.49%
31.63%
9.25%
-32.17%
24.47%
2.22%
-5.64%
-48.49%
-70.95%
6.10%
-3.99%
-3.32%
1.69%

Table 4: Project 1 2011 data analysis

Project 1 was generally very accurate overall, with an estimate that came within 1.69 percent
of the actual budget. However, the percentage differences between individual elements
suggest that there were changes made or discrepancies with the actual construction cost in the
information provided at the estimating stage. This would suggest that there were material
price increases and changes in scope during construction, and indicates that historical data
may need updating, or possibly, that contingency for price escalation is not being considered.
As a whole, the project is within budget, but there are fluctuations throughout the building
components which need attention. Also, from the budget vs. actual figures it seems budgets
are not being set, or that the budgets are being mixed up over several trade elements. Some
invoiced work has been coded incorrectly, which makes it difficult for back-costing and for
feedback from projects to be accurately achieved. This may mean that project feedback
processes need more time and effort to dissect the information to truly identify the
discrepancies and inaccuracies. The biggest discrepancy in this project is the joinery (in terms
of value, not percentage). This could be due to the joinery being an architectural range for
which the budget for the model house is not sufficient. During the initial stage of the project
estimation, it would have been better practice for the estimator to obtain a quote or to make
the joinery a provisional sum so that the difference could have been on-charged to the client.
26

4.5.2 PROJECT 2 - 2011

House type: Standard
Project duration: 11 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
8.10%
5.14%
n/a
n/a
n/a
5.43%
20.68%
-46.61%
-27.70%
-19.23%
-3.60%
-26.50%
-88.54%
-10.28%
13.14%
-11.28%
50.48%
6.25%

Table 5: Project 2 2011 data analysis

Project 2 had a significant number of variations to the contract; hence, all budgeted figures
become invalid. From the budget, there is a difference of 6.25 percent, which is quite good in
terms of additional margin; however, the biggest difference is in the joinery expenditure (in
terms of value not percentage). This has clearly been underestimated and there are a number
of reasons which could contribute to this.
From the above, it would suggest that items which have not been affected by variations
requested by the client have been within the budget, but items for client changes are
significantly different. From the above, it also seems that the items in the contract that are
usually provisional sum expenditures exceed the estimates. This is unusual as the provisional
sum is an actual cost versus the indicative budgeted expenditure. Any additional costs should
have been on-charged to the client; however, the underestimate could also be a result of
incorrect coding of the invoiced items.
Although, in this case, a higher margin has been achieved by overestimating the project costs,
there is a risk that tenders for jobs may be lost in other situations where this occurs.

27

4.5.3 PROJECT 3 - 2010

House type: Architectural
Project duration: 6 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
n/a
-15.66%
-11.98%
n/a
-7.72%
4.82%
7.86%
-39.11%
-9.46%
-26.41%
-19.31%
6.00%
41.48%
-4.19%
-5.55%
-4.27%
-77.19%
-10.93%

Table 6: Project 3 2010 data analysis

This job shows a significant loss as the actual costs exceeded the budget allowed in the
contract. Because the discrepancy has spread across the entire job, it seems the trend could
have been the result of several factors. First, the standard model the house is on is the square
metre rate, and this could be inefficient. This rate is generic and used as a kick-off point for
estimating; if this is inaccurate by either the quantity of the gross floor area or the rate not
being at the appropriate amount, it could upset the entire estimate. Also, looking at the date of
the estimate, it shows that the contingency for price increases has not been allowed for.
Another influence could have been that at the time the estimate was carried out, work was in
short supply and a builders discount was given in order to obtain the job. In strict terms of
the estimating aspect, it is out; however, the underlying factors are construction issues and the
clients personality. Construction issues such as remedial work, incorrect application of
finishes, or general errors made on-site could also be reasons for the differences in the budget
vs. actual figures. The client has a major influence over the project; an easy-going client
makes their decisions quickly and keeps the job going. However, a difficult client questions
all claims, changes, and progress which eventually slows construction and costs the
contractor money. It is apparent from the P & G that the job has gone on for way too long.

28

4.5.4 PROJECT 4 - 2010

House type: Standard
Project duration: 11 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
32.08%
-32.50%
12.52%
81.66%
19.87%
1.23%
13.39%
-87.60%
16.84%
0.29%
-7.44%
24.76%
6.62%
6.60%
-24.78%
-70.32%
18.26%
2.39%

Table 7: Project 4 2010 data analysis

Overall, Project 4 was very accurate with very few overruns. However, looking more closely
at the job, two items which stand out are the insulation and drainage. Insulation has been
trending from the other jobs as a constant overrun. This indicates that the historical data is not
being updated with new building code requirements.
This poses a minor risk with just one item being only a few thousand dollars outside of the
budget. However, over a long period of time, this could build up a constant deficit but one
that can easily be fixed by updating the historical data (including the standard model house).

29

4.5.5 PROJECT 5 - 2009

House type: Standard
Project duration: 7 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
39.89%
-2.36%
n/a
60.64%
9.59%
17.25%
-62.97%
46.26%
-7.25%
-0.35%
17.34%
-6.02%
31.31%
6.07%
23.18%
14.74%
-10.21%
7.15%

Table 8: Project 5 2009 data analysis

Project 5 has a difference of 7.15 percent under the intended budget; this is better for the job
margin, but is clearly an overestimate in terms of what should have been budgeted for. One
item which stands out is the Roofing element; this has had a significant overrun which
indicates that the type of roof budgeted for was substantially lower than the required amount.
This can be due to a number of reasons such as: the type of roof was not estimated as a sea
spray zone type roof; historical data was not updated frequently enough to identify the proper
rate; there may have been construction issues with a damaged roof needing replacing; an
inexperienced estimator may not have provided for extra allowances for difficult roof
construction with high pitch; or the gross roof area was not measured correctly at the initial
stage.
Another frequent mistake or discrepancy which seems to be reoccurring is incorrectly coded
elements in the invoicing system this company uses. For example, the decking element
should consist of the timber, hardware, builders labour, waterproofing, plumbing, and
staining invoices; however, it seems this has been mixed or merged with other elements and
creates difficulty when it comes to back-costing to see where improvements can be made.
The margin would, in fact, be higher on this job due to the under budget figures; however,
this form of estimating proves to be inefficient as the contractor is pricing himself out of the
market.

30

4.5.6 PROJECT 6 - 2009

House type: Architectural
Project duration: 14 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
37.38%
-12.08%
71.27%
n/a
-105.78%
2.50%
61.96%
50.36%
-29.20%
15.10%
26.06%
35.89%
17.16%
-74.10%
12.99%
-24.63%
-22.76%
10.81%

Table 9: Project 6 2009 data analysis

Project 6 seems to be overestimated for the majority of the elements at a total difference of
10.81 percent. This project has four significant overruns: driveway paths and patio, exterior
joinery, decorating, drainage, and additional items including P & G. Driveway paths and
patio have been underestimated from the beginning; no variation could be raised as the
contract has not changed, and it is not a provisional sum to on-charge as the budget deviation.
This has resulted in the client obtaining a concrete driveway more cheaply without paying
anything over the initial estimate. The problem with this is that either the measured area was
under the required amount, or the rate used was insufficient. The exterior joinery, as indicated
from previous projects, seems to constantly be underestimated; this shows that the rate
allowed per $/GFA is insufficient, and when a house deviates from a standard residential
series joinery range, it requires trade quoting or a replacement of the fixed cost with a
provisional sum. Again, this is an issue with the historical data, and relying on it to be used as
a general tool for estimating.
Decorating has been underestimated by approximately -74.10 percent; this is a result of the
estimator not allowing enough when it comes to deep base, pastel, or dark-coloured paints.
This is a contract exclusion; however, it has not been claimed from the client in a variation,
and therefore, it becomes a cost control issue rather than a estimation issue. The drainage has
exceeded the budget, but unlike the other projects, this is not a provisional sum; therefore, the

31

difference could not be on charged on to the client. This is a problem for items which have
unforeseeable conditions for estimating.
Underground work like foundations, excavation, and retaining wall and in this case,
drainage is reliant on the site condition. Drainage is also as-built; therefore, the plan pipe
work and fittings positioning becomes invalid. Lastly, the additional items including P & G
have been underestimated for a number of reasons; the overheads are being mixed up with
the job costs, and construction has taken too long so that the temporary services such as
portaloos, scaffolding, power, water, etc. have exceeded their budgets.

32

4.5.7 PROJECT 7 - 2008

House type: Standard
Project duration: 6 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
-2.15%
-14.56%
32.71%
28.54%
29.15%
-22.70%
63.21%
58.59%
7.14%
16.12%
22.11%
11.08%
-5.65%
-13.92%
12.91%
-359.92%
-83.40%
0.49%

Table 10: Project 7 2008 data analysis

Project 7 is very accurate overall; however, this has a deviation of 0.49 percent with major
overruns in the drainage and additional items including the P & G element. The
underestimate caused by the drainage is a result of a fixed cost item in the contract locking in
the contractor with no choice but to absorb the difference. Trends seen from the other projects
are that the drainage is usually a provisional sum as it is as-built, and highly dependant on the
site topography and council conditions.
The floors have been severely underestimated due to the fact that the model house or
"standard" per gross floor area budget may not have been updated regularly. With a house
that is outside the scope of a standard midfloor, the rate allowed is not sufficient and becomes
invalid. Other overruns seem to trend from over-long construction increasing the temporary
costs; this can result from a number of reasons; i.e. insufficient budget from initial estimate,
construction programming not tight enough, or delays caused by the client's constant changes
in project scope delaying construction. Unlike the previous jobs, this one did not have an
overrun in the joinery element which may be due to the fact that double-glazing was not
required at this stage.

33

4.5.8 PROJECT 8 - 2008

House type: Standard
Project duration: 12 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
34.95%
-0.65%
2.65%
41.43%
n/a
-16.07%
14.67%
42.43%
25.39%
19.63%
-16.73%
137.22%
0.16%
-20.42%
-22.03%
-261.81%
-12.23%
2.84%

Table 11: Project 8 2008 data analysis

Project 8 is close to being on target with only a deviation of 2.84 percent. A few
discrepancies in the job that stand out are the drainage, hardware, decorating, and plumbing.
The biggest discrepancy is the drainage cost created as a fixed sum in the contract; while in
the other projects, it is almost always a provisional sum. This seems to be a commonly made
mistake when estimating a job in the initial stage when the underground work poses a great
risk. Being ground conditions, council requirements and as the drainage is as-built then this
initial plan becomes invalid.
Next, the hardware element seems to be coded incorrectly; it is hard to tell if it was accurate
at all or if the client has supplied all the gear without the contractor raising a credit variation.
The next two inaccurate items are the decorating and plumbing elements; these did not have a
budget established, and several remedial costs are apparent without back charges to the
responsible trade. This is, however, not an estimation problem, but a site manager and/or cost
control problem reflecting a lack of attention to the sites daily activities.
Finally, the most recurring inaccuracy and one that seems to be underestimated constantly
is in the additional items including P & G; this can be a result of slow construction,
budgets not being set, underestimation, and mixing overheads in the job cost when they
should be separated into the company overheads.

34

4.5.9 PROJECT 9 - 2007

House type: Standard
Project duration: 7 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
1.41%
-159.45%
n/a
91.35%
-14.15%
-33.64%
73.56%
16.53%
-11.16%
-13.08%
-0.45%
7.24%
-3.57%
-31.21%
-13.65%
17.97%
33.44%
0.44%

Table 12: Project 9 2007 data analysis

Project 9 is very accurate overall, but appears to have major overruns in the specific elements
when looked at more closely. The elements of concern are in the floors and decks; it is
difficult to identify if they are actual overruns as they contain several different trades which
have not been coded correctly. This poses the risk of not following the budget which defeats
the purpose of even setting one. The job is accurate overall, but the discrepancies within the
entire job show that the project is not being carried out correctly.
One key aspect which has changed from previous projects is that the additional items,
including P & G, are not an overrun, but under the budget. This is apparent from more
budgets being set at the early stage, and the pre-tender estimate being more accurate than the
previous projects. This project dates back nearly five years, but the budget setting in the
invoicing system seems to be more accurate in terms of not mixing up overheads and
allowing for detailed breakdowns. This being said, the project does show discrepancies
throughout; although. as a whole, it has come out on target.

35

4.5.10 PROJECT 10 - 2007

House type: Architectural
Project duration: 15 months
Ref
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Item Description
Foundations, excavations, and retaining wall
Floors
Fencing and landscaping
Decks
Driveway, paths, and patio
Exterior sheathing
Roof
Insulation
Exterior joinery
Interior linings and finishing
Electrical
Hardware
Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G
Total deviation as a percentage

% Difference
-41.96%
-36.02%
n/a
21.16%
-32.08%
-2.22%
64.83%
1.06%
-32.23%
-28.36%
21.40%
-275.35%
-220.67%
-58.06%
-6.58%
1.16%
-20.51%
-13.71%

Table 13: Project 10 2007 data analysis

Project 10 has the highest deviation overall with an accuracy of -13.71 percent which has
nearly all elements in the negative bracket. Clearly, it has been underestimated in all aspects
which could be caused by a number of factors. The first of these is time: the time lapse
between when the estimate was made and the time of construction. Another factor is the
effectiveness of the $/m2 of GFA budget established. The estimates are first based on a m2
rate established from the model house; however, the effectiveness of the rate drops when the
house complexity changes. Also, the gross floor area of the house passes the maximum
allowance. The model house only has one version, so there could be an additional allowance
or a contingency for architecturally designed houses, or provision of a new system of pricing
houses when it exceeds a certain GFA.
The biggest discrepancies are the hardware and interior joinery; the interior joinery seems to
be a result of the painters invoice for a deep-based paint. This is an extra cost to a standard
paint colour which has not been on charged to the client in a variation that has resulted in a
loss in that element. The hardware variance seems to be from an underestimate in the early
stages of the initial estimate. An element which does not often seem to be off the target is the
electrical trade; this element is always on target with the standard per GFA m2 rate, and with
any additional changes charged on to the client. Alternatively, the drainage in this case is a
provisional sum which results in the actual cost replacing the budgeted cost and has put the
specific element in a very accurate estimating range.
36

4.6

SIMILARITIES BETWEEN DATA FINDINGS

When the budget and the actual costs are compared to one another there are similarities
which seem to reoccur through the projects. The drainage element is a prime example of the
use of provisional sums being so important to a projects level of accuracy. Morrison (1984, p
59) describes how provisional sums, when ignored, have an influence on the estimators
performance, as fixed price expenditures require sufficient detail in order to be estimated
accurately.
The following shows how the accuracy of a project alters when an element is subject to
uncertainties such as ground, local authority, and building code conditions.

Variation of the drainage element

50.00%

Variation from budget (%)

0.00%

Project 9 - 2007
Project 10 - 2007

Project 5 - 2009

Project 3 - 2010
Project 1 - 2011

Project 6 - 2009

-50.00%

Project 2 - 2011

-100.00%

Project 4 - 2010

-150.00%
-200.00%
-250.00%

Project 8 - 2008

-300.00%
-350.00%
-400.00%

Project 7 - 2008
Time scale 2007 - 2011

Figure 1: Variation of the drainage element

The projects which have the element classified as a provisional sum are within a close
proximity of the budget. Whereas Project 8 2008 and Project 7 2008 are completely
outside of the budget and have resulted in a negative value. This is an important form of cost
expenditure; it is not a automatic guarantee of the estimators accuracy, but instead, forms a
basis for the estimates being open to cost fluctuation for unknown risks in the project
(Kaming, Olomolaiye, Holt, and Harris, 1997, p 92).
Estimating for elements in a project as described by Choon (2008) consist of quantities of the
work, method of construction, production rate of resources, and the factors which affect these
items. This is relative to fixed-cost expenditures where the work can be quantified and
methods are identifiable; however, it is apparent that the inconsistencies are being repeated
with the underground work which cannot be quantified for a detailed estimate.

37

Conceptual estimation methods are dependant on having historical cost information upon
which the estimates are based (Dysert, 2005, p 5). The cost information used in the projects
analysed indicate that the historical data is not updated or monitored as it should be. The
discrepancies seem to be carrying onto the future projects which lead to losses on projects
and opportunities lost due to over- or under-estimation.
The graph below displays the flooring element variation from the initial budget:

Variation of the exterior joinery element

30.00%
Project 8 - 2008
Variation from budget (%)

20.00%

Project 4 - 2010

10.00%

Project 7 - 2008

0.00%
Project 3 - 2010
-10.00%

Project 9 - 2007

Project 5 - 2009

-20.00%
Project 6 - 2009

-30.00%
-40.00%

Project 10 - 2007

Project 2 - 2011
Project 1 - 2011

Time scale 2007 - 2011

Figure 2: Variation of the exterior joinery element

The flooring element is a prime example of an element which has no consistency in the
accuracy of its data. The variation between the budget vs. actual is completely outside of the
range it should be within. This displays reoccurring inaccuracies which suggest that the
historical data or model house pricing structure is not being updated as it should be, and the
inaccuracies are being transferred onto future projects.
Flanagan and Norman (1983) emphasise that the feedback procedures of a project are
intended to access the forecasting performance, and should have a number of characteristics
that identify the issues. By not carrying out these feedback reviews, a significant problem
arises and presents a barrier to learning from experience. It is suggested that the estimators
experience will block them from future learning; however, this is only relevant for
idiosyncratic factors that affect estimation. The floor element, for example, is not an element
affected by the uncertainties that underground work would be challenged by; instead, it is
affected by market rates and cost for construction methodology which is not being updated
regularly as it should be.

38

4.7

DIFFERENCES BETWEEN DATA FINDINGS

The projects seem to fall into two categories when being analysed:

Standard designed houses

Architecturally designed houses

The base rate which is created from the companys standard model house was still used in
both scenarios when it came to forecasting the construction costs. It became apparent from
the data analysed that the rate used could, in fact, be invalid for architecturally designed
houses as it was outside of the scope of the model house completely.
Below is prime example of a project which had significant overruns in nearly all elements:

Project 10 - 2007 project accuracy over all

elements
100.00%

Additional items

Drainage

Plumbing

Decorating

Interior joinery

Hardware

Electrical

Exterior joinery

Insulation

Roof

Decks

Interior linings and

-200.00%

Exterior sheathing

-150.00%

Driveway, paths

-100.00%

Fencing and

-50.00%

Floors

0.00%

Foundations,

Variation from budget (%)

50.00%

-250.00%
-300.00%

Elements

Figure 3: Project 10 2007 project accuracy over all elements

Project 10 - 2007 has inaccuracies in nearly all elements which is the result of an
underestimated conceptual estimate. The top two factors identified in the literature are the
scale and scope of construction and the type of client. These factors are crucial to the success
of a project, and estimates that fail to take them into account produce invalid conceptual
estimates. The level of accuracy of cost estimates at the pre-tender stage is an important
indication of effective estimation (Liu and Zhu, 2007, p 94). The contracts are fixed;
therefore, cost fluctuations are not appropriate to on-charge to the client; however, the
provisional sums are indicative and subject to the actual cost replacing the budgeted figures.
This poses a risk to the contractor as the price escalation of the provisional sum allowance
must be justifiable. Should the increase in cost be a result of underestimation in the early
stages of the project without any change of scope then the contractor bears the risk of
payment claim rejection. This is seemingly a common dissatisfaction for the client when the
39

unpleasant shock comes because the tender prices substantially exceed the budget. This
reinforces the argument that Oberlender and Trost (2003) have as to the accuracy being
dependant upon who prepared the estimate, how it was prepared, what was known about the
project, and the factors that were considered when preparing the estimate.

4.8

SIGNIFICANT FINDINGS

The variation of the project totals are clear in showing which projects came within the budget
range and which projects did not. The 17 elements, on the other hand, fluctuate from element
to element when compared over the 10 sampled projects.
The following graph displays the elements percentage of accuracy over the 10 sampled
projects analysed:

Variation of the elements

Foundations, excavations and
retaining wall
Floors
-12.74%

Fencing and landscaping

11.30%

Decks
Driveway, paths and patio

-25.30%

Exterior sheathing
21.43%

-70.24%

Roof
Insulation
Exterior joinery
54.13%

Interior linings and finishing

-27.05%
-0.43%

Electrical
Hardware
-27.02%
28.88%
-9.13%
5.12%
4.16%

-9.98%

-1.18%

-14.45%
-3.49%

Interior joinery
Decorating
Plumbing
Drainage
Additional items including P & G

Figure 4: Variation of the elements

The elements with the highest discrepancies seem to be affected by the following influences:
40

Selection of provisional sum expenditures

Historical data validity
Factors affecting the accuracy of the estimate
Model house base rate

Selection of provisional sum expenditures

It is apparent that the projects which require provisional sums have either not been accounted
for or inadequately estimated which led to under claiming from the client. This is a argument
that Morrison (1984, p 59) had which was that the provisional sum expenditures when
ignored, the estimating performance becomes remarkably inconsistent.
Historical data validity
Odusami and Onukwube (2008, p 1) explain that the estimating process is not a precise
technical and analytical process, but to an extent, a subjective process where the estimator
considers factors relevant to the successfulness of the project. The estimation over time,
whilst only a sample representation, still shows that major elements such as floors, fencing
and landscaping, decks, roof, interior joinery, decorating, and drainage require attention as
the inaccuracies can be carried forward onto future projects and are costing the company
money.
The accuracy of a projects construction costs, as emphasised by Liu and Zhu (2007, p 98),
are extremely dependant on the source of quality historical data along with the expertise of
the estimator. The projects, whilst only a small sample, seemed to display inaccuracies over a
number of projects which would usually have been corrected by feedback processes. The
historical data used displayed signs that it was not being updated and revisited after every
project. This caused the inaccuracies to be carried forward onto new projects and further
affected the margins of the contractor. The detail in the early stages of a project is limited and
is based on the quality of the historical data and estimators assumptions and/or judgements.
With the lack of quality historical data, the information used is invalid and poses a risk of
losing clients in the early stages or completing a project with a loss.
Factors affecting the accuracy of the estimate
The estimates seem to be affected by factors which are identified in the literature as having
affected their accuracy. These have been identified by Liu and Zhu (2007, p 99) as control
factors and idiosyncratic factors. The control factors are those that can be determined by the
estimator to increase the performance of the estimation; however, the idiosyncratic factors are
outside of the control of the estimator, and are those which require judgement decisions and
expertise to facilitate so as not to risk a project. The case study company has displayed areas
of judgement which have resulted in inaccuracies such as the drainage element. This may be
a factor which is only influenced by the estimators experience and expertise and can
determine whether a project is successful.
Model house base rate
41

The majority of discrepancies and inaccuracies in the data analysed from the projects
reinforced the argument which Akintoye (2000, p 78) had for the biggest factors that
influence a projects cost estimating practice. These are complexity of design followed by the
scale and scope of construction. The project which
which had the largest inaccuracy was an
architecturally designed house that used the same method of estimation and the base rate of a
standard model house. This seemed to be inadequate and simply outside of the scope of the
construction.
An estimate is definedd by the literature as a close forecast of what the actual cost should be,
and the accuracy of the estimates are determined by the techniques and methods used. The
case study company has employed only one method for every sampled project; this consists
of a base rate created from the standard model house and then additions of extras over the
standard model house inclusions. This has proven to be accurate in some projects and
inaccurate in others. Ashworth (2004, p 264) explains that the estimation is an important
i
factor in a clients decision to build, as it determines the feasibility of a project. Therefore,
the success of the estimates is dependant on the accuracy of their preparation. The projects,
when dissected to the exact element costs,
costs seemed to show
ow inaccuracies and discrepancies
which question methods and data used for estimation. The overall variation between the total
budgets vs. actual cost of construction has a better representation of the accuracy of the
projects.
The following graph indicatess the variation of project accuracy over time for all 10 sample
projects analysed:

Variation of project accuracy

15.00%
Variation from budget (%)

Project 6 - 2009
10.00%
5.00%

Project 5 - 2009
Project 8 - 2008
Project 9 - 2007Project 7 - 2008

Project 2 - 2011

Project 4 - 2010

Project 1 - 2011

0.00%
-5.00%
-10.00%

Project 3 - 2010
Project 10 - 2007

-15.00%
Time scale 2007 - 2011

Figure 4: Variation of project accuracy

The red line is the bracket the projects aim for in order to be considered as an accurate
project. The projects outside of this bracket are inaccurate in the sense that they are either
over- or under-estimated.
estimated. The under-estimates
under
represent a loss, but the over-estimates,
over
while
they indicate a higher margin achieved by the contractor, are still inaccurate and when
42

estimating a project in the early stages, pose a risk to even obtaining the job from a client
(Aibinu and Pasco, 2008, p 1257).

4.9

CONCLUSION

This chapter has discussed the data findings in terms of the similarities between the findings,
differences between the findings, significant findings, and the actual findings compared with
the literature. It investigated the inaccuracies and discrepancies in the data which drew
discussions of where the issues have risen.
The significant findings consist of the actual data from the case study company backed by the
literature theory as it relates to the research question to illustrate that the research question
has been answered. Throughout the chapter, the issues with data collection and the process of
analysing the data have been described to identify the flaws in the analysis. The overall
comparison of the data findings has been critiqued and conclusions from the literature have
been drawn to specify the similarities and differences in the case study company.
The findings and discussions in this chapter will be transferred into the following chapter to
provide a complete conclusion for this research. The limitations of the research,
recommendations for future practice, and future research areas derived from this research will
also be presented.

43

5.0 CONCLUSION AND RECOMMENDATIONS

5.1

CONCLUSIONS

The results of this study indicate that there are indeed inaccuracies in the projects analysed.
From the literature theories compared to the actual construction data and the authors
interpretation of the data, the conclusion can be drawn that the process and the estimation of
the projects actual cost forecast is under-utilised.
Throughout the entire project, the variation between the budget and the actual costs seemed
to fluctuate between an accurate and a very inaccurate project. When this is dissected into the
elements, it shows that the historical data and quality of resource information used is not
being updated and reviewed as frequently as it should be. This has resulted in inaccuracies in
the elements which are then being carried forward into future projects. The technique and
method of estimation of the case study company comprises a base GFA rate based upon a
model house with additions of extra allowances for deviations from this standard house. From
one of the most inaccurate projects, it is apparent that the base rate used is not valid when
houses are architecturally designed as the scope of construction of a standard model house
differs completely.
Where idiosyncratic factors such as the drainage element where the uncertainty of the
underground work and local authority requirements among other conditions need to be
considered in the early stages of a project, then the estimator must make decisions that will
minimise, eliminate, or transfer the risk. The projects analysed showed that judgement has
been made for selection of provisional sums when it is applicable and when it is not.
However, in some projects this has resulted in the underestimation of a fixed price element,
and as it is not a provisional sum, the risk is not transferred to the client where further
payments can be claimed for the extra costs. This, while not completely certain based on the
limited information collected, is a result of the estimators expertise and experience which is
one of the primary requirements for a successful project.

5.2

RECOMMENDATIONS

From this research, the discussions and conclusions have highlighted a number of areas
where improvements can be made within the case study company in order to provide more
accurate project estimates.
This residential construction company should consider a system of feedback processes which
will comprise an analysis of projects costs vs. their budgets to determine where the areas of
inaccuracy are and make amendments to the pricing structure to correct the discrepancy. This
44

can mean that the company will be able to see the factors that affect the estimates, and
examine the level of risk that the estimate can have when incorrectly determined. This poses
two advantages when the feedback system is in place: as a learning curve for juniors and even
the seniors and as a procedure for improving the projects margins to arrive on budget.
The case study company is working with only one method of estimation using the
standard model house base rate plus the addition of extra allowances required for the project.
While this may be an effective process when adhered to correctly, it may only be valid when
the house does not deviate from the existing design. Architecturally designed houses may
require a more substantial estimation process which is also referred to as a traditional
estimation method. This consists of each element having a complete cost and no base rate is
applied. While this is a more time-consuming task, it will provide a more accurate indication
of the projects actual cost forecast.
The estimators experience and expertise is one of the primary requirements for a successful
project, so these suggestions for improvement may only be considered as a process similar to
the feedback system to train the juniors by looking at past mistakes, discrepancies,
inaccuracies, factors for estimation, and the methods to be employed when estimating. While
change does not happen overnight, this can provide a starting point for estimators to establish
a routine for reviewing all projects after completion.

5.3

LIMITATIONS

All research papers, journals, and books used to understand the literature theory behind the
estimating practice originated outside of New Zealand. This literature was also based mostly
on a general or commercial sector interpretation which can be argued to be limited in
relevance to the New Zealand residential construction industry.
The data divulged in the data findings chapter is not a proper representation or presentation of
the actual costs vs. budget value variations as the values are shown not as a dollar value but
as a percentage difference. In some instances, the percentage difference is dramatic in the
sense that while it is a minor variation in terms of a dollar value, it actually shows as a high
percentage of deviation.
This study did not distinguish the estimators perceptions or the case studys estimators
experience and expertise; therefore, the conclusions given for inaccuracies due to this are
only from observation of the data findings.
This study, while specifically concentrated on the case study company, is only limited to this;
it is not a representation of the entire construction industry or even the residential
construction industry.

45

5.4

FUTURE RESEARCH

There has been little or no research into the accuracy of estimation in New Zealand and
especially in the residential sector. The literature is focused overseas, and based on the
literature analysed and considered when compiling the data of the project, there is a gap
which can be filled with future research.
Further research to identify the factors that the estimator considers and the process of how the
estimates are arrived at would benefit the New Zealand residential construction industry. This
could pinpoint the very issues in the estimates which are affected by the idiosyncratic factors.
Currently, the industry is somewhat reliant on theory-based literature, and there has been no
empirical analysis of the estimators perceptions and judgements on the estimating
influences.
Also, further research into alternative methods of estimation that a residential construction
company can employ could be very beneficial as the current method that the case study
company is using is limited in versatility. There are obvious problems for projects which step
outside the scope of the model house. Resolving this would increase the likelihood of
companies ensuring budgets are achieved and the client getting value for the money
estimated.
These suggestions for further research would provide a better understanding of estimation as
a practice of forecasting the actual construction costs. It will not only benefit the case study
company by improving on the current system they are working with, but would also provide
the industry with an example of how one company is carrying out the estimation practice.

46

7.0 REFERENCE
Aibinu, A. A., & Pasco, T. (2008). The accuracy of pre-tender building cost estimates in
Australia. Construction Management & Economics, 26(12), 12571269. doi:
10.1080/01446190802527514.
Akintoye, A. (2000). Analysis of factors influencing project cost estimating practice.
Construction Management & Economics, 18(1), 7789. doi:
10.1080/014461900370979.
Ashworth, A. (2004). Cost Studies of Buildings (4 ed.): Harlow, England; New York :
Pearson/Prentice Hall.
Bell, J. (2007). Doing Your Research Project. Retrieved from
http://www.unitec.eblib.com.au.libproxy.unitec.ac.nz/patron/FullRecord.aspx?p=2878
13&userid=%2bZ2jXE1KAGL1ov6vqRkMYA%3d%3d&tstamp=1311497231&id=0
A63B428ED7C533AA885168D8E7C1665ABB678D9
Cheung, F. K. T., Wong, M. W. L., & Skitmore, M. (2008). A study of clients' and
estimators' tolerance towards estimating errors. Construction Management &
Economics, 26(4), 349362. doi: 10.1080/01446190701802380.
Choon, T. T., & Ali, K. N. (2008). A Review of Potential Areas of Construction Cost
Estimating and Identification of Research Gaps. Journal Alam Bina, 11(2), 61-72.
Clough, R. (1986). Construction Contracting: John Wiley & Sons, New York.
Denscombe, M. (2010). The Good Research Guide: For Small-Scale Social Research
Projects. Retrieved from
http://www.unitec.eblib.com.au.libproxy.unitec.ac.nz/patron/FullRecord.aspx?frbrVer
sion=4&p=650320&userid=%2bZ2jXE1KAGL1ov6vqRkMYA%3d%3d&tstamp=13
11496690&id=7321DD803103CEAD22B3090CF27A4D49432E2EFF
Dysert, L. R. (2003). Sharpen Your Cost Estimating Skills. Cost Engineering Vol 45 no6
June 2003, 108(11), 9.
Dysert, L. R. (2005). So You Think Youre an Estimator? AACE International Transactions
2005, 1, 6.
Dysert, L. R. (2006). Is Estimate Accuracy an Oxymoron? 2006 AACE International
Transactions, 15.
Elhag, T. M. S., Boussabaine, A. H., & Ballal, T. M. A. (2005). Critical determinants of
construction tendering costs: Quantity surveyors' standpoint. International Journal of
Project Management, 23(7), 538545. doi: DOI: 10.1016/j.ijproman.2005.04.002.
Enshassi, A., Mohamed, S., & Madi, I. (2007). Cost Estimation Practice in The Gaza Strip: A
Case Study. The Islamic University Journal (Series of Natural Studies and
Engineering), 15(2), 153176.
47

Flanagan, R., & Norman, G. (1983). The accuracy and monitoring of quantity surveyors'
price forecasting for building work. Construction Management & Economics, 1(2),
157180.
Fellows, R., & Liu, A. (2008). Research Methods for Construction Vol. 3. Retrieved from
http://reader.eblib.com.au.libproxy.unitec.ac.nz/(S(ldvs0h4gfbvdcltlbr0znn5l))/Reader
.aspx?p=428236&o=105&u=%2bZ2jXE1KAGL1ov6vqRkMYA%3d%3d&t=131028
4889&h=06BA51EEB47DAC4E64BDD0C07F3C684462D9F864&s=4509052&ut=2
92&pg=1&r=img&c=-1&pat=n#
Gillham, b. (2000). Case Study Research Methods Vol. 1. Retrieved from
http://reader.eblib.com.au.libproxy.unitec.ac.nz/(S(lclhumfbnp404w2no03jwjdw))/Re
ader.aspx?p=564247&o=105&u=%2bZ2jXE1KAGL1ov6vqRkMYA%3d%3d&t=13
09770947&h=204D287D39D1888EABFC032BC4D5CA41C0D4A7BB&s=4496743
&ut=292&pg=1&r=img&c=-1&pat=n
Henderickson, C., & Au, T. (1989). Project Management for Construction: Fundamental
Concepts for Owners, Engineers, Architects, and Builders Retrieved from
http://ebookee.org/Project-Management-for-Construction-Fundamental-Concepts-forOwners-Engineers-Architects-and-Builders_112251.html.
Kaming, P. F., Olomolaiye, P. O., Holt, G. D., & Harris, F. C. (1997). Factors influencing
construction time and cost overruns on high-rise projects in Indonesia. [Article].
Construction Management & Economics, 15(1), 83-94. doi:
10.1080/014461997373132.
Liu, L., & Zhu, K. (2007). Improving Cost Estimates of Construction Projects Using Phased
Cost Factors. [Article]. Journal of Construction Engineering & Management, 133(1),
9195. doi: 10.1061/(asce)0733-9364(2007)133:1(91).
Lowe, D., & Skitmore, M. (1994). Experiential learning in cost estimating. Construction
Management & Economics, 12(5), 423.
Morrison, N. (1984). The accuracy of quantity surveyors' cost estimating. Construction
Management & Economics, 2(1), 5775.
Odusami, K. T., & Onukwube, H. N. (2008). Factors Affecting the Accuracy of a Pre-Tender
Cost Estimate in Nigeria. Cost Engineering, 50(9), 3235.
Skitmore, R. (1990). The accuracy of construction price forecasts A study of quantity
surveyors' performance in early stage estimating: Salford University of Salford.
Trost, S. M., & Oberlender, G. D. (2003). Predicting Accuracy of Early Cost Estimates Using
Factor Analysis and Multivariate Regression. Journal of Construction Engineering &
Management, 129(2), 198.

48

APPENDICES
APPENDIX 1: TABLE 14: LITERATURE REVIEW MATRIX
Author
Aibinu, A. A.
and Pasco, T.

Title
The accuracy of
pre-tender
building cost
estimates in
Australia

Year Aims/Objectives
2008 To investigate
characteristics
influencing the
accuracy of pretender building cost
estimates for
practical
improvement

Methodology
Quantitative
case study on
102 quantity
surveying
firms

Key words
Australia,
estimating
accuracy, pretender
estimates,
quantity
surveying,
tendering

Akintoye, A.

Analysis of
factors
influencing
project cost
estimating
practice

2000 To gain an
understanding of the
factors involved in
costing construction
projects

Two
Qualitative
case studies

Cost estimate,
factor analysis,
tendering, cost
estimate

Key findings
Accuracy of
estimating in the
early stages of
design comprising of
two aspects, bias
and consistency of
the estimate when
compared with the
contract or tender
price
Importance of cost
estimating when
trying to determine
the bottom line
figure for direct
costs to be incurred

Comments
Accuracy of
estimating,
factors
affecting
estimating
accuracy,
reducing
inaccuracies

Themes
Accuracy of
estimating,
feedback and
review of
accuracy Factors
affecting the
accuracy of cost
estimating

Factors
Factors affecting
affecting
the accuracy of
estimating
cost estimating
Mark up and
adjudication of
net cost
estimates

49

Author
Ashworth, A.

Title
Pre-Contract
Studies:
Development
Economics,
Tendering and
Estimating

Year Aims/Objectives
2002 Aspects of precontract phase of
building
development,
excluding the actual
design process

Methodology
Qualitative
case study

Ashworth, A.

Cost Studies of
Buildings

2004 Understanding and

application of costs
to building and other
structures Ensure
that scarce and
limited resources are
used to the best
advantage

Qualitative
case study

Azhar, N.,
Farooqui, R.
U., Ahmed, S.
M.

Cost Overrun
Factors In
Construction
Industry of
Pakistan

2008

Qualitative
case study

Cost overruns,
macro
economic
factors,
management
factors

Cheung, F. K.
T., M. W. L.
Wong, et al.

A study of clients'
and estimators'
tolerance
towards
estimating errors

2008 To study estimating

practice and in
particular the
attitude of clients
and estimators
towards estimating
errors

Qualitative
case study

Expert
judgement,
cost planning,
client,
accuracy,
survey

Identify the issues

involved in cost
overruns in
construction projects
in Pakistan

Key words
Estimating,
design
economics,
tendering,
quantity
surveying,
accuracy of
bids
Cost planning,
pre-tender
estimating,
price
forecasting,
cost control,
value for
money

Key findings
Cash budgeting and
interpretation of
financial data,
project construction
costs Forecasting
construction costs

Cost planning,
importance of cost
control,
construction
economics, pretender estimating,
accuracy and
consistency, cost
and price analysis
42 key factors that
affect the accuracy
of estimating
construction costs

Characteristics of
good estimates,
client and
estimators being
risk adverse,
tolerance for
overestimating and
underestimating

Comments
Forecasting
construction
costs, accuracy
of predicting
construction
costs with
changes in
scope
Accuracy of
estimating,
pre-tender
estimating,
construction
economics

Themes
Accuracy of
estimating,
Estimating to a
budget, Value of
historical data

Factors for
cost overruns,
accuracy
influences

Factors that
affect the
accuracy of
estimating

Under
estimating,
over
estimating,
tolerance for
error, accuracy
of
measurement

Accuracy of
estimating,
Estimators
experience,
pricing risk

Accuracy of
estimating,
quality of
estimates

50

Author
Choon, T. T.,
Ali, K. N.

Title
Year
A Review of
2008
Potential Areas of
Construction Cost
Estimating and
Identification of
Research Gaps

Aims/Objectives
To comprehend the
various types of cost
modelling, effective
cost control and
development for
forecasting

Methodology
Qualitative
case study

Key words
Cost
modelling, cost
estimating,
building
construction

Key findings
Standard methods
of calculation,
procedures for
estimating, reliance
in early stage
estimating

Comments
Early stage
estimation
using cost
models

Themes
Forms of
estimating,
estimating
process and
methods

Clough, R.

Construction
contracting

1986

Resource for
construction
professionals in the
industry for
successful
management of
construction

Qualitative
case study

Construction
methodology,
contracting,
pre-tender
estimating, sub
contracting

Forms of estimating
techniques,
methodology of
construction
contracting

Types of
estimating and
uses for them

Forms of
estimating

Dysert, L. R.

Sharpen Your
Cost Estimating
Skills

2003 To discuss
estimation
methodologies from
conceptual to
definitive estimates

Quantitative
case study

Capital
budgets,
projects, cost
estimates,
estimation
methodologies

Parametric cost
estimation as a tool
for preparing early
conceptual
estimates when very
little information is
given

Parametric
estimating,
early design
estimating

Pre-tender
estimating,
experience of the
estimator, forms
of estimating

51

Author
Dysert, L. R.

Title
So You Think
Youre an
Estimator?

Year Aims/Objectives
2005 To identify the
estimating
methodologies that
can be used to
prepare early stage
estimating

Methodology
Qualitative
case study

Key words
Cost estimates,
magnitude
estimating,
estimating
methodologies

Key findings
Conceptual
estimating
techniques using:
capacity factoring,
parametric
modelling, end
product unit
methods, analogy
and expert
judgement

Comments
Conceptual
estimating
techniques,
estimating
methodology,
accuracy of
estimates

Themes
Accuracy of
estimating,
factors affecting
the accuracy of
estimates, forms
of estimating

Dysert, L. R.

Is "Estimate
Accuracy" an
Oxymoron?

2006

A study for the

predictive process
used to quantify cost
and price resources
required in
construction project

Quantitative
case study

Estimating,
accuracy of
estimating,
forecasting,
prediction of
construction
costs, risk
analysis and
contingency
estimating

Economic feasibility
of a project by
evaluating between
project alternatives
and project
cost/schedule
control

Topic debate
on estimating
accuracy

Accuracy of
estimating forms
of estimating,
definition of
estimating,
definition of
accuracy

Elhag, T. M.
S.,
Boussabaine,
A. H., Ballal,
T. M. A.

Critical
determinants of
construction
tendering costs:
Quantity
surveyor's stand
point

2005

Identification of cost
determinant
variables and
evaluation of their
degree of influence
when estimating

Quantitative
case study

Cost
influencing
factors, pretender
estimates, and
construction
projects

Cost estimation as
an experience based
process and
practitioners being
aware of
uncertainties,
incompleteness and
factors affecting
construction costs

The use of
feedback
systems and
the factors
which
influence the
estimating
practice

Feedback and
review of
accuracy, factors
affecting the
accuracy of
estimating

52

Author
Enshassi, A.
and
Mohamed, S.
and Madi, I.

Title
Cost Estimation
Practice in the
Gaza Strip: A
Case Study

Year Aims/Objectives
2007 A study of the
fundamental part of
construction practice
for estimation for
implications for
influences

Methodology
Quantitative
case study

Key words
Cost
estimation,
accuracy,
contractors,
economy

Key findings
Factors and their
influences on
construction cost
estimating practice
and the ranking

Comments
A compilation
of factors that
affect
construction
cost estimates
in the Gaza
strip

Themes
Factors affecting
the accuracy of
estimating

Flanagan, R.
and Norman,
G.

The accuracy and

monitoring of
quantity
surveyors' price
forecasting for
building work

1983 Examines the

performance of two
quantity surveying
departments when
forecasting the
tender price for
proposed projects at
design stage

Two
Quantitative
case studies

Price
forecasting,
accuracy,
monitoring,
quantity
surveyor

Feedback
mechanism,
reliability of price
forecasting using
historical data ,
professional skill
and judgement

Accuracy of
estimating,
feedback
mechanism for
improving
estimating

Accuracy of
estimates,
feedback and
review of
accuracy

Gunner, J.
and
Skitmore, M.

Comparative
analysis of prebid forecasting of
building prices
based on
Singapore data

1999 Analysis of bias and

consistency in
designers price
forecasts

Quantitative
case study

Accuracy,
building ,
estimating,
pre-bid
estimates,
statistical
analysis

Consistency
attained in practise
in the aspect of
designers price
forecasts Accuracy
of estimates
monitored and
systematic errors
improved

Accuracy of
estimating,
bias and
consistent
estimate
forecasts,
forecasting
techniques,
estimator
capabilities

Accuracy of
estimating,
feedback and
review of
accuracy

53

Author
Henderickson

Title
Project
Management for
Construction:
Fundamental
Concepts for
Owners,
Engineers,
Architects, and
Builders

Year Aims/Objectives
Methodology
1989 The processes and
Qualitative
techniques of project case study
management for
construction from
life cycle, cost
estimation and
performance

Key words
Project
management,
construction
fundamentals,
life cycle
costing,
conceptual
design
estimation

Key findings
Design and bid
estimates, the
planning and various
estimation for
design stages which
reflect the progress
of design

Comments
Themes
Split type of
Forms of
estimate being estimates
the conceptual
estimate and
detailed
estimate
which are
commonly
recognised

Liu, L., and

Zhu, K.

Improving cost
Estimates of
Construction
Projects Using
Phased Cost
Factors

2007 Critically assess the

accurate prediction
of construction costs
when using quality
historical data for
information
dependence

Qualitative
case study

Cost
estimates,
construction
projects,
phased cost
factors, cost
modelling

The value historical

data has along with
the dependence
estimators have on
quality data

The heavy
reliance on
historical data
when
estimating

Use / Value of
historical data,
Accuracy of
estimating

Lowe, D. and
Skitmore, M.

Experiential
learning in cost
estimating

1994 Investigates
experimental
learning theory and
the current
perception of
experimental factors
in the accuracy of
pre tender cost
prediction

Quantitative
case study

Cost
estimating,
experience,
experimental
learning,
feedback,
quantity
surveyor,
expertise

Importance of
experience in pretender estimating
practice Experiential
learning to improve
cost estimating over
8 methods

Estimator
experience,
accuracy of
estimating

Accuracy of
estimates,
Estimators
experience,
Review accuracy
of estimating,
feedback on
estimates

54

Author
Morrison, N.

Title
The accuracy of
quantity
surveyors' cost
estimating

Year Aims/Objectives
1984 Examines the
accuracy of cost
estimates prepared
by quantity
surveyors during the
design stages of
construction projects
2008 To access the factors
affecting accuracy of
pre-tender cost
estimates

Methodology
Quantitative
case study

Odusami, K.
T. and
Onukwube,
H. N.

Factors Affecting
the Accuracy of a
Pre-Tender Cost
Estimate in
Nigeria

Ogunlana, O.

Shane, J. S.
and
Molenaar, K.
R., Anderson,
S. and
Schexnayder,
C.

Key words
Cost
estimating,
cost planning,
accuracy,
variability,
quantity
surveyor
Consultants,
cost estimate,
construction,
design,
quantity
surveyors

Key findings
Accuracy of data
used from historical
data, improvement
of cost performance
through controlling
influences of
estimates
Factors affecting the
accuracy of pretender estimating

Comments
Accuracy of
historical data,
factors and
influences of
cost
estimating

Learning from
experience in
design cost
estimating

1991 To aid learning from

experience in design
cost estimating
practice

Qualitative
case study

Design cost
estimating,
accuracy,
learning,
experience,
feedback,
stable,
development

Learning from
experience through
awareness of
errors/mistakes,
determination of
what is to be learnt

Feedback,
learning from
past
estimating
mistakes,
concept of
awareness of
errors

Feedback and
review of
accuracy,
Experience of the
estimator

Construction
Project Cost
Escalation
Factors

2009 To assess escalation

factors when
assessing future
project costs and
mitigate the
influence of factors
to improve accuracy
of cost estimates

Qualitative
case study

Construction
costs,
estimation,
construction
management,
planning

Accuracy of
estimating from
inception to
initiation Cost
escalation factors
for internal and
external influences

Accuracy of
estimating,
cost escalation
factors

Factors affecting
the accuracy of
cost estimating,
accuracy of
estimates

Quantitative
case study on
50 randomly
selected
quantity
surveyors

Accuracy of
estimating,
estimators
expertise

Themes
Use and value of
historical data,
factors affecting
the accuracy of
estimating,
estimating
accuracy review
Estimators
experience,
Factors affecting
the accuracy of
estimating,

55

Author
Shash, A. A.,
Ibrahim, A. D.

Title
Survey of
Procedures
Adopted by A/E
firms in
Accounting for
Design Variables
in Early cost
Estimates

Year Aims/Objectives
2005 Investigate the
techniques that are
used by architectural
engineering firms for
forecasting the early
cost estimates of
residential buildings

Methodology
Qualitative
case study

Key words
A/E firms,
Design
variables, Early
cost estimates,
estimating
techniques

Key findings
The variables that
estimators consider
when estimating for
work

Comments
Factors that
affect and
influence the
decisions that
estimators
have on
residential
construction
projects

Themes
Factors that
affect the
accuracy of
estimating

Skitmore, R.

The accuracy of
construction
price forecasts A
study of quantity
surveyors'
performance in
early stage
estimating

1990 To provide an
understanding of
estimates on the
market price of
construction
contracts

Qualitative
case study

Construction
costs, cost
forecasts, early
stage
estimating,
quantity
surveyor

The quality of cost

forecasts to be
accurate to the
market rate,
Influences on bias
and consistent
estimating

Cost
forecasting,
estimating
techniques,
market cost
targets

Estimating
techniques, forms
of estimating, Use
of historical data

Skitmore, R.
M. and
Marston, V.

Cost modelling

1999 Understanding of the Qualitative

various types of cost case study
model for effective
cost control and
development of
future forecasting
techniques

Cost modelling,
price
forecasting,
quantity
surveyor,
bidding
techniques

Pre-contract
monetary
evaluation of
building design
Parametric
estimating where
historical data with
adjusted factors are
used

Cost
modelling,
price
forecasting,
parametric
estimating

Use of historical
data, factors
affecting the
accuracy of
estimating

56

Author
Stoy, C. and
Pollalis, S.
and
Schalcher, H.
R.

Title
Drivers for Cost
Estimating in
Early Design:
Case Study of
Residential
Construction

Year Aims/Objectives
2008 To identify cost
drivers for buildings
during the early
stages of design

Methodology
Quantitative
case study of
70 German
residential
properties

Trost, S. M.
and
Oberlender,
G. D.

Predicting
Accuracy of Early
cost Estimates
Using Factor
Analysis and
multivariate
Regression

2003 Understanding of the Quantitative

accuracy of
case study
conceptual cost
estimates for capital
projects

Key words
Cost
estimating,
early design
estimation,
residential
construction,
cost control
Cost
estimates,
construction
industry,
decision
making,
methodology

Key findings
Variables and
influences of
estimating during
the early design
stage

Comments
Factors and
variables that
affect
estimating
practice

Themes
Factors that
affect the
accuracy of
estimating

Initial decision
making on early
stage estimates also
known as
conceptual
estimating

Early stage
estimating and
the difficulty
to obtain data
for detailed
estimating

Factors affecting
the accuracy of
estimating, forms
of estimates

57

58