CHAPTER ONE

INTRODUCTION
1.1 Background of the study
Infrastructural development has been identified as one of the key activities that
contribute significantly to the Gross Domestic Product of Nigeria and other nations
(Amadi & Amadi, 2020). It involves projects which are usually complex and risky
but plays a pivotal role in driving economic growth and employment generation in
both developed and developing nations (Amadi & Amadi, 2020). The projects
usually require the investment of large sums of money. Consequently, projects
failure or abandonment would lead to huge financial losses. The losses are often
due to poor cost and time estimations or non-existent risk management practices
associated with the projects (Renuka et al, 2014). These losses associated with
project failure makes it important to understand what makes for a successful
project performance (Kishk & Ukaga, 2018) and how effective cost estimation
contributes to such performance. Project cost estimation is challenging but very
effective for use in bidding, negotiations, cost monitoring and controls (Valtanen,
2020) and is closely related to the success or failure of projects (Jiang, 2020).
When projects fail or are abandoned, the resources already invested becomes a
waste to the organisation or nation in the face of competing needs. If the project
succeeds, on the other hand, a valuable asset is created that will satisfy its intended
use and adds value to the organisation, industry or nation. The value addition may
include enhanced profitability, employment creation, infrastructural development
that will enhance economic development, income to government by way of taxes
and multiplier economic effects. It is therefore compelling that proper cost
estimation procedures are developed and adopted prior to and in the course of
project execution to enhance project performance and ensure project objectives are
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met. Project performance is difficult to define because of the complexity and
dynamics of the concepts of the project. Construction project success or
performance has been discussed by many researchers and until now, there are
myriad of opinions on the critical factors that should be used to measure project
performance (Bodicha, 2015). The performance or success of a project is measured
by the full actualisation of the project objectives. The objectives include achieving
the agreed work scope and specifications within the constraints of cost, time and
quality (Al-Hammadi & Bernard, 2016; Sylvester & Rani, 2011). Also, Oyedele
(2012), define project performance as the ability of a project to meet the planned
cost, time, quality, safety and stakeholder satisfaction. Estimating project costs and
schedules are extremely difficult because large projects contain a complex web of
cost-influencing factors including material cost, possible design and scope
changes, ground conditions, duration, the size of the project, type of client,
tendering method, and other technical requirements (Ali & Chew, 2017). A well-
controlled project schedule and good estimates are critical for project performance
and delivery in this highly competitive global market because it leads to
performance improvement. Therefore, this study will examine effect of cost
estimation on project performance in construction firms.
1.2 Statement of the Problem
Adherence to cost estimates is considered the most important factor of successful
projects, which help to decrease problems for all parties and give new chances to
construct other related projects. It also helps to increase the profits and
development of construction sectors. Adherence to cost estimates in the
construction sector is a major challenge and considered to be the biggest setback
that hinders project's progress because it decreases the contractor profit leading to
huge losses as well as placing the burden to taxpayers. Non-adherence to cost
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estimates is nearly noticed in every construction project implemented indicating
that this problem doesn’t receive enough attention from the researchers and the
stakeholders. The construction projects are exposed to extreme cost escalations and
as a result, little or no efforts have been made to curtail or solve the problem.
Construction as an important sector is characterized by chronic non-adherence to
cost estimates which portends dire consequences inflicted to the taxpayers and the
sponsors of the project. Whenever this menace is experienced, the project
management team normally asks not only for extra funding but also for other
resources which deepens the cost crisis. While the sponsor or donor may be willing
to offer the requested additional funding, the impact is very detrimental to both the
taxpayer and the financial base of the financiers. In this case therefore, it is enough
to conclude that adherence to cost estimates have been consigned to a situation of
dependency with no regard to factor analysis in sight.
Prevalence of non-adherence to cost estimates cannot be allowed to continue as it
brings about the stakeholders’ based-conflicts which adversely affect the success
of the project and service delivery. Although there have been improvements in the
management of construction projects over the years, the problem of cost escalation
is still a critical issue in the construction industry. If these factors are not
considered, it is likely to exacerbate underlying success factors of the project. For
that reason therefore, it was of paramount importance to imperatively exert utmost
effort to accomplish this study in order to determine and examine the hypothesized
variables and to treat all the weakness points and from all sides, thus giving
specific priorities in order to avoid nonadherence to cost estimates in construction
projects.

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1.3 Aim and Objectives of the study
The aim of the study is to examine the effect of cost estimation techniques on
project construction in Owerri, Imo State using selected construction company.
The objectives of the study are as follows:
i. To determine project cost estimation methods and techniques that can be
utilized by emerging construction firms to reduce project cost variance in
Owerri, Imo State.
ii. To identify significant risk factors affecting cost estimation of construction
works in Owerri, Imo State.
iii. To establish internal organizational processes and method for reducing
project cost variances in Owerri, Imo State.
1.4 Research Question
i. What are the project cost estimation practices, methods and processes that
can be utilised by emerging construction firms to reduce project cost
variance in Owerri, Imo State.?
ii. What significant risk factors affects cost estimation of construction works in
Owerri, Imo State?
iii. What internal organizational processes and method could help to reduce
project cost variances in Owerri, Imo State.?
1.5 Research Hypotheses
H01: Techniques used in cost estimating has no significant effect on construction
contractors
H02: Causes of inaccuracy in construction contractors cost estimates has no
significant effect on construction contractors

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1.6 Significance of the study
Cost estimation in building construction is one of the main elements of the building
industry. It is an important aspect of building construction and as such extensive
research needs to be carried out on this element. There are many groups inside and
outside of the building industry that will benefit from this study. Among these
groups are: owners, consultants, designers, and academicians. Some of the benefits
that this research offers include: Provide possible improvement of consulting cost
estimation system and its benefits to clients, consulting firms and the constructor of
the project; Clients will benefit tremendously from unnecessary risk; by avoiding
or reducing the risk. Contractors can use the knowledge to forecast or hedge cost
estimates, that is in pricing, protecting against exchange rate and inflation. Finally,
the study will also assist lecturers, students and individuals from different works of
life as a basis for further research into the subject area of project cost estimation
1.7 Scope of the Study
The scope of this research is limited to examination on the effect of cost estimation
techniques on project construction in Owerri, Imo State using selected construction
company.
1.8 Limitation of the Study
The study is limited to selected projects in Owerri, Imo State because there is easy
access of information by the researcher. Target respondents for this study are the
principal actors in the construction industry namely: the Client, the Consultant and
the Contractor.
1.9 Overview of the Study
The project is expected to have a significant effect on project construction based on
the stated hypothesis given.

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1.10 Definition of terms
Cost: In production, research, retail, and accounting, a cost is the value of money
that has been used up to produce something or deliver a service, and hence is not
available for use anymore. In business, the cost may be one of acquisition, in
which case the amount of money expended to acquire it is counted as cost.
Cost estimate: A cost estimate is the approximation of the cost of a program,
project, or operation. The cost estimate is the product of the cost estimating
process. The cost estimate has a single total value and may have identifiable
component values.
Construction: Construction is the process of constructing a building or
infrastructure. Construction differs from manufacturing in that manufacturing
typically involves mass production of similar items without a designated purchaser,
while construction typically takes place on location for a known client.
Construction Company: A construction company is a capital-intensive business.
You may need to rent or buy heavy equipment, or purchase materials in bulk. A
solid business plan can outline your assets, and make the case for your new
construction company to access funding from investment sources, from private
interests to SBA loans.
Contractors: A contractor is a person or a company that seeks to do business by
obtaining contracts and carrying them out. Being a contractor is similar to being a
business owner – you negotiate your deals, work for yourself, have your clientele
and are rewarded on your own merits.
Practices: Practice or practise is the act of rehearsing a behavior over and over, or
engaging in an activity again and again, for the purpose of improving or mastering
it, as in the phrase “practice makes perfect”. Sports teams practice to prepare for
actual games. Playing a musical instrument well takes a lot of practice.
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 CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptual Review
2.1.1 Overview of Nigeria’s Construction Industry
The construction industry is as significant to a nation’s economy as it is essential in
creating employment and generating wealth. It plays a key role in improving the
quality of life of the citizens through the provision of essential social and economic
infrastructure. It generates a multiplier effect that enables other industries and
economic sectors to thrive (AbudulRahman, wang, Takim & Wong, 2021).
Therefore, a substantial proportion of government budgetary resources in most
developing countries is committed to the provision of infrastructure, and these
resources are expended by the construction industry (Adeagbo, 2014).
2.1.2 Concept of Cost Estimation
Cost estimation is a vital process required of every project because it is the
predecessor for budget estimates, resource allocation, monitoring and control of
the project for successful completion (Hashemi & Ebadati, 2020). Cost estimation
has been defined by The Association for the Advancement of Cost engineering
(AACE, 1990) as “the determination of the quantity and the predicting, or
forecasting, within a defined scope of the costs required to construct and equip a
facility, to manufacture goods, or to furnish a service. Included in these costs are
assessments and evaluation of risks and uncertainties”. Cost estimatio3n accounts
for each element required including both direct and indirect costs required to bring
a project to completion. These costs, include labour cost (direct labour and indirect
labour), materials cost, equipment cost, services and facilities, overhead costs (site
overhead and office overhead) and mark up (risk contingencies and profit) adds up
to a total amount that determines a project's budget. Cost estimate is vital to
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construction contract tendering and provides the basis for establishing the likely
cost of resource elements of the bid price for construction projects. Also, the
approximate total project cost, called the cost estimate, is used to authorize a
project’s budget and manage its costs (Bello & Odusami, 2023). Project cost
estimation applies to everything from building a bridge to developing that new
killer app. It all costs money, so the clearer you are on the amount required, the
more likely you’ll achieve your objective. Cost estimates are typically revised and
updated as the project’s scope becomes more precise and as project risks are
realized as noted by the Project Management Body of Knowledge (PMBOK). Cost
estimating is an iterative process that requires constant review and update as
circumstances change and new facts emerge. To usefully serve its purpose, project
cost estimate requires a reasonable level of accuracy, reliability, efficiency and
transparency and has to be justified with underlying assumptions clearly
documented. The data forming the cost estimation bases must be relevant, current,
appropriate, and of good quality and value. Construction cost estimate can be used
for one of three purposes: design, bid and control. Each comes at different stages
of project development with the required levels of accuracy varying accordingly.
The design estimate which usually emanates from the project owner comes in four
stages: rough order of magnitude estimate made before the project design at the
project initiation phase based on the cost data of similar projects in the past and the
accuracy range is -50% to +75%; preliminary or conceptual estimates based on the
project’s conceptual design at the early project planning phase which has become
available and the accuracy range is -30% to +50%; detailed estimate made when
the project work scope has been clearly defined based on a detailed design with an
accuracy of -15% to +30% and the work elements can be broken down into smaller
packages and the engineer’s estimate arising from the final plans and specifications
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 at the time the project owner is already to invite bids from construction vendors
(accuracy ranges from -5% to +10%). The bid estimate comes from the
construction vendor and is usually a reflection of both the estimating tools
available to the vendor and their desire to win the tender. The owner provides the
design and specifications upon which the vendor extracts the materials take off for
the preparation of their bids. The control estimate is required by both the project
owner and the vendors which forms the baseline for project control during
execution. For the owner, this may be the same as the detailed estimate which must
be revised periodically to take account of change orders, unexpected cost overruns
or savings.
2.1.3 Purpose and Importance of Cost Estimate
According to Oberlender and Peurifoy (2014), the purpose of cost estimate is to
determine the forecast cost required to complete a project in accordance with the
contract plan and speculations. The estimate can produce, within reasonable
accuracy, the total cost for a given project. Oberlender and peurifoy (2014) also
state that, there are two distinct tasks in estimating;
i. To determine the probable real cost and
ii. To determine the probable real time to build the project.
The process of estimation serves three main functions in the construction industry:
i. An estimate of the probably cost of construction is required in the early stages
of a building program in order to determine whether or not a project is
financially feasible. This estimate is produced from a minimum detail since no
detail designs are available and the project is still in infancy.
ii. Estimates are required in cost control programs to facilitate the control of the
expenditure of funds on a project. Cost management during the design phases
of a project includes considerations of alternative designs.
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iii. This results in the competitive bidding process by which most construction
contracts are awarded. Providing a good forecast is central to the contractor
winning a bid. (Oberlender and Peurifoy, 2014).
2.1.4 Dimensions of Cost Estimation
The Project Management institute (PMI, 2017) recommends several tools and
techniques for estimating cost (bottom up, parametric, analogous, three point, top
down and expert judgment estimating techniques). However, this study has
adopted two of the most commonly used methods or techniques as follows as the
independent variables for this study:
2.1.4.1 Bottom up estimating
This is the most reliable method for cost estimating when the work scope is
properly defined and the work can be broken down into smaller packages known as
Work breakdown Structures (WBS) (Goh, 2015). The cost of each of the smaller
packages or deliverables are separately determined more precisely and aggregated
to determine the project cost estimate. However, the development of the packages
or deliverables is usually time consuming, especially for complex projects. This
belongs to the detailed estimating group as it can only be done when detailed
information about the project is available. Bottom-up estimating is a method of
estimating a component of work. The cost of individual work packages or activities
is estimated to the greatest level of specified detail. The detailed cost is then
summarized or rolled up to higher levels for subsequent reporting and tracking
purposes. The cost and accuracy of bottom-up cost estimating are typically
influenced by the size and complexity of the individual activity or work package.
The major setback of this technique is the great amount of details required and
time required. On the other hand, the process for deriving the cost estimate is
easily understandable and repeatable.
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2.1.4.2 Parametric Estimating
This method uses independent variables from historical data and parameters and
applies it to the current project. It is very popular in construction project estimating
(Chan, 2015). This technique is based on the building of “Cost Estimation
Relationships” (CERs) which are simple mathematic relations between the costs of
a work element and some of its parameters called ‘cost drivers’. For instance, the
knowledge of the cost per sq meter of floor space for building or cost per km of a
road of given width can be applied to determine current cost estimate. It is more
accurate than analogous method but requires more initial data and needs correct
and realistic unit costs for the independent variable.
2.1.5 Measures of Project Performance
When do we say a project has been successfully performed? The project life cycle
starts from initiation. Initiation is preceded by some objectives in mind and plans
are then put in place to achieve these objectives through project execution and
control. The extent to which these objectives have been met upon completion is a
measure of the project performance (Takim et al, 2018). These four variables; Cost
(budget), Schedule (time), scope (specifications) and quality (CSSQ) are the major
measures or indicators of project performance and the ultimate objective of the
project is to ensure that these four measures are satisfied. Based on the triple
constraints theory, three of these (scope, time and cost0 has been selected as the
dependent variables for this study.
2.1.5.1 Scope (specifications): Scoping projects accurately is an important skill.
The scope must be clearly defined and understood by the various stakeholders in
the project. With this common understanding, a Works Breakdown structure is
created with a scope management plan. This is continually revalidated, monitored
and controlled to ensure scope creep and avoidable changes do not arise to impact
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on time and cost. Unfamiliarity with project scope and project complexity has been
adduced as one of the causes of poor project execution leading to project failure. It
also causes valuation disputes which could lead to project execution delays with
attendant cost and time overrun. Scope creep is also a major issue affecting project
execution outcome. Scope creep is an increase in scope without a commensurate
increase in resources or an extension to the project schedule.
2.1.5.2 Schedule (time): This is very important in assessing the success of a
project. The work schedule must be properly and skillfully developed through a
detailed activities listing and sequencing. The schedule is then monitored and
controlled throughout project duration to avoid avoidable delays that could create
variation orders which may impact on cost and quality. It has been established that
delay is a common issue faced in projects execution all over the world especially in
developing countries and consequently, most projects do not end successfully.
2.1.5.3 Cost (budget): With the activities listing loaded with required resources,
costs can be estimated and projects budget determined. The budget is closely
monitored and controlled to avoid unnecessary cost overruns. Next to poor risk
management is cost overruns in terms of ranking for project failures arising from
poor project execution. Managing costs within approved budget is acknowledged
as a critical project execution parameter based on studies. This is more so as
money is the scarce and driving force everywhere.
2.1.5.4 Quality: A quality management plan must be in place before project
execution. This is designed to minimise failures / defects and to meet the
expectations of the customer. Quality assurance and quality controls must be
performed all through the execution phase to ensure that the desired quality of
product is produced that will meet customer’s expectations.

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2.1.6 Impact of Cost Estimation on Project Scheduling
Cost estimation plays a crucial role in project scheduling, as it directly influences
the allocation of resources, timeline planning, and overall project success. By
accurately estimating costs, project managers can make informed decisions,
mitigate risks, and ensure the project stays within budget. Let's explore the impact
of cost estimation on project scheduling from different perspectives:
1. Resource Allocation: Cost estimation helps project managers allocate resources
effectively. By estimating the costs associated with labor, materials, equipment,
and other project requirements, managers can determine the optimal allocation of
resources. This ensures that the right resources are available at the right time,
preventing delays and optimizing project efficiency.
2. Timeline Planning: accurate cost estimation enables project managers to create
realistic project schedules. By considering the estimated costs of various
project activities, managers can determine the duration of each task and establish
dependencies between them. This allows for better planning and sequencing of
activities, minimizing schedule conflicts and ensuring timely project completion.
3. Risk Management: Cost estimation plays a vital role in identifying
and managing project risks. By estimating costs accurately, project managers can
identify potential cost overruns or budget constraints early on. This allows them to
proactively address these risks, implement appropriate mitigation strategies, and
make necessary adjustments to the project schedule to avoid delays or budgetary
issues.
4. Decision Making: Cost estimation provides valuable insights for decision
making throughout the project lifecycle. By having a clear understanding of the
estimated costs, project managers can evaluate different options, assess trade-offs,
and make informed decisions regarding resource allocation, scope changes, and
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project priorities. This helps in maintaining project alignment with organizational
goals and maximizing value delivery.
5. Stakeholder Communication: Accurate cost estimation facilitates effective
communication with project stakeholders. By providing transparent and reliable
cost estimates, project managers can build trust and credibility with stakeholders.
They can explain the financial implications of project decisions, address concerns,
and ensure stakeholders are well-informed about the project's progress
and financial health.
In summary, cost estimation significantly impacts project scheduling by enabling
resource allocation, timeline planning, risk management, informed decision
making, and effective stakeholder communication. By considering cost estimation
as an integral part of project management processes, organizations can enhance
project success rates and achieve desired outcomes.
2.1.7 Factors that Affect Preliminary Cost Estimating in Building Projects
From previous researches and a field survey done from different experience, a
predetermined list of factors that may affect the accuracy of construction projects
cost estimating is collected in order to prepare.
A. Financial Issues
i. Punctuality of periodical payments
ii. Availability of management and finance plans
iii. Inflation pressure
iv. Economic instability
v. Uncertainty of taxes
vi. Currency exchanges fluctuation average
vii. Accuracy of estimated financing cost
viii. State of market
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 B. Bidding situations
i. Number of competitors
ii. Level of competition
iii. Time between project announcement bid opening average
iv. Accuracy of biding documents provided by client
C. Project Characteristics
i. Type of contract
ii. Size of contract
iii. Project location
iv. Site condition
v. Competence and leadership of project manager
vi. Experience and incentives of field staff
vii. Quality of firm’s project planning and management
viii. Labor and equipment required
ix. Contract period
x. Content of the project specifications
xi. Punitive damages
xii. Arbitration clause
xiii. Knowledge of client and consultant average
xiv. Owner A/E experience level
xv. Attitude towards changes
xvi. Environmental issues
xvii. Impact of project schedule “expected to delay”
xviii. Quality of specification codes
xix. Unforeseeable change in local laws and procedures
xx. Weather
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 xxi. Nationality of labor
xxii. Social and cultural impact
xxiii. Religious regulation
xxiv. Public exposure
D. Estimating Process
i. Estimating method
ii. Availability of productivity standards
iii. Availability of cost indexes average
iv. Relevant experience of estimating team
v. Ability of estimating team
vi. Standard procedure for updating cost information
vii. Method used in determining contingency
2.1.8 Cost Estimation Techniques in Nigeria
a) Analogous Estimating
Several studies have highlighted the use of analogous estimating in Nigeria. This
technique is commonly used because of its simplicity and speed in estimating
project costs. Adebayo (2018) found that analogous estimating is widely used for
preliminary cost estimates, especially for projects with limited data or early in the
design phase. However, this method is not always accurate, as it depends on the
similarity of the new project to previous ones.
b) Parametric Estimating
Parametric estimating involves the use of unit costs or historical data to predict the
cost of a project. Oluwatayo (2020) reported that parametric estimating is
increasingly being adopted in Nigeria, particularly for large-scale infrastructure
projects, as it offers a more data-driven approach compared to analogous
estimating. The study found that using parametric models can improve the
16
accuracy of cost predictions by factoring in more specific project details, such as
location, size, and type of construction. However, Oluwatayo (2020) also pointed
out that the effectiveness of this method depends on the availability of reliable
historical data, which may be lacking in some cases.
c) Expert Judgment
Expert judgment is another commonly used technique in Nigeria, especially for
projects with unique characteristics or in the absence of sufficient data. Olubunmi
& Ganiyu (2020) discussed how experienced professionals are often consulted to
estimate project costs. This method is particularly useful in complex and non-
standard projects where historical data or parametric models may not be
applicable. While expert judgment is valuable in some cases, Olubunmi & Ganiyu
(2020) noted that it can be subjective and prone to bias, making it less reliable
compared to data-driven methods.
d) Bottom-Up Estimating
The bottom-up estimating technique is also employed in Nigeria for detailed cost
estimation, particularly during the detailed design phase. Olawale & Sunmola
(2017) explained that this technique involves estimating the costs of individual
components, such as materials, labor, and equipment, and then aggregating them to
form the total cost. This method is known for its accuracy, but it requires detailed
project specifications and can be time-consuming.
While bottom-up estimating tends to produce more accurate results, the study
found that the technique can be challenging for projects with insufficient
information or for projects where detailed breakdowns are not available early on.

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2.1.9 Effectiveness of Cost Estimation Techniques in Nigeria
a) Accuracy and Reliability
The effectiveness of cost estimation techniques in Nigeria depends on the method
used and the availability of reliable data. Studies have shown that bottom-up
estimating tends to provide the most accurate results when detailed data is
available. According to Akinmoladun et al. (2019), bottom-up estimates are more
reliable as they are based on the actual costs of materials, labor, and equipment.
However, this method may not be practical for projects at early stages or with
limited information.
On the other hand, analogous estimating tends to be faster and less resource-
intensive but is often less accurate. Adebayo (2018) found that relying on past
project data may lead to inaccuracies, particularly if the current project differs
significantly from previous projects.
b) Impact of Local Factors
Nigeria’s construction industry is heavily influenced by local factors such as
inflation, fluctuations in the prices of construction materials, and labor costs.
According to Olubunmi & Ganiyu (2020), cost estimation in Nigeria must account
for these factors to improve accuracy. For instance, inflation can cause significant
variations in the price of materials, and as such, cost estimations made without
considering such external factors may result in budget overruns.
A study by Olawale & Sunmola (2017) pointed out that while cost estimation
techniques such as parametric estimating offer more precision, they are often
limited in Nigeria due to the volatility of construction material prices, which can
make historical data less relevant or outdated.

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c) Project Complexity and Size
For more complex and larger projects, a combination of methods is often used to
increase the reliability of cost estimates. Olawale & Sunmola (2017) argued that
for high-value projects, using a mix of techniques such as expert judgment,
bottom-up estimating, and parametric estimating can provide more accurate cost
predictions. These combined methods allow for cross-validation, thereby reducing
the margin of error.
In contrast, smaller projects with fewer variables may rely more heavily on
analogous estimating or expert judgment, as these methods can be quicker and
sufficient for low-budget or less complex constructions.
2.1.10 Challenges in Cost Estimation in Nigeria
a) Lack of Accurate Data
One of the primary challenges identified in the literature is the lack of accurate and
reliable data. Olawale & Sunmola (2017) emphasized that cost estimation in
Nigeria is often hindered by the unavailability of up-to-date material prices, labor
rates, and historical project data, making it difficult to rely on techniques such as
parametric estimating.
b) Volatility of Construction Material Prices
As highlighted by Oluwatayo (2020), the volatility of material prices due to
economic fluctuations significantly affects the accuracy of cost estimates. The
unpredictable nature of commodity prices in Nigeria means that even well-
documented cost estimation techniques may fail to produce accurate results if not
adjusted regularly.
c) Inconsistent Training and Skills
The lack of standardized training for professionals in cost estimation is another
challenge. Adebayo (2018) found that many construction professionals lack formal
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training in cost estimation, leading to reliance on outdated methods or personal
experiences, which can contribute to inaccuracies in the estimation process.
2.1.11 Recommendations for Improving Cost Estimation Techniques in
Nigeria
a) Improved Data Collection and Management
To enhance the accuracy of cost estimates, Olawale & Sunmola (2017)
recommended that Nigerian construction firms invest in better data collection
systems and databases. Regular updates on the prices of materials and labor, as
well as detailed historical data on previous projects, would help improve the
reliability of cost estimation.
b) Use of Software Tools and Technology
Akinmoladun et al. (2019) suggested that adopting modern cost estimation
software and digital tools can enhance the precision of cost estimates. These tools
can assist in analyzing vast amounts of data, automating calculations, and
accounting for inflation and material price fluctuations.
c) Training and Professional Development
As Adebayo (2018) pointed out, there is a need for training and professional
development in cost estimation for Nigerian construction professionals. Institutions
and firms should offer continuous education to improve the skills of cost
estimators, ensuring that they are capable of using modern techniques and tools
effectively.
2.2 Theoretical Review
2.2.1 The Triple Constraints Theory
The recognition of the triple constraints theory as a veritable tool for measuring
project performance as envisaged by Barnes differs amongst different scholars.
While many scholars recognize the theory as appropriate and offering a concise
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definition of project success, many others do not agree with it. Scholars like Parker
et al (2015) and Sridararan et al (2017) are in agreement with the theory positing
that the triple constraints are clear and effective indicators that project managers
traditionally use to measure project performance. However, some scholars while
adopting the three constraints of cost, time and scope added some additional
measures like profit (Franklin & Christina, 2015) and customer satisfaction (Joslin
& Muller, 2016).
A second group of scholars rejected the triple constraints as a measure of project
performance but rather regarded the theory as simply a project management
approach (Rugenyi, 2015) to govern the tradeoff between the triple constraints. In
their opinion, the determination of project success or performance goes beyond
meeting the project scope, time and cost. A third group of scholars (Turner & Xue,
2018) also rejected the triple constraints as a measure of project performance but
rather as a measure of project efficiency or project management success by
delivery of the project scope on time and within budget. In their opinion, a project
may be delivered efficiently, yet the owners do not realize satisfactory benefits
from the project. They believe that a better measure of success or performance
would be delivering desired outcomes / objectives and benefits, positive net
present values and meeting business or public needs. Some other scholars
(Scheumer, 2017) are in agreement with this school of thought but only to the
extent of regarding the triple constraints as an efficiency indicator. The most
important measure of performance in their opinion is customer / stakeholder’s
satisfaction.
2.3 Empirical Review
Reuben A O 2019 assessed the factors for preliminary cost estimation of building
projects in the Nigerian construction industry. To achieve the objectives of the
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study, the purpose and importance of cost estimation in the Nigerian construction
industry and the factors that affects preliminary cost estimates of building projects
were identified from the literature review and presented in the well-structured
questionnaire for respondents to evaluate. Seventy-three successful completed
questionnaires were analyzed. Twelve factors were identified that have severity
greater than or equal to 0.85 of the importance index. The study reveals that the
major factor that affects preliminary cost estimate is economic stability and
therefore recommends that when preparing cost estimates for any future project,
the economic stability and project location should be taken into consideration and
should be embraced in the Nigerian construction industry.
Nazif et al., 2020 evaluated factors responsible for cost escalation of building
construction projects. Questionnaires were administered to examine and assess
these factors. Subsequently, the mean score value of each factor was determined.
In addition, Correlation and Linear regression analyses were used to establish the
relationship between these factors. Factors responsible for cost escalation in
projects were examined as well as the impact of those factors, and occurrence of
those factors on project cost. The result of the analysis showed that, the most
agreed factors responsible for project cost escalation were; inadequate supervision,
irregular payment, and design error, having high mean values of 4.25, 4.20, and
4.15, respectively. Also, correlation analysis result established that the factors
responsible for cost escalation and the impact of cost escalation had significant R
and R2 of 0.81 and 0.70 respectively. Addressing these factors would go a long
way in reducing the escalation of building project cost. Never the less, an effective
cost management strategy is absolutely necessary to safeguard and sustain the
construction industry.

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Machasio et al., 2018 investigated the factors that significantly contribute to
inaccurate cost estimates on plant installation projects implemented by Richfield
Engineering Limited and analyse their impact. The four variables were considered
as significant in contributing to inaccurate cost estimates, namely; estimator
knowledge and experience, scope assumptions, available time and cost models as
significant contributors to cost variations. This study reviewed available literature
and theories about project cost estimation thus theory of Learning Curve (LC),
triple constraint theory, Complexity Theory and S-Curve theory. The descriptive
research design was identified as the design of this study. The population of this
study was 1000 REL employees and associates working in the area of projects
operations and management. The study used a census sampling technique. Primary
data was collected using interview and questionnaire and secondary data was
collected by reviewing published materials. The data was presented in tables,
charts and figures. The study lead to conclusions whether the identified variables
and underlying factors contribute to inaccurate cost estimates in plant installation
projects in Kenya. The results should enable planners to take stock of past
performance and incorporate lessons learned on future projects planning and
implementation.
Ike et al., 2022 investigated the effect of cost estimation on project performance in
construction firms in Abuja. The objectives of the study are; To determine the
effect of bottom up cost estimating and parametric cost estimating on the
realization of work scope / specifications in construction firms in Abuja, To assess
the impact of bottom up cost estimating and parametric cost estimating on time /
schedule performance in construction firms in Abuja, To ascertain the impact of
bottom up cost estimating and parametric cost estimating on cost performance in
construction firms in Abuja. The researcher adopted the descriptive research design
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and structured questionnaire was used as instrument for data collection. The
purposive sampling technique was adopted in the study. Data analysis was
committed to descriptive statistics of mean and percentages as well as inferential
statistics of correlation and multiple regression analysis. The results showed that
both bottom-up estimation and parametric cost estimating are both positively and
significantly influenced by scope/specifications, time/schedule and cost. The study
concludes that project managers need to be cognizant of this relationship and focus
on developing estimates and schedules using modern project management tools
that would project accurate costs and schedules. It was recommended that for
successful completion of projects, construction project managers should be fully
abreast of cost estimating techniques through intensive training awareness and the
use of both bottom up and parametric estimating techniques be adopted for
construction projects as appropriate.
Babatunde et al., 2022 developed a framework for evaluating the impact of risk on
cost estimation through a systematic review. This risk is critical because initial
estimates provided to clients serves as bases for planning activities. Theoretical
concept was validated via a processual lens of a systematic literature review with
cost variability and construction projects as search string within three databases:
Scopus, Web of science and EBSCO (BSP) (Business source premium), which
were further studied and knowledge or research gaps identified. The review
indicated factors causing deviation between final accounts and contract sum varied
from 1 to 45, thus meeting objective 1 of the study. Data collection will be
achieved using interviews and questionnaires to consider other objectives of
peculiarities, severity, effects and ways of mitigating risk, leading to the
development of a cost estimating framework that is adjudged an essential tool in
risk shedding rather than risk-sharing in project risk management, which would be
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a solution to cost estimation problems, leading to cost variability in the Nigerian
construction industry.

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