Draleti, G; Sengonzi, R and Kakitahi, J (2024) Improvement of risk management in cost estimation in the building construction industry in Uganda. Journal of Construction in Developing Countries, 29(1), pp. 111-138. ISSN 1823-6499
Abstract
The cost performance of construction projects is a crucial success factor. However, risks in construction projects make exact budgetary requirements challenging to forecast accurately, resulting in underestimation and overestimation. Inaccurate cost estimates could further result in unnecessary financial loss to project stakeholders and the loss of reputation and trustworthiness of construction professionals. In Uganda, risk factors are either ignored or subjectively taken care of by simply allowing a contingency figure ranging from 0% to 10% of the project cost. However, this method is sometimes unreliable and difficult to justify to project owners. Therefore, there is a need for a reliable and justifiable risk-based cost estimation method. The current study aimed to improve risk management in cost estimation in the building construction industry in Uganda. The specific objectives were to establish the risk factors, assess the effects of the risk factors and develop a reliable model that can be used for risk-based cost estimation in the building construction industry in Uganda. The study adopted a mixed-method approach by utilising quantitative and qualitative research methods. The collection of data was done using a self-administered questionnaire and an interview guide. The data was first sorted, coded and entered for analysis using the Statistical Package for the Social Sciences (SPSS) and Microsoft Excel. The risk factors in cost estimation were identified through a detailed literature review. The study revealed that the top five risk factors influencing cost estimation were: cost of materials, inflation, fraudulent practices and kickbacks, incomplete scope definition, and incomplete design and specification. The study concluded that the risk factors with the most severe effects on cost estimation were inflation, proficiency in estimating, cost of materials, incomplete design and specification, fraudulent practices and kickbacks. The study proposed a model developed using the analytic hierarchy process (AHP). The study recommends more research on the efficiency and effectiveness of risk-based cost estimation models.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | analytic hierarchy process; cost estimation; risk management; risk-based cost estimation; Uganda |
| Index terms: | cost estimate, Uganda, social science, construction professional, risk management, effectiveness, risk factor, owner, efficiency, package, estimating, cost performance, construction project, inflation, questionnaire, project stakeholder, qualitative research method, literature review, building construction, project cost, success factor, interview, cost estimating, specification |
| Subjects: | risk assessment, data collection methods, research design and methodology, data analysis and analytics, contractual arrangements, economic analysis, health monitoring assessment and metrics, financial and cost management, contractual condition, Geography, production management, professional development, theoretical framing, economics, performance management, environmental hazards, sociology, building construction |
| Topics: | Quality Management, Contract Administration, Health and Safety, Business Strategy, Cost Management, Information Management, Project Management, Geographical Context, Research Practice, Stakeholder Management, Risk Management, Sustainability, Construction Technology, Procurement |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here