Adafin, J; Rotimi, J O B and Wilkinson, S (2015) Why do the design stage elemental cost plan and final tender sum differ in New Zealand? Journal of Financial Management of Property and Construction, 20(2), pp. 116-131. ISSN 1366-4387
Abstract
Purpose – The aim of this study is to investigate the reasons for disparity between design stage elemental cost plan and final tender sum (contract sum) in building procurement. A number of risk factors responsible for such variation were identified through case study projects from which data were extracted. Design/methodology/approach – Literature review determined the risk factors inherent in the preparation of design stage elemental cost plan. Interviews and thematic analysis identified the risk factors responsible for the disparity between design stage elemental cost plans and final tender sums. Analysis of documents obtained from the archives of study participants (consultant quantity surveyors) complemented responses from the interviews. Findings – The review revealed a number of inherent risks in the design stage elemental cost plan development. The interviews further indicated that risks have an impact on and are responsible for the deviations experienced. The assessment of these risk elements could assist in determining the final tender sum from cost plans. Research limitations/implications – Findings revealed disparity between elemental cost plans and final tender sums in the region of −14 and +16 per cent. The risk factors identified were responsible for the deviations observed. With this information, Quantity Surveyors are more able to accurately forecast final tender sums of building projects from cost plans through proper risk identification and analysis, thus increasing the accuracy of design stage elemental costing. Originality/value – To the best of the knowledge of the researchers, there is no recent documentary evidence of an investigation into the reasons for disparity between design stage elemental cost plan and final tender sum in traditional building procurement in New Zealand construction.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | New Zealand; design stage; disparity; elemental cost plan; final tender sum; traditional building procurement |
| Index terms: | variation, methodology, design stage, evidence, documents, thematic analysis, final tender sum, interview, elemental cost plan, literature review, accuracy, risk identification, building procurement, investigation, risk factor, disparity, costing, quantity surveying, New Zealand, case study, traditional building procurement, deviation |
| Subjects: | financial and cost management, contractual arrangements, data analysis and analytics, bidding, professional practice, profession, evaluation and assessment methods, data collection methods, environmental hazards, social justice, financial risk, professional development, contractual condition, Geography, methods and analysis, accounting and finance, research methods |
| Topics: | Sustainability, Procurement, Roles and Professions, Information Management, Research Practice, Geographical Context, Cost Management, Contract Administration, Ethics, Design Practice |
| Descriptive scope: | 5 PCTEA |
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