Horner, M and Zakieh, R (1996) Characteristic items: a new approach to pricing and controlling construction projects. Construction Management and Economics, 14(3), pp. 241-252. ISSN 01446193
Abstract
Recent research has demonstrated the feasibility of identifying within any category of project, a small number of cost-significant work packages whose value represents a consistently high proportion of the total bill value. Using the allied principle of quantity-significance, it proved possible to build simple models which could predict both the cost and the duration of a project. In the course of that work, a surprisingly linear relationship between value and quantity was noted. This paper reports the background to and consequences of that finding. Quantity-significant work packages are formed by aggregating those items within a trade for which a linear regression of value against quantity yields a correlation coefficient greater than 0.99 and an intercept insignificantly different from zero. The price of packages formed in this way can be determined simply by applying to all the items within the package the rate associated with the largest quantity, the so-called 'characteristic item'. Application of die concepts of quantity-significance and characteristic items is expected to lead to simpler estimating and more effective control procedures, because there is no longer any need to allocate cost and resources to each individual item contributing to a work package.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cost control; cost modelling; cost-significance; estimating |
| Index terms: | pricing, control procedure, package, duration, cost control, estimating, construction project, modelling |
| Subjects: | financial and cost management, analytical methods, contractual arrangements, economic analysis, project controls, project delivery, production management |
| Topics: | Time Control, Engineering Principles, Project Management, Procurement, Business Strategy, Cost Management |
| Descriptive scope: | 2 PC |
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