ANALYTICAL AND APPROXIMATE VARIANCE OF PUBLIC BUILDING TOTAL PROJECT COST, ESTIMATION BY MEAN COMPONENT COSTS METHOD

ANALYTICAL AND APPROXIMATE VARIANCE OF PUBLIC BUILDING TOTAL PROJECT COST, ESTIMATION BY MEAN COMPONENT COSTS METHOD

Abstract

Building construction projects have become a daily problem, which involves spending hard-earned money by project owners, called customers. The expectations of construction project owners are what justify good project execution. This is made possible by the purpose of the project. Project objectives include project costs. The cost of the project includes the cost and quality of delivery in the expected time. A major issue is project cost, which determines success. Variations in project costs have impacted the speed and success of building construction projects. The key fact in this study method was to collect and analyse public building project cost estimates containing building components, which includes preliminaries, substructure, superstructure, mechanical/electrical, external works and contingency in the bill of quantity (BOQ) from projects handled by Education Trust Fund(ETF) in the tertiary institutions located in Kaduna, Kwara, Kogi and Abuja from 2009 to 2010. The study adopted mean component cost method modeled by Skitmore and Ng (2002) to determine the projected cost variance of the Lecture Theatres and Lecture Rooms handled by the organization in various tertiary institutions in Nigeria. The analysis of the data collected was made by using standard method of analysis which employs SPSS for the project costs.Skitmore and Ng (2002) model was employed to test the variability of the project cost data. The result shows that; the building component cost data 4782.50 had closer link to the mean 4773.92(mean) for preliminaries component column in project ID 4 of Lecture Theatreandanother component data 2797.62 is also close to 2312.91(mean) for Ext.Wkscolumn in project ID 7 for the Lecture Theatre building projects butfor the Lecture Classrooms building the preliminaries column had 1531.41 and 1416.33(mean) in project ID 2 and 1611.22 and 1673..58(mean) for M/E column for project ID 5. This project therefore concludes in addition to the results of the cost variances, that the lecture theatre and classrooms projects are underestimated.Interview was also conducted on the professional estimators in building industry. Moreover, there are significant differences between the components of these public buildings. According to analytical calculations, the correct variance for the average auditorium project in this study was 34.73%. The sample analyzed showed a correct classroom variance of 38.50%. An auditorium is therefore considered a better architectural project than a classroom building. The study recommends that initial estimates should be thoroughly verified and other technical issues should be addressed to minimize the occurrence of overages before a contract is signed. . It also recommends using the average component cost analysis method and setting up a committee to properly review the estimates.

chapter One
1.0 Introduction
1.1 Research background
In the construction industry, it is formal procedure to determine the initial cost of a construction project before a contract is awarded. This helps determine the customer’s financial situation, and whether the project is worth it. The bottom line is the volatility of market prices for the key tools involved in construction: materials, labor and equipment.
The recent wave of volatility in project production costs has caused concern in the construction industry. An estimate of the cost of a construction project is submitted for tender, and if the contractor submits a tender with the necessary adjustments and a contract is awarded, the agreed contract price will be the final project cost at completion. Not likely.

The recent wave of volatility in project production costs has caused concern in the construction industry. An estimate of the cost of a construction project is submitted for tender, the contractor submits a tender with the necessary adjustments, and if the contract is awarded, the agreed contract price is the final project cost at completion. Unlikely. The final project cost is often high upon completion.
There are many factors that lead to changes in the final cost. Giwa (1998) found that the effect of variation between initial and final costs incurred is a major issue in the construction industry, especially among clients and estimators. This cost difference is known in the construction industry as cost variance. Cost variances are critical to overall cost planning and can be a major problem for construction industry managers to solve.