ASSESSMENT OF FACTORS AFFECTING CONSTRUCTION TENDER COST

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Product Category: Projects

Product Code: 00005476

No of Pages: 91

No of Chapters: 5

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ABSTRACT  

Identification and assessment of factors influencing construction Tender helps in building a more reliable cost models that help Quantity surveyors come up with a more accurate cost estimates.  Several researches have been carried out in the UK and other developed countries with results varying on one hand based on the questions asked and on the other hand the nature of the economy.  This research was undertaken to assess the factors that affect the Tender in Nigeria. Factors were identified to be peculiar to Nigeria. The research was a two phase research. The first was the literature review. In this phase, a   total of 73 factors affecting Tenders were identified and further grouped into six categories. These Factors were identified to to be peculiar to Nigeria being a developing economy. The second phase was a Questionnaire survey. Questionnaires were administered to quantity surveyors in the FCT, Kaduna and Plateau States, Nigeria and the data was analysed. Priority ranking of cost influencing factors was carried out using their significance index. The average indices for the groups range from 75.2 to 63.6%.These factors were subjected to factor analysis so as to bring out the actual redundant factors. They include of registration with the client, working relationship with the client, project finance methods etc. the most critical factors include site conditions, tender selection methods, plant cost, labour cost etc. findings of the research indicates that Quantity Surveyors perceive that Tenders are more influenced by project characteristics. Some factors that were considered to be critical in previous research were redundant in this research. This concludes that the location and economic situation of a location influence the factors that determine Tender in that location. It was recommended that factors affecting Tender should be examined so as to know the degree to which it affects the Comparison of the outcome of this research and previous ones were presented. Tender. This will help in proper tender evaluation and thus the overall success of the project.

 

 

 

                                                           TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

1.1      Background to the Study

1.2      Statement of the Problem

1.3      Need for the Research

1.4      Aim and Objectives of the Study

1.5      Scope and Limitations

1.5.1   Scope

1.5.2   Limitations

 

CHAPTER TWO

LITERATURE REVIEW

2.1      Background

2.2      Cost Estimation

2.3      Cost Estimation Activities

2.4      Methods Of Estimating

2.4.1   Conference 

2.4.2   Financial Methods

2.4.3   Units Methods

2.4.4   Superficial Area Methods

2.4.5   Cost Models

2.5      Cost Estimation Issues

2.5.1   Cost Estimation Accuracy

2.5.2   Human Factor

2.5.3   Practical Knowledge

2.5.4   Cost Data/Information

2.6      Accuracy of Cost Estimate

2.7      Review Of Related Literature

 

CHAPTER THREE

RESEARCH METHODOLOGY

3.1      Study Design

3.2      Study Area

3.3      The Study Population and Sample

3.4      Sampling Technique

3.5      Data Collection

3.5.1   Data Collection Instrument

3.5.2   Data Collection Procedure

3.6      Data Analyses

3.6.1   Significance Index (SI)

3.6.2   Factor Analysis (FAa)

 

CHAPTER FOUR

RESULTS AND DISCUSSIONS

4.1      Survey Response Rate

4.2      Characteristics of Respondents

4.3      Priority Ranking Using Significance Index

4.3.1   Client Characteristic

4.3.2   Consultant and Design Parameters

4.3.2   Contractor Attributes

4.3.4   Project Characteristics

4.3.5   Contract Procedure and Procurement Method

4.3.6   External Factors and Market Conditions

4.3.7    Overall Average Significance Indices

4.4      Factor Analysis (FA) of the Tender Influencing Variables.

 

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1      Summary Of Findings

5.2      Conclusion

5.3      Recommendation

5.4      Suggestions For Further Studies

REFERENCES

APPENDIX I: QUESTIONNAIRE

APPENDIX II :. Overall Ranking and Significance Indices Table

APPENDIX III TABLES OF FACTOR ANALYSIS

 

 



CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Construction estimation is an experience-based process (Elhag et al., 2005).  The code of estimating practice produced by the Chartered Institute of Building (CIOB, 1997) defined estimating as “the technical process or function undertaken to assess and predict the total cost of executing an item(s) of work in a given time using all available project information and resources. Based on this definition, estimators‟ estimated cost is based on the time of construction or project duration, cost of material, method of construction etc. and estimators are aware that most of these factors can be readily estimated. 

The estimators in the construction team are usually the Quantity surveyors. The Quantity surveyor as an expert is employed early enough in the project so as to advice the client/Architect on the probable cost implications of the design decisions and to assist in obtaining economical and efficient design (Seeley, 1996). 

However, experts in construction estimation are aware of uncertainty, incompleteness and unknown circumstances of factors affecting cost of construction.  As a result of various studies, several estimating techniques have been exploited and several models have been developed      (Elinwa          and     Buba   1993; Elhag and     Baussabaine, 1998; Dissanayaka and Kumaraswamy, 1999; Munns and Al-Haimus, 19992000; Ashworth, 2002;Ganiyu and Zubairu, 2010) but the limitation of these techniques and models is that they fail to account for the effects of the factors that are more qualitative in nature.

The cost of construction in Nigeria has been reported to be high(Olatunji, 2010), and this has been attributed to several cost determinant variables. Olatunji (2010) reported that construction cost in Nigeria are often high and unpredictable and the pattern of the variability is not explained by inflationary indices of common goods and services but rather it is reactive to boom-and-burst shocks that are triggered by the oil price regimes. Elhaget al. (2005) identified and evaluated cost determinant variables within the UK construction industry among Quantity surveyors. Prior to the study carried out by Elhaget al. (2005), Okpala and Anekwu (1988) argued that underdeveloped economies tend to exert different influences on construction cost compared to developed economies such as the UK. This has a major impact upon critical factors affecting construction Tender.  Windapo and Iyagba (2007)  stated that the Nigerian construction industry need to map out efficient strategy for determining efficient factors affecting construction cost in Nigeria, given the peculiar dynamics of the cost of finance. 

1.2      Statement of the Problem

 

The identification of cost – determinant variables and evaluation of the degree of influence of these factorson construction cost estimates play an essential role in the building up of reliable cost estimates and enhance the competitive edge of quantity surveyors as well as the contracting organization. Elhaget al. (2005) identified and evaluated cost determinant variables to ascertain the degree of their influence on construction cost in the UK construction industry. Although, the research evaluated the degree of influence of some cost determinants variables, the results may not be applicable to the Nigerian Construction industry based on the argument that Nigeria as a developing country has distinct behaviour and should have distinct set of cost determinants that affect construction costs (Okpala and Anekwu, 1988; Windapo and Iyagba, 2007; Olatunji, 2010). Similarly, several other factors not considered by the previous research (Elhaget al., 2005) were also identified by Olatunji(2010).  Olatunji (2010) argued that the oil regime in Nigeria has a way of making the factors affecting sectors in the nation differently than the way it would have normally affected other countries especially developed country. This is because Nigeria‟s majar source of revenue is from the export of crude oil. This makes the nation‟s economy unstable since the nation cannot control the demand of the crude oil.Therefore, although there have been several studies on Tender in Nigeria, there has not been any dedicated to outline the critical factors affecting construction Tender.  This is the gap that this study aims to fill. 

1.3 Need for the Research

The purpose of tender estimation is to provide an indication of the probable cost of construction. The estimate will be an important factor in the clients overall strategy of the decision to build. It will also provide a basis for the clients budgeting and control of the construction cost. The single most important criterion of the estimate is its accuracy (Ashworth, 2002). Thus outlining the critical factors affecting construction Tender will help in building reliable cost models that will help estimators come up with more accurate cost estimates.

1.4 Aim and Objectives of the Study

The aim of the research is to assess the critical factors affecting construction tender sum with the view of articulating the critical determinants.

The following are the objectives;

i.         To identify factors affecting construction Tender.

ii.       To assess the level of significance of factors determining affecting Tender.

iii.     To articulate determine the critical factors and eliminate redundant factors

1.5      Scope and Limitations

1.5.1 Scope

Construction Tender has been seen to be influenced by several factors. This research focused on assessing the factors that influence Tender.This research was limited to Quantity surveyors both in public and private practice in Abuja (FCT), Kaduna State and Plateau state of Nigeria. Abuja (FCT) and Kaduna state were chosen as study area because these places are amongst major cities in Nigeria where construction firms have their headquarters while Plateau State was chosen because of the massive construction projects going on in the state at the time of the study, thus the presence of a good number of quantity surveyors. Quantity surveyors were considered since they play a measure role in the preparation of tender sums. 

1.5.2   Limitations

This research was limited to Quantity surveyors both in public and private practice in Abuja (FCT), Kaduna State and Plateau state of Nigeria. Abuja (FCT) and Kaduna state were chosen as study area because these places are amongst major cities in Nigeria were construction firms have their headquarters while Plateau State was chosen because of the massive construction projects going on in the state thus the presence of a good number of quantity surveyors while Quantity surveyors were considered since they play a measure role in the preparation of tenders.

This research was limited to the fact that the Quantity Surveyors that responded were not necessarily registered but were the ones available at the time of research.  

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