Cost Estimation on Material Market

Running head: COST ESTIMATION
Assignment 1: Cost Estimation on Material Market
Name of the student:
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Total word: 1122

1COST ESTIMATION
Introduction
This report depicts the importance of appropriate estimation of cost for any construction
project is extremely important from the business perspectives. Different group are associated to
any construction projects such as project characteristics, labour market, external factors, financial
market, material market etc however, for this specific report the chosen group is material market.
If the actual cost exceeds the planned or estimated cost then the feasibility of the project
will be interrupted. It is the role of the project head to consider some factors such as location and
complexity of the project, price for the labours, price and quality of the materials, competitors,
competitive market etc individually that may affect the construction cost estimation.
Part 1: Factor affecting accuracy of earlier stage building estimation for the
chosen group
According to Shin (2015) the availability and type of specific material also affects the
approach of construction cost estimation. If the client of the project insists for any particular
material or particular product on manufacture for the success of the project then the cost of the
construction project can drive up over project cost. This is referred to as a type of close
specification for the construction projects.
On the other hand if the project head or the constructors accepts a material for
somewhere equal or a quality reduced range then the it will indicate the project head is leaving
the room for their competitors (Belay et al. 2017). On the other hand, the product availability or
the material availability can affect the project success that is relative to the expected schedule of
the clients. The project manager should consider the concept of lead time while estimating the

2COST ESTIMATION
project cost. Lead time is referred to as the time that will be taken for any order that has to be
delivered and measured according to the project requirement).
The material market of any construction project can also be affected through some
external factors such as punctuality in the periodic payment approach, availability of the finance
planning and management plans, tax uncertainty, status of the current business market, pressure
due to the financial inflation, commercial instability, accuracy of the financial cost etc (Komurlu
& Arditi 2017). Material management is defined as a process that helps to provide right choice of
materials at proper place of construction to the contractors and it is comprises of identification,
procuring, storage, receive and distribution. Right balance between the quality and quantity of
the material can minimize the total cost of the project.
The aim of the material management is to deliver right choice of material at the right
point of requirement. Thus, effective procurement of material management can represent the key
role in successful accomplishment of the construction projects. For making material management
a site effective fast track projects, they needs to be integrated accordingly (Belay, Tekeste &
Ambo 2017). Three different phases that holds the key success of the material management
include material usability, material purchase and material storage. The overall cost of the project
will be reduced that will lead to production streamlining and production profitability. The
components that are to be managed appropriately by the contractors include value analysis,
material handling, store keeping, recycling, purchasing etc.
The working capital should be identically utilized which can lower the inventory
investment. Proper material management can also increase the inventory turnover rate. Material
management can respond to market changes that are related to any construction related products