Factors Influencing Cost Estimation Accuracy in Construction Projects

This report examines the crucial factors impacting the accuracy of early-stage construction cost estimations. It highlights the significance of precise cost projections for project planning and financial stability, particularly for clients making investment decisions. The report identifies several key factors that can lead to cost variations, including shortages in labor, materials, and equipment, as well as price escalations and design complexity. It emphasizes the impact of delays, material price fluctuations, and intricate designs on overall project costs, using the example of a 14-story residential apartment tower in Sydney. The report concludes that accurate cost estimation relies on careful consideration of these factors, effective control over material availability and prices, and the selection of designs with reduced complexity. The analysis underscores the importance of comprehensive feasibility studies to ensure precise construction cost predictions.

Factor Influencing Cost Estimation in construction
Cost estimation with high accuracy in the construction at early stages is crucial for the
project development, planning and feasibility. The clients require accurate and early cost
envision to allow them to plan for the funding and decision making (Dahiru, 2017).
Nevertheless, it is never easy to come up with the precise cost estimates due to different factors
which influence the final cost. The experts have to be precise and accurate in projecting the final
costs to prevent stalling of the projects due to financial issues.
One factor which can lead to the cost changes in a construction is the shortages in labor,
plants and materials as well the escalations time of construction. The construction industry relies
on the presence of the materials, working equipment and materials in order to complete the
works completed on time (Baldwin, & Bordoli, 2014). Delays and shortages of the materials,
equipment and plants on site means that the contractor cannot continue any works on site. This
raises the delays in work execution and ultimately need for escalation time of completion. The
escalation of completion time comes with additional costs which may not have been anticipated
in the beginning during cost projection. For instance, if the construction of 14 story residential
apartments tower: Milsons Point, Sydney had an initial anticipated time of completion of 1 year,
and due to avoidable circumstances the completion time is increased to 1 ½ years then additional
labor cost will be incurred and therefore increasing the final cost of the project. Shortage on
materials, plants and equipment may give rise to this situation. In addition, prices escalations
mean that original quotations have to change and the total cost as well. The time duratiosn may
be critical in changes on the prices of materials and therefore affecting the rates used. Any slight
increase of the prices in any part of the building material in any room means that the whole
building will have an increase in final cost of the building (Challender, Farrell & McDermott,

2019). Moreover, any escalation of prices means that the different sections have increase overall
room costs and the overall final cost will escalate. The high quality finishes are costly and any
price escalation leads to a substantial increase in the final cost by a higher margin.
The design complexity which causes difficulty in the construction period is another key
factor which influence the final building construction cost. Complicated designs have been found
to increase the final cost of the buildings more than simple designs. First, complicated designs
require more time of construction and need experts to be achieved. The specified experts are
costly and the increase of time of execution increases labor costs for the projects. The presence
of these two factors increase the final cost of the buildings (Hinze, 2012). Failing to estimate the
need for the experts and time of construction will result to a higher deviation of the final cost
(Cindrela Devi, & Ananthanarayanan, 2017). In other words, the estimation for a simple design
building will be low than of an enveloped design. For instance, having a circular wall with round
roof for 14 story residential apartments tower: Milsons Point, Sydney will have a great variance
in cost than a use of rectangular design with pitched roof. Even when the area of both buildings
are similar, the final cost is likely to be way apart. Increased time of construction for an
enveloped designs means more cost will be experienced. Therefore, estimation of the cost
according to the designs is important to help in arriving at a precise cost of construction.
In conclusion, the final cost can precisely be arrived at when proper feasibility of key
factors affecting the cost are estimated. Proper control on materials, plants and equipment
availability on site and prices escalations as well as consideration of proper design with reduced
complexity can be used to arrive a precise estimation of cost of construction in the beginning.

References
Cindrela Devi A., & Ananthanarayanan K. (January 01, 2017). Factors influencing cost over-run
in Indian construction projects. Matec Web of Conferences, 120.
Dahiru A,. (January 01, 2017). Appraising Factors Influencing Construction Engineering Cost
Estimates. Arid Zone Journal of Engineering, Technology and Environment, 11, 89-102.
Hinze, J. (2012). Construction planning and scheduling. Upper Saddle River, N.J.: Pearson
Prentice Hall
Baldwin, A., & Bordoli, D. (2014). A handbook for construction planning and scheduling.
Chichester, West Sussex, UK: Wiley Blackwell.
Challender, J., Farrell, P., & McDermott, P. (2019). Building collaborative trust in construction
procurement strategies. Hoboken, NJ: Ohn Wiley & Sons, Inc.