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Effects Of Preliminary Estimate On Final Account Of Building Projects
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1.2 Statement of the Problem
The feasibility of construction
projects as decision tool is received with optimistic expectations,
first that it may never be adequate; and second, that it may never be
exhausted (Tate & Flanagan, 1997). This pessimism originates the
spates of project cost performance failure over the decades.
Construction projects across the globe are bedeviled by cost deviation
and overruns. Flyvjerg (2005) found that construction projects are
completed at about 28% above budget. Mahamid (2013) reports 16.73% cost
deviation, the mean cost overrun of 7.9% is reported in Odeck (2004),
and Cantarelli et al. (2012) reports cost deviation of 11%. Scarcity of
world’s economic resources informs the increasing important to
reconsider the controversial disposition of cost overrun. The wide
infrastructure gap in many places are alarmingly high including Nigeria.
Cost
differential is therefore perceived as endemic (Odeyinka, 2015) and the
stakeholders in the construction sector are burdened to mitigate cost
overrun. For the construction professionals to have credibility before
the client, Mbachu (2012); Larkin et al.(2012); Odeyinka et al.
(2012a,b)and Odeyinka (2015) suggested that as an obligation and the
basis for reward, clients, contractors, financiers, and other
stakeholders should carefully consider the expanding variance between
feasibility and final account.
Other wide range implications of cost
deviations are prominent. First the perception of the stakeholders in a
project is affected (Hobbs, 2010). Project financing is difficult and
possible abandonment is imminent. The most prevalent impact of cost
deviation is delay and disruption. The effects and causes of delay and
disruption is widely studied across geographical spread but the
implications lean towards similar results (Aibinu and Jagboro, 2002;
Sambasivan and Soon, 2007; and Haseebet al. (2011). These include time
overrun, dispute, arbitration, total abandonment and litigations
(Kikwasi, 2012). This study therefore seeks to determine the
contribution of estimating to overall cost discrepancy between budget
and final account.
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