Development of Tender Price Indices for the Ghanaian Building Industry

Abstract

Tender price indices (TPI) remain an optimum process for predicting tender prices. There have been several indices’ developments in the Ghanaian Building Industry (GBI) to help in cost management practices, for instance, building cost indices, and material indices among others. Notwithstanding, there are no indices for forecasting tender price at the design stage of building projects in the Ghanaian Building Industry. The motivation of this study is to develop tender price indices that would facilitate easy prediction of the initial cost of building projects. Through a thorough literature review and secondary data collection, the index was formulated using Laspeyres with Excel spreadsheet for the actual index. The variables considered include preliminaries and measured work sections which include the substructure, concrete work, reinforcement, masonry, lining/sheathing, window/door/stairs, metalwork, surface finishes, sanitary appliances/fitting and electrical supply/power light system of the Bills of Quantities. The finding of the study shows that on average there is a change in price of about 4.42 per cent within the eight-year period from 2008 to 2016. The study has developed tender price indices for the Ghanaian Building industry for the facilitation of the easy prediction of the tender prices at the initial design stage, however, the indices have an error margin of ±3. The development of these indices will serve as the basis for further development of other indices in GBI such as locational indices and value-based indices for effective cost management practices.