Factors affecting cost estimate accuracy: Evidence from Palestinian construction projects

Abstract

Estimating the cost of construction projects with high accuracy at the early phase of project development is crucial for project planning and financing. Construction clients require early and accurate cost advice prior to site acquisition and commitment to build in order to enable them to take the correct decision concerning whether to construct the project or not. However, many factors might affect the accuracy of a cost estimate. This study aims at identifying the factors affecting the accuracy of cost estimating construction projects in the West Bank in Palestine. A survey of 60 contractors and 45 consultants from the West Bank in Palestine was performed. Forty-one factors are identified in the study. The study investigates the impact of those factors measured by level of importance and ranked according to an importance index from both the contractors' and the consultants' points of view. The degree of agreement between the participating parties on the importance ranking of the factors affecting cost estimating accuracy in construction projects is presented. The findings reveal that the top five affecting factors according to the surveyed contractors are: fluctuation in currency exchange rate; contract management; number of competitors; financial status of owners; and fluctuation of prices of materials. While the top five factors according to the surveyed consultants are: the political situation; fluctuation of prices of materials; economic instability; poor planning; and previous experience of the contractor.