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The accuracy of pre-tender building cost estimates in Australia

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  • Ajibade Ayodeji Aibinu
  • Thomas Pasco

Abstract

A pre-tender building cost estimate is an important piece of information when making decisions at the project planning and design stage. The important project characteristics influencing the accuracy of pre-tender building cost estimates are examined and practical improvement for increasing the accuracy of estimates are considered. A quantitative approach is used to address the research problem. Analysis of data from 56 projects and from a postal questionnaire survey of 102 quantity surveying firms suggests that the accuracy of pre-tender building cost estimates varies according to project size and principal structural material. When eight identified project characteristics are controlled in a multiple regression analysis, the accuracy of estimates is influenced by project size. The estimates of smaller projects are more biased than the estimates of larger projects. It was discovered that pre-tender building costs are more often overestimated than are underestimated. Overestimated forecasts are incorrect by a larger amount than underestimated forecasts. Data analysis also revealed that the accuracy of pre-tender building cost estimates has not improved over time. The majority of the respondents are somewhat dissatisfied with the accuracy of estimates in the industry. Probability estimation and simulation of past estimates, reducing quantity surveying and cost engineering skill turnover, incorporating market sentiments into estimates, early involvement of the quantity surveyor at the brief stage, and proper documentation of experience gained in the estimation of projects should help firms increase the accuracy of estimates for new projects.

Suggested Citation

  • Ajibade Ayodeji Aibinu & Thomas Pasco, 2008. "The accuracy of pre-tender building cost estimates in Australia," Construction Management and Economics, Taylor & Francis Journals, vol. 26(12), pages 1257-1269.
    • Handle: RePEc:taf:conmgt:v:26:y:2008:i:12:p:1257-1269
    DOI: 10.1080/01446190802527514
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    Citations

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    Cited by:

    1. Tomáš Bruckner & Filip Vencovský, . "The Process of Unit Price Extraction from Public Sector Contracts," Acta Informatica Pragensia, Prague University of Economics and Business, vol. 0.
    2. Miranda Sarmento, J.J. & Renneboog, Luc, 2017. "Cost overruns in public sector investment projects," Other publications TiSEM 51799a3e-4c78-4dbd-b330-b, Tilburg University, School of Economics and Management.
    3. Miranda Sarmento, J.J., 2014. "Public private partnerships," Other publications TiSEM c7d4c978-234c-4f88-83ed-1, Tilburg University, School of Economics and Management.
    4. Igor Peško & Vladimir Mučenski & Miloš Šešlija & Nebojša Radović & Aleksandra Vujkov & Dragana Bibić & Milena Krklješ, 2017. "Estimation of Costs and Durations of Construction of Urban Roads Using ANN and SVM," Complexity, Hindawi, vol. 2017, pages 1-13, December.
    5. Tomáš Bruckner & Filip Vencovský, 2020. "The Process of Unit Price Extraction from Public Sector Contracts," Acta Informatica Pragensia, Prague University of Economics and Business, vol. 2020(2), pages 170-183.
    6. Cezar SIMION-MELINTE, 2016. "Factors Influencing The Choice Of Cost Estimates Types And The Accuracy Of Estimates For Construction Projects," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(1), pages 50-56, November.

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