Pre-Tender Cost Estimates And Its Effect On Real Estate Investment Decision Making In Dar Es Salaam Tanzania

Project cost estimates goes through several stages before the final pre-tender cost estimate is arrived at. The pre-tender cost estimates is usually used as the basis for client’s budget when the client is proposing a specific real estate investment. However, the literature shows that most pre-tender cost estimates are undertaken without reliable information thus posing a risk for over or under-estimating when compared to the tender price submitted by bidders in the bidding process. This observation may frustrate the project and ultimately the client’s investment decisions. Despite the use of pre-tender cost estimate as client’s budget ceiling during tendering, researches have revealed that there has been significant variability between pre-tender cost estimates and received tender prices which can make pre-tender cost estimates less reliable in subsequent decisions. Client may therefore be forced to re-tender the project after revising the design, suspended the project indefinitely or rejected it outright. Based on questionnaire surveys on 240 construction professionals (QS, Architects, Engineers and Project Managers) this study analyses client’s reaction in response to pre-tender cost variability towards making the ultimate decision on proposed real estate investment project. Using descriptive statistics and contingency coefficient tests, the study established that client's decisions to proceeds with proposed investment is highly determined by factors external to the environment onto which the project is conceived. Professionals pre-tender cost variability, therefore, is limitedly accorded adequate consideration by real estate investors. Pre-tender cost estimate or its variability does not deter initiation of real estate development projects rather could be responsible for a great bunch of failed building construction projects notable in the city of Dar es Salaam.