Factors influencing accuracy of construction project cost estimates in Pakistan: Perception and reality

Construction projects are unique as they are priced before being constructed. Therefore, accuracy of construction project cost estimates is pivotal in project success. Several studies have determined factors influencing the accuracy of cost estimates. Comparatively less information is available for construction industries in developing countries. This study identified factors influencing the accuracy of cost estimates for construction projects in Pakistan. Cost data was collected for 46 completed construction projects. Four dimensions 60 factors were considered. Dimensions included: project characteristics, project team, estimating procedures, and (costing related) information items. A rigorous analysis framework based on principal component analysis and regression analysis was used. Involvement of the contractor in the estimation procedure and labour rates were found to be the most significant factors. Early involvement of the contractor can result in realistic estimates through timely input from subcontractors, materials suppliers and manufacturers among others. This also helps in controlling labour costs as most of the construction projects in Pakistan employ labour through subcontractors.