Strategies to improve the risk factors that affect cost estimation in the Building Construction Industry in GHANA

Strategies for improving risk factors affecting cost estimation in the building construction industry continue to be a major feature of construction projects in an attempt to deal effectively with uncertainty and to achieve project success. The dissertation presents strategies for the improvement of risk factors affecting cost estimation in the building construction industry. The study is on risk allocation (both contractors view and as practiced); risk importance and risk effects on a construction project; and analyses contractors’ perception of allocating construction risks to the common practice of allocating these risks. To achieve the study objectives of this dissertation the researcher conducted a literature review of the subject, defined important risk parameters and categories related to construction risks, designed a questionnaire related to allocation of risks, importance and effects of these risks on a construction projects. However, questionnaire was distributed to 25 construction contractors of D1K1 working with Ghana Cocoa Board. Responses from 23 contractors were received, analysed, summarized and reported which represent 92% of response rate. The findings of the results indicated that the perception of construction contractors in Ghana in allocating measured risks is different from the common practice of allocating these risks. In practice, according to the respondents the measures that will help mitigate the risks that have been identified in cost estimation in this order: (i) Eliminate over design (ii) Risk Management must rely on tools and techniques that will help the likelihood of future events (iii) Use of Value Engineering (iv) Design Professionals should understand not only the project but also the external environment in which that project will be constructed (v) Risk management should really be considered the responsibility of everyone involved in a project. An effective way of tackling risk is to prepare for it adequately. Every organisation must have a plan to tackle risk. There is the need to look at the past experiences of the organisation and others in the same sector and identify some of the risk that has been confronted by them. Waiting for the risk to occur and tackling it is often the weakest part of the risk management process. There should also be the use of qualified estimating personnel throughout the life of the project from budget preparation, design, and tendering, post-tender review and construction phases. The use of unqualified estimators will result in inaccurate estimates and, hence, inappropriate budgets. The implication of the study is that the lessons drawn from the research will serve as early warning to contractors to risk management in the running of their businesses and also ensure that proper measures are put in place to address issues of improving risk in cost estimation in the construction industry. The government and the stakeholders in the industry are also expected to take a cue from the research to ensure that these contractors have the necessary tools to manage risk in cost estimation. Keywords: Risk management, Construction industry, strategic measures and cost estimation

Source: KNUST