CHAPTER ONE

1.1  Background of the Study

In nearly all contract types, the preparation of a realistic cost estimates is a necessary part of any building work (Holm et al, 2005). Estimating is done before commencement of building work or even before tendering for the building work starts. The Quantity Surveyor is responsible for these estimates which serve to ensure that the building work will have a successful financial outcome (Enshassi et al,2013). Estimating is therefore one of the important functions of a successful project. Estmating is the processs of calculating and anaIysing all the cost that will be incurred in a particular project, reliable estimates serves as basis for good contracting. It is therefore important that the estimates of building works are reliable (Odeyinka, 2010). In the building industry, main concern of construction clients are projects delivered within the predefined estimates, on time, to the expected quality with no surprises (Alan et al, 2008). Essentially, estimate is intended to look into the future and create a cost that will continue to be feasible and reliable at the time the project is completed.

 The purpose of cost estimation is to produce a reliable estimate of a building work.  An estimate is unreliable if it is overestimated or underestimated (Akintoye, 1998).  Overestimation is where the estimated costs are higher than the actual costs of completing the project, while underestimation is where the actual costs significantly exceeds the estimated costs. Researchers seem to agree that cost overestimation is not much of a problem as cost underestimation (Flyvbjerg et al, 2002, World Bank, 2004, Creedy 2006). In other words error of underestimating costs is significantly much more than the error of overestimating costs.

 To achieve reliability of cost estimate the Quantity Surveyor must keep in mind all the factors affecting the estimate and be careful to neither overestimate nor underestimate. Studies conducted by researchers in  United Kingdom (UK), Middle East, Asia and Africa concluded that the deviations between the initial estimate and final costs are common. Moreover, Odeyinka (2010), asserted that no matter how much care is put into the preparation of initial cost estimate, deviations observed between them and the final cost are usually significant. Again, there are evidences in construction management indicating that it is difficult to find a building work in which the final cost is the same as initial cost estimate (Akintoye,2000, Aibinu and Pasco 2008, Odusami and Onukwube, 2008,  Enshassi et al , 2013). Obelender and Trost, 2003 stated that reliability of an estimate depends on who was involved in the preparation of the estimate, how the estimate prepared was and what was known about the building project while preparing the estimate.

 Nkadu (2004) noted that unreliable estimates have negative implication on the client, Quantity Surveyor and the Contractor. In the case of underestimating, the client may get an unpleasant shock when the initial costs are drastically modified upwards which can result in abandoned project, losses or litigation by the client. To the Quantity Surveyor, it means inability to deliver value for money and could tarnish his image and reputation and loss of confidence reposed in him by the client. To the contractor, it implies loss of profit through penalties for non-completion of project and could jeopardize his   chances of staying competitive in future contracts. In the case of overestimating, the Quantity Surveyor may lose the job or lose the client confidence. In theory, this statement demonstrates that the fine line between the underestimate and overestimate is what the client and Quantity Surveyor is aiming at.

Studies on the subject matter have been conducted in the West Bank region of Palestine (Mahamid, 2015), in New Zealand (Barzandeh, 2011), in Malaysia (Azman et al, 2013), in Zambia (Chobota 2010), and in Pakistan (Alizar et al, 2008).

In Nigeria, study on the subject matter been conducted by Odusami and Onukwube (2008) and Oladokun et al, (2011), but the specific region or state in which the studies were undertaken where not indicated. A similar study was conducted in Kaduna by (Alumbugu et al, 2014).

 There have been concerns raised by some contractors in Akwa Ibom State on the reliability of estimates prepared by Quantity Surveyors. In spite of this, studies on the subject matter are scarce in the south- south geopolitical zone in general and in Akwa Ibom State in particular. It therefore means that the factors affecting reliability of estimate prepared by Quantity Surveyors in Akwa Ibom State have not been identified. This study is therefore carried out to examine the reliability of estimates prepared by Quantity Surveyors in Akwa Ibom State.

1.2       Statement of Research Problem

Construction industry is a very sensitive and relevant sector of economy of any nation. Despite its relevance; it is also endowed with a lot of projects that were not completed within the initial budgeted estimates (Oladukun et al, 2011). There has been insufficient fund to complete various projects because the amount released is a function of the amount specified in the project cost estimation. Consequently, most  building projects are usually characterised by incessant request of upward review of contract sum above the initial cost (Trost and Oberlender2011).

 Research has been carried out in the field of estimating for building work. Some studies have investigated the reliability of estimates and their respective measure of influences which is similar to the focus of the current studies. Unreliable estimates have potential to negatively affect the performance of building projects. It could result to financial loss by the client, litigation among contractual parties and in extreme cases it could lead to abandon of the building project. It could also undermine the reputation of the professional Quantity Surveyor as he may lose that confidence reposed on him by the client. Moreover, contractors may suffer loss in profitability as a result of inaccurate estimate prepared by the Quantity Surveyor. However, studies investigating the reliability of estimate for building projects in Akwa Ibom State appear to be scarce. In therefore suggests that construction industry stakeholders in Akwa Ibom State have not been provided the knowledge on the important factors affecting reliability of cost estimates, effects and measures for improving reliability of estimates.     

In view of these problems, it is pertinent that this study is carried out to identify the causes of failure of estimates prepared by Quantity Surveyors for building works in Akwa Ibom state, the effect of failure of estimates and measures of controlling failure of estimates prepared by Quantity Surveyor in Akwa Ibom state.

1.3       Research Questions

In the course of this research, the following questions were raised

    I.               What are the causes of failure of estimates prepared by Quantity Surveyors for building works in Akwa Ibom State?

 II.               What are the effects of failure of estimates prepared by Quantity Surveyors for building work in Akwa Ibom State?

III.               What are the measures of controlling failure of estimate prepared by Quantity Surveyors for building works in Akwa Ibom State?

1.4      Aim and Objectives

The study is aimed at examining the reliability estimates prepared by Quantity Surveyors for building works in Akwa Ibom State; the objectives include;

       I.            To identify the causes of failure of estimates prepared by Quantity Surveyors for building works in Akwa Ibom state.

    II.            To investigate the effects of failure of estimates prepared by Quantity Surveyors for building works in Akwa Ibom State.

 III.            To examine measures of controlling failure of estimates prepared by Quantity surveyors for building works in Akwa Ibom State.

1.5       Significance of Study                       

Estimating process is very important as it enables building industries to determine their direct costs and provides a bottom line cost below which it will not be economical for them to carry out the work. Baccarini (2004) stated that every estimate is associated with uncertainty and is therefore associated with a probability of overrunning or underruning the predicted cost

            Cost estimation is one of the most important activities of the entire project duration. Mahamid (2015) stated that the basic challenges faced by the Quantity Surveyor are to estimate the cost of constructing a building work for the specific construction of activities and after that the built work is within the estimated cost and schedule. It is rare to find a building project delivered in Akwa Ibom State according to the contractual cost hence there is need for this study. 

            This study is beneficial to the clients, Quantity Surveyors, Contractors and the Construction industry as a whole. To the clients, this study will help in minimising losses, abandoned project and litigation which could occur due to unreliable estimates. To the Quantity Surveyor, the outcome will enhance and improve their estimating skills and efforts towards achieving reliable estimates thereby giving the client value for money. In addition, the result will maintain the image and reputation of the Quantity Surveyor and will also boast the client confidence on the professional competence of the Quantity Surveyor. To the contractor this study will help in reducing loss of profit which he could incur as a result of unreliable estimate and will also promote his chances of staying competitive in future contracts.  To the construction industry it will boast the productivity as the reliability of cost estimates is one of the main elements for improving the efficiency of the construction industry.

1.6   Scope and Delimitation

This study covers both public and private building projects in Akwa Ibom State, Nigeria. The research was conducted in three major towns of Akwa Ibom Stare these include Uyo, Ikot Ekpene and Eket where the number of building projects is relatively high.

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