Risk Factors in Cost Estimation: Building Contractors’ Experience

Abstract

The study has examined risk factors in cost estimation of building construction projects. An investigation was made of risk emanating from risk factors as perceived by building contractors. Data was collected by use of questionnaires were a total of 61 questionnaires were administered to building contractors. The analysis considered four categories of risk factors: construction, physical, financial and estimator’s risk factors. The results show estimator’s risk factors as perceived to have the highest risk on cost estimates. Overall respondents view indicate all four categories of risk factors have an influence to project performance at a range of moderate to high. The study has also established potential risks that originate from risk factors. Such risks are noted to work against the achievement of project goals and include amongst others, project delays, cost overrun and performance failures. It is hence recommended by the study for not only contractors to be vigilant in mitigation of risk factors, but clients as well should also take this initiative as they are bound to suffer when inaccurate cost estimates are committed to a project.