ELEMENTAL ESTIMATION RISK IN NEW ANDALTERATION CONSTRUCTION PROJECTS

In the competitive construction industry where standard professional fees arederegulated, precontract planning work is executed at the professional’s risk. Costestimators prepare project estimates with very little information thereby encumberingthemselves with increasing financial risks. The principal concern is the possibility ofa substantial variance between final construction cost and estimated cost, resulting ina claim against the estimator. The objective is to maximise the accuracy of theestimate by using a modest amount of information within a short period.In South Africa there are increasing numbers of alteration projects, which arebelieved to contain a higher financial risk profile than new developments. Thepurpose of this research was to explore at conceptual design phase, the risks ofelemental costs in new and alteration residential projects.The data revealed that new residential developments contained greater financialvariances at conceptual design stage than alteration work. The elemental costdistributions used in the model and the unexpected risk profiles were presented toexperienced construction industry professionals for discussion and evaluation.The findings indicated that at the preliminary planning phase, alteration work did notattribute greater risks to the estimator if the estimate is underpinned by suitablequalifications. The research furthermore highlighted the need for greaterinvestigation into risk profiles of all sectors of the construction industry.