The analysis of pre-tender building price forecasting performance: A case study

The financial management of the construction procurement process is dependent upon on the performance of the managers involved. This paper describes an analysis of pre-tender building price forecasts (estimates) made by a Hong Kong consulting organisation for a series of 89 building projects from 1995 to 1997 to identify factors influencing the accuracy of the forecasts made for possible improvement in performance. This involved the consideration of two distinct sets of models the purpose of which was (1) to identify and explain the underlying systematic causes of errors and (2) to assist in improving the predictive ability of the forecasts. The analysis for (1) used ANOVA to detect significant differences between the errors grouped according to building size (value), building size (floor area), forecasting (estimating) method (approximate quantities and superficial), nature of the work (new build and alteration work), type of client and type of project. This was followed by a Gunner-Skitmore Price Intensity (PI) theoretic analysis. For (2), MRA was used with using cross-validation analysis to simulate the ex-post errors.