ASSESSMENT OF FACTORS AFFECTING THE ACCURACY OF COST ESTIMATION IN PROJECT MANAGEMENT: THE CASE OF WATER WORKS DESIGN AND SUPERVISION ENTERPRISE (WWDSE)

Abstract

Estimating is one of the most important functions of a successful project. Accurate estimates optimize good contracting as well as the process of calculating and analyzing all the costs that will enter into a particular job to arrive at a set total. (Barzandeh, 2011) This research assesses factors affecting the accuracy of cost estimation and analyzes their effect on project management in water works design and supervision enterprise. The implications of errors in cost estimation are discussed. Descriptive research design is employed in this research. The financial & physical performance report of large scale projects are also reviewed in order to assess to what level of accuracy the cost estimation is predicted. Then the data collected through questioner are analyzed and interpreted. The findings have indicated most of the estimated cost of the projects is either under-utilized or over utilized which shows there is undeniable inaccuracies in the project’s cost estimation. The most influential factors that affect the accuracy of project cost estimation identified by this study are completeness of technical and socio economic information, work load during estimation, Availability of adequate time for estimation and Insufficient number of estimating staff, nonattendance of project managers in cost estimation, the effect of client on cost estimation, financial situation and budget of client, location, site constraint, weather condition and complexity of projects, availability of skilled labor in the market at predetermined cost, the impact of government policies. The conclusion that have been drawn shows that the under utilization or over utilization of estimated project cost with large variance are seen and there is inefficiency in project management. The wide variance between the estimated and actual cost of the projects can make the actual profit to be different from the forecasted one with extensive gap. Therefore it is recommended that the management of the enterprise to give more attention to the most influential factors that affect the accuracy of projects cost estimation that are identified in this research in order to achieve more reliable and realistic estimates.