QTY 804 Assignment

TRENDS IN COST MODELLING

Cost modelling is the technique used for forecasting the estimated cost of a proposed construction
project.

Therefore, all methods, techniques or procedures used by quantity surveyors for cost estimation or cost
forecast may be termed as cost models.

The practice of construction cost estimating originated as far back as the 18th century among the
British quantity surveyors. Since then, estimation techniques have grown considerably in
sophistication and complexity. Prior to this time, building contractors and clients have to wait till the
completion of sections of the project so as to appoint a measurer who then carries out the measurement
of the work done necessitating the need to wait till the end of a project to assess the contract sum.

Cost modelling can be classified into three generations:

1. Traditional model
Conference
Financial method,
Functional unit,
Superficial,
Superficial-perimeter,
Cube,
Storey enclosure,
Approximate quantity,
Bill of quantities

With the exception of Bill of quantities, each of the traditional methods cost estimates is derived from
previous historic cost data or experience of the estimators on similar projects executed and
adjustments are made for location differences, scope, quality, special requirement, etc. to arrive at the
cost of a proposed scheme either at the conceptual or preliminary design stage . The techniques used
here is mostly analogical approach and sometimes in combination with parametric. The level of
accuracy is determined by the amount of information available.
In the case of bill of quantities, details about the project are clear and the level of information is high.
Therefore, analytical approach to cost modelling is used.

The cube method was the first recorded forecasting method; this was invented about 200 years ago,
floor area approach was developed around 1920, some researchers later developed storey enclosure
method by 1954, which provides better result over the previously developed cube and floor area,
certain variables were identified and incorporated into the model other than those used in the past, like
floor areas vertical positioning, storey heights, building shape and presence of basement.

However in the mid-1970s, researchers started deploying statistical techniques to cost modelling.
Through these, conventional methods evolved, such as approximate quantities and optimization.
Which eventually lead to the emergence of the non-traditional approaches.

2. Non-traditional model
Statistical / Econometric model (Regression analysis and Causal model)
Risk / Simulation model (Monte Carlo simulation and Value management)
Knowledge-based model
Resource-based model
Life cycle model
These methods invariably involves the collection of cost data from various projects executed in the
past and using statistical or probability distribution methods in analysing them in other to forecast the
cost of a proposed construction project. Software is developed to collect such statistical information,
store them and as new project parameters are impute, processing is made to generate the likely cost of
the new scheme.

3. Artificial Intelligence System

Neural network (NN)
Genetic algorithm (GA)
Case-based reasoning (CBR)
Fuzzy logic (FL)

These are based on the mimicking of human intelligence to provide cost estimate for a proposed
construction project. Neural network uses an interconnection of nodes called neurons which function
in the same pattern as the human brain cells the interconnection allows the system to carry out
complex analysis and minimise the margin of error learned from past estimates. GA is a method of
intelligently searching for an optimal solution based on the genetics and natural selection. CBR is
widely used by construction managers not only in estimating costs but also in many decision-making
models. In calculating the similarity of cases and retrieving similar cases from a case base, the weight
of cost impact attributes is important. Fuzzy logic are usually intended to model people's cognitive
states, they can be determined from either simple or sophisticated elicitation procedures. At the very
least, subjects simply draw or otherwise specify different membership curves appropriate to a given
problem.

In recent developments, a combination of all or some of the artificial intelligence (AI) systems are
used to generate models for construction costs.

References

1. Ashworth, A; Neale, R H and Trimble, E G (1980) An Analysis of Some Builders' Estimating.

The Quantity Surveyor, 36(4), 65-75.
2. Skitmore, R.M, and Ng, S.T., (2003) Forecast models for actual construction time and cost,
Building and Environment. Vol. 38, No 8, Pp 1075.
3. M. Salama, F. Al-Sharif, A. P. Kaka, and C. Leishman, (2006) Cost Modelling for
Standardised Design
4. Projects
5. Azmi A., (2009) Exploring the Types of Construction Cost Modelling for Industrialised
Building System (IBS) Projects In Malaysia.