CHAPTER 1

INTRODUCTION

1.1 Introduction

Generally, the process of awarding any construction contract is based

on a competitive bidding. Contractors will be invited to submit their bids to

the owner who normally awards the lowest bid to construct the project.

Beforehand, both the owner and contractor have to access the construction

cost of the proposed project. This is achieved through a construction cost

estimate. Although, the actual total cost of construction is not known until the

completion of the project, conceptual estimates can be a good start for the

owner and contractor. The owner will be able to estimate in advance a range

of the final cost, to secure the lowest cost to construct the project, and budget

the necessary fund in advance. Considering an adequate contingency

percentage to the total estimated cost covers such risk. In order to win the

contract, the contractor bid price has to be low enough to compete with other

competitors, yet high enough to cover his risks and make some profit.

Consequently the importance of cost estimates is enormous for all project

phase, moreover at the conceptual and feasibility phase.

The preparation of any type of cost estimate depends on the experience of the

estimator, the tools used, the time spent, and the information available.

1
Usually the preparation of an estimate starts by breaking down the project

into components, then taking off the quantities of the elements of each

package and next pricing them all.

Finally, by summing up the price the direct construction cost is computed.

This process is long and complex but the most complicated part of it is the

quantity take off.

Consequently, computers are considered to be effective tools in cost

estimating. due to their capability of doing complex calculation and storing

huge amount of data for future use. Any decision concerning the construction

of a project that has been or to be executed is based on one type of estimates,

which are preliminary estimates, which their moderate level of accuracy

owner, quantity survey and contractor consider them as the first choice

estimates because they are inexpensive and fast to generate. Owner uses them

to decide whether constructing a project is feasible and to evaluate

contractors bids, while architect to design within owner’s budget and

considering alternatives, and the contractor to know if bidding on a project is

profitable or not. Consequently, in the proposed methodology the

concentration is on preliminary construction cost estimates with the emphasis

on a computer as an avail tool for estimators.

2
1.2 Background

Computers are expending increasingly into all aspects of daily life. The

cheaper computer hardware today has boasted the rush of using the

computers. Although the move had been slow compared to the others, the

construction industry is steadily coping itself with the advancement in the

information technology system. As a result, the professional Architects,

Engineers and surveyors had computerised their works, and the contractor

had started to use computers for their daily business purposes. From a survey

by Mohd Hisham Ariffin (2002), it is concluded that the Construction

Industry Development Board (CIDB) G7-graded contractors were highly

dependent on computer for the administration work while having mediocre

dependency on computer for technical work which include scheduling,

technical calculation, budgeting, estimating, and others.

The early uses of computers by construction companies were limited to

accounting functions. With the advances in micro-computing, increased

knowledge of computer capabilities, and the development of user-friendly

software, computers have been used everyday construction to make quick and

accurate decisions.

The method of pre-tender price estimating have been developed as manual

processes. The computer can be used in conjunction with any methods of

3
estimating for the rapid retrieval of cost data, of for calculating an

approximate estimating. The advantage of using a computer is that an

estimate, however detailed, can be updated quickly and efficiently for

changes, which may be necessary in a revised design.

The computers potential in construction estimating has progressed from its

use as an adding machine to an integrated process of computer-aided design

(CAD), estimating software, job costing software and project scheduling

systems. However the actual use of the computer for estimating is varied

within the industry. Some companies use the computer for all projects and

with high degree of sophistication.

There is a variety of estimating software program available. Some simply

perform the mathematics of the estimating process, others integrate the

estimating operation with other functions of the construction process. No

matter how sophisticated the program might be, it is imperative that the

estimator understands the calculation methods and assumptions used in the

program. The estimator should be properly trained and should know all

assumptions before proceeding with an estimate.

Computer estimating still involves the measurement of dimensions and

compiling materials. This information can then be fed to the computer to

obtain the labour, equipment and material costs that may be used to compile
4
the estimate. To perform this type of function, the computer must be

programmed to proceed through the required steps, and appropriate unit costs

must be stored in it.

An estimator must assemble a large amount of information in an

organized manner and perform numerous calculations to prepare a cost

estimate. The computer can be used by the estimator to organize, store and

retrieve information and to perform the many calculations necessary to

prepare an estimate. It can be an effective tool for decreasing the preparation

time and increasing the accuracy of cost estimating.

Numerous computer database can be developed to automate and standardize

the estimating function. Historical cost database can be developed from the

cost records of projects that have been completed by the company.

Information from the historical cost database can be retrieved for the

preparation of estimates for future projects. As new information is obtained

from current projects, the historical cost database can be updated.

The advent of the relatively powerful and economical computer technology

has realistically made the computer-aided estimating become feasible. The

number of estimating products increased rapidly since the entry of an

interactive computing system into the market. Accompanied with the

emergence of estimating software, advance in the database management

5
system has significantly influenced the development of a computer-aided

estimating software. Therefore, it can be concluded that the entry of computer

technology in the estimating practice is a major event in the improvement of

the traditional estimating method by shortening estimate preparation time,

reducing the amount of paperwork required for the conventional data storage,

improving the quality of documentation. These advantages allow the

estimator to pay more attention on decision making during the process of

estimation and leave all burdens of data handling tasks to the automated

system (Charoenngam, 1996).

1.3 Problem Statement

In general, it can be stated that the current estimating programs are

unable to fully satisfy their own users. The available software are under–

utilized due to its inefficiency in terms of difficulty, cost and because the

program does not match with the company’s style of estimate (Charoenngam,

1996). There is very long learning curve for practicing estimators to operate

the system especially for small companies ( Lowe,1994).

Most estimating products focus on program manipulation and offer to much

irrelevant optional features rather to concentrate on the core estimate

preparation. The estimating method and techniques are different from

6
regions, countries to countries, location to locations and companies to

companies (Lowe 1994).

Therefore the research is needed because in Malaysia the use of Cost

Estimating system was very limited. The most common and widespread

method for taking-off was still the traditional method and spreadsheet

method. In the mean time, although most of the contractors have their highly

capable Cost Estimating system, there are still many of them who still use the

spreadsheets program. The reason is that spreadsheet programs actually save

more time than the Cost Estimating production system. For all this

spreadsheet users, template or standard sheets were being developed to help

out Cost Estimating process. The users will only have a key in the dimension

and then, they will have quantities for multiple items in one single sheet.

1.4 Aim and Objectives of the Study

The aim of this project is to develop a prototype computer – aided

project cost estimating system which can help the users to prepare

preliminary estimate cost of building works. In order to achieve the above

aim, the following objectives of study have to be carried out.

1. To study the various conventional methods of estimating from contractors

perspective.
7
2. To identify the software used by contractor for cost estimating in practice

and the problems they faced in using the software.

3. To develop a computer – aided project cost estimating system by using

Microsoft Access 2003.

1.5 Scope of Research

This study only covers the following scopes :-

1. This study concentrates on developing an application from taking off to

automatic approximate cost estimating.

2. This study concentrates on building work only.

3. This study focused only on an assortment of contractors who has registered

with Pusat Khidmat Kontraktor (PKK) and Construction Industrial

Development Board ( CIDB) in Johor Bahru.

1.6 Importance of the Study

Although it is a simple application, which covers only the approximate

cost estimating preparation process, it is a landmark application that cost

estimate can be prepared automatically using Microsoft Access. This

application will have the same capabilities with the expensive Cost

Estimating production software in terms of preparing Cost Estimate.

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As this application only requires Microsoft Access 2003 to run, the cost of

obtaining and installing this application is thought to be much cheaper then

the available Cost Estimate Production software. As a low cost solution, this

will give the contractor much more opportunity to use the computer in

preparing their cost estimate.

As a result of this widespread usage, files can be shared among all the parties

involved.

1.7 Research Approach

The idea of this research initiate from the researcher experience in using

KAPPA-PCT Application Development System version

2.2 In doing preliminary

Estimate before architectural drawings can be produced. The prototype

is developed in the form it is easy to understand and use. The user has to

answer the questions appear on the screen such as type of school, location,

year when the school is to be build, site condition and piling requirement, that

is before the preliminary estimate can be calculated. They cannot

accommodate detailed element for preparation cost estimate.

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Therefore, the first phase in doing this research is to make study on the

Microsoft Access of whether it can be developed into a Cost Estimate

Production application.

The second phase involves doing literature review on the Cost Estimate

Production software or associated software available in the market. All the

software was extensively being reviewed and it form a model for the

proposed application.

The third phase is on learning to do programming in Microsoft Access. This

is important because this application will be programmed by the researchers

who have little experience in programming beforehand.

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 CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

Cost estimating is an essential aspect for the business operation of

construction firms. Construction is a unique industry that by nature is risky

since most projects must be priced before they are constructed, whereas in

other industries the selling price is based on known manufacturing costs. The

success or failure of a project relies on the accuracy of several estimates done

throughout the course of the project.

Estimating has been recognized as an important element of construction

project. The primary function of preliminary or approximate estimating is to

produce a forecast of the probable cost of a future project, before the building

has been designed in detail and contract particulars prepared. In this way, the

building client is made aware of his likely financial commitments before

extensive design work is undertaken (Seeley,1996).

The purpose of pre-tender price estimating is to provide an indication of the

probable costs of construction at a very early stage in the life of a

construction project.

It is one of the most important factors influencing the client’s decision to

build. An approximate estimate, which is too high, may discourage a

11
potential client, whereas estimates, which are shown to be far below a tender

sum, may result in an abortive design.

2.2 Definition of Estimating

Researcher and experts give cost estimating different definition, thus

the succeeding paragraph states some of them. The Project Management

( PMI ) defines the cost estimating to involve developing an approximation

(estimate) of costs of the resources needed to complete project activities

(Duncan 1996). Hendrickson specifies that are design, bid and control.

Furthermore, he defines that at the very early stage of design, the screening

estimate or order of magnitude estimate is made before the facility is

designed, therefore it relies on the cost data of similar facilities built in the

past. While preliminary or conceptual estimate is based on the conceptual

design of the facility at the state when the basic technologies for the design

are known. Moreover, the detailed or definitive estimate is made when the

scope of work is clearly defined and the completed plans and specification

when they are ready for the owner to solicit bids from construction

contractors (Hendrickson 1989) Association for the Advancement of Cost

Engineering (AACE) International define the cost estimation to provide the

basis for project management, business planning, budget preparation and cost
12
and schedule control. Included in these costs are assessments and an

evaluation of risks and uncertainties (Uppal 1997). On the other hand, Carr

defines it as being an accurate reflection of reality that shows the levels of

detail that is relevant to decisions (Carr 1989).

Estimating is the process of looking into the future and trying to forecast

project costs and resource requirements (Halpin 1985). An estimate is a

judgement, opinion, forecast or prediction. It is a judgement or opinion of the

cost of a process, product, project or service. It is a prediction or forecast of

what a work output or work activity will cost (Stewart 1982). Estimating is a

collection and analysis of the bill items which influences and contribute to

the cost of the project (Clough, 1984 ) According Society by Laws, march

1978 Estimating is the art of approximating the probable worth or cost of an

activity based on information available at the time (Stewart 1982). The

primary function of preliminary estimating is to produce a forecast of the

probable cost of a future project, before the building has been designed in

detail and contract particulars prepared. (Seeley, 1996). Consequently, all

those definition are similar in one way or the other in describing cost

estimating as being the process of guessing and foreseeing the future costs of

a project or product before it actually exist. Despite the likeness between cost

estimating and pricing, one has to carefully distinguish the difference. Cost
13
estimating involves an assessment of the likely quantitative result, how much

will it cost to perform product or service involved. Pricing is a business

decision, how much will be the charge for that product or service (Duncan

1996). Wood mentioned that in management terminology the cost refers to

expenditure, not revenue, the price and cost are not the same. Thus, the price

may be less than the cost in the case of a loss, or the price may be greater

than the cost in the case of a profit (Wood 1974).

2.3 Purposed of Cost Estimates

Peculiar to the definitions an estimate, at its most excellent, is a close

approximation of the actual costs. Hence the purpose of an estimate is to

postulate the costs required to completing a project in accordance with the

contract plans and specification. Furthermore, it is important that

management has as much information as possible when deciding on funding

projects. Sutherland (1999) explains the purposed as to provide the client and

design team with as precise an estimate of final cost as possible so that the

project can be accomplished within the client’s budget. Likewise, Weatney

(1997) outlines the purposed of a cost estimate through the following :

14
  Provides an assessment of capital cost for a specified piece of work.

 Forms the basic for planning and control by defining the scope of work

and it’s associated estimated cost.

 Provide much of the basic information (hours, resources, tasks, and

durations) which is needed for preparing a schedule. It also states

general resource requirements such as labor, material, and construction

equipment.

 Provides the financial input required to prepare a cash flow curve.

 Is a catalyst for discussion, idea generation, team participation, clarity

and buy-in, it ties together much of the relevant project information

within a simple document.

2.4 Estimating and Project Management Roles

Both project management and estimator differently share responsibilities in

performing an estimate at the decision level.

2.4.1 Project Management Estimating Responsibility

Decision making requires a sequence of actions needed to be taken to

perform the process from an initial status to a goal status (Hegazy 1993).
15
Therefore, management must know what cost information is needed and how

to use it in making decisions. Estimate development must be directed and

approved by management prior to issue. The project manager is actively

involved in the development of the estimate and is reasonable for the final

product. The project team is responsible for providing the necessary project

deliverables and scope information to the estimator (Dysert 1997).

2.4.2 Estimator Responsibility

Estimating is a fundamental part of the construction industry. Cost

estimating accuracy is the basis of a project success or failure. Accurate

estimates optimize good contracting ( Andrian 1993). Much of the credit for

the fruition or dud of a construction enterprise is attributed to the accuracy

and capability of its estimating department and personnel. An accurate, liable

and realistic bid preparation demand good judgement and estimating skills. It

is the estimator responsibility to ensure that a project team understands the

information needs for the estimate, then ensure that a project team

understands the information needs for the estimate, then ensure that the

information provided is suitable to produce the quality of estimate desire

(Dysert 1997). Estimators should compile and analyze data on all factors that

might influence the cost like materials, labor, location and equipment (Cost
16
Engineering Journal 1998). Estimating is not an easy process, it involves

complex calculations, and when little information is available demand the

estimator to imagine the elements of the projects. It is important that the

estimator views the complete estimate in orderly steps that include quantity

takeoff, costing of the work, determination of overhead costs, and the

determination of an appropriate profit (Adrian 1993). Including all the items

in the project neither more nor less challenges estimator. Prior to the design

completion, estimator has to have the vision to see beyond the obvious

components and their primary costs of construction (Carr 1989).

2.4.3 Estimator Skill

The challenge that faces a cost estimation is to have it close the actual

cost, this inquires good skill and experience. Dyset and Elliot (1999) avows

that an effective estimating organization requires highly knowledgeable

personnel, possessing technical skills. Furthermore they define a set of skills

as estimating core competencies as follows :

 Understanding of the capital project process.

 Detailed understanding of the estimate requirements for each class of

estimate.

 Engineering document reading.

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  Code of accounts/works breakdown structure/project breakdown

structure.

 Basic project controls (budget, schedule, cost control, change

management, progress measurements, earned value, forecasting).

 Data analysis (labor productivity, database standards and development,

historical data analysis, and benchmarking).

 Strategic estimating skills (capacity factoring, equipment factoring, cost

modeling, general factor, and ratio development).

 Detailed estimating skills (material takeoffs, pricing and costing ).

 General software.

 Estimating software.

 Presentation skills.

 Report writing.

 Listening.

2.5 Types of Estimates

The availability of design data to the estimator does influence the types

of estimate to be chosen. Cost estimates may be divided into two different

types, depending on the purpose for which they are prepared for and the

amount of information known when estimates are prepared. Approximate and

18
detailed estimates are the major types of construction cost estimate. (Steward

1982) classifies the cost estimating methods as the “top-down” or parametric

approach that uses historical data from previous projects to develop the cost

of new project based on increased or decreased factors : or the “ground-up”

or industrial engineering approach that requires estimating and pricing the

man-hours and materials of each element. Approximate estimate are

commonly known as Conceptual, Preliminary, Order of Magnitude and

Budget or feasibility estimates. Meanwhile bid and definitive estimates are

other names for detailed estimates.

The most common estimates type used in building construction are

1) Conceptual estimate.

2) Preliminary estimate.

3) Engineer’s estimate.

4) Bid estimate.

The four levels reflect the fact that as the project proceeds from concept

through preliminary, to final and bidding phase, the level of detail increases,

allowing the development of a more accurate estimate (Halpin 1985). AACE

International has identified a progression of five types of estimates of

construction costs during engineering design, order of magnitude, conceptual,

19
preliminary, definitive and control ( Duncan 1996). Furthermore, Westney

(1997) classified the estimating types based on

1) How the estimate will be used.

2) The type, quality and amount of information available for preparing the

estimate.

3) The range of accuracy desired in the estimate.

4) The calculation technique used to prepare the estimate.

5) The time chosen to produce the estimate.

6) The method or input and output (manual orcomputer) used in preparing the

estimate.

7) The phase of project (feasibility, appropriation and construction) related to

the estimate.

8) For whom the estimate is prepared (owner, contractor or insurance

company).

Generally, the estimating chore continues during the different phases of

the project construction to ascertain whether the actual costs match with the

bid’s estimate. Although, numerous methods and level of accuracy are

available to estimate the cost of constructing a project, all these estimates are

approximated and are based on experience and judgement (Barrie and

Paulson 1992). Certainly the total actual costs will be known just when the
20
project construction is consummated. Table 2.1 lists the four commonly used

estimates, when each one of them can be used according to the design

progresses. In addition to the purpose of using each one of them.

Table 2.1: Types of Cost Estimates

ESTIMATE TYPE WHEN WHY

Conceptual Estimate Prior to design Useful for decision in

conceptual and

budgetary stage.
Preliminary Estimate After detail design(40% Offers the owners a

of total design) pause to review design

before details.
Engineers estimate After detail design Ensure design is within

(100% of total design) financial resources and

assist in evaluating

bids.
Bid Estimate During bidding by Establish bid price

contractors

2.6 Method of Estimates

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 Estimating are required at all stages of a project with varying of

available information thus several methods are evolved. Estimator has to

always consider the relationship between available information, project stage,

method and estimate accuracy. Forecasting is the procedure for simulating

the future by creation of a picture based on historical information (Wood

1974). Yet forecasting contrived from publishing press is slightly accurate so

forecast should be carried out on information related to the industry in which

it is serve. Different estimating methods are described in the midst of the

succeeding paragraphs.

2.6.1 Preliminary Estimates.

Early in the planning stages, both building owners and designers must

agree on an anticipated cost of the project at bid award. Preliminary

Estimates are employed in the early planning phases of a proposed project to

match an owner's needs, expressed as written programmatic requirements,

with budget constraints in order to establish its overall scope (size) and

quality expectations. The Work Breakdown Structure recommended at this

stage is a systems-based format, where elements of the building (e.g. exterior

closure) are the method of categorization. Estimate comparisons at this stage

are especially valuable in evaluating the feasibility of strategic alternatives

22
being considered to satisfy current and projected space requirements (e.g.

new construction versus renovation, or lease space). As the design is not fully

developed at this stage, a design contingency is typically included, typically

between 10-15%. Issues which need to be identified at this juncture include

method of procurement being considered, location market factors, specific

site constraints or challenges, proposed phasing plans, and start and finish

dates. It is recommended that a formal risk analysis be carried out at every

stage in the design, but particularly in the planning stage when proactive

steps can be taken to mitigate identified risks.

2.6.2 Intermediate Estimates.

After proceeding with a preferred course of action, Intermediate

Estimates are employed at various stages of project design development to

maintain accountability for initial budget projections and as a means of

evaluating competing alternative construction assemblies, systems, and

materials. On large projects it is common practice for an owner to employ a

construction manager or professional estimator to continually update project

estimates and provide feedback on budget impacts of decisions on major

design elements. The estimates will typically still be in a Work Breakdown

Structure.
23
The risk assessment should be updated and a contingency factor calculated

depending on the outcome of the risk analysis. As the design progresses and

risks are mitigated, the design contingency can typically be reduced.

2.6.3 Final Estimates.

As the design is completed a detailed pre-bid estimate can be prepared.

At this stage the design contingency would typically be reduced to zero:

however, in some instances, there will still be risk surrounding the project,

which would make it prudent to still include a small bidding contingency.

The estimate should be organized in the same Work Breakdown Structure as

required of the bidders. This then allows for a comparison of the final

estimate with the bids received and can aid in negotiating with the lowest

bidder. In addition, having the final estimate and bids in the same format

facilitates developing cost databases for use in planning future projects.

2.6.4 Unit Method

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 Wood (1976) elaborate unit estimates as selecting a standard unit like

seat per cinema, bed per hospital, table per school to obtain the estimate cost

of project.

Based on the total unit of functional proposed building, the estimate cost of a

building can be obtained from past project of the same functions.

The unit of preliminary estimating consists of choosing a standard unit

of accommodation and multiplying this an appropriate cost per unit. The

standard units may represent, for example schools (cost per pupil), hospital

(cost per bed) and car parks (cost per apace). The technique is based upon the

fact that there is usually a close relationship between the cost of construction

project and the number of functional units it accommodates. Functional units

are those factors, which express the intended use of the building better than

any other. This method is extremely useful on those occasions where the

building client requires a preliminary estimate based upon little more

information than the units of accommodation.

The method of counting the number of units is extremely simple, but

considerable experience is necessary in order to select an appropriate rate.

Rate can be obtained by the careful analysis of a number of recently

completed projects of a similar type, size and construction. Adjustments

based upon professional judgment will however need to be made to account

25
for varying site conditions, specification changes and market conditions. It is

the simplest and quickest method to implement, but it must be used with care.

Therefore, it is advisable to express the cost within a range of prices that can

be useful for budgetary estimate.

2.6.5 Superficial Method

This perhaps the most common method in use for estimating purposes.

The estimate is easy to calculate and costs are expressed in a way fairly

readily understood by an average building. The area of each of the floors are

measured and then multiplied by a cost per square meter.

The rules of measurement for the superficial area of a building were defined

by the Royal Institution Of Chartered Surveyor, United Kingdom. In order to

provide comparability between various schemes, the floor areas are

calculated from the internal dimensions of the building. It is preferable to

separate the floor areas and apply different unit rates. It is appropriate for

projects such school and housing where storey heights are constant.

26
 Fi

gure 2.1 Superficial Method

Factors such as storey height and plan shape are particularly important when

deciding upon the rate to be used. Another factor in its favour is that rates are

readily available from many sources, or alternatively, they can e very easily

calculated from existing schemes.

27
2.6.6 Cube Method

The Royal Institute of British Architects defined the rules of

measurement for the cubic content of a building as follows :-

The external plan area was multiplied by the height from the top of the

concrete foundation to halfway up the roof if pitched or to 610mm above the

roof if flat. If the roof space was to be occupied then the height on pitched

roof building was three-quarters way up the roof. The allowances for flat and

pitched roofs and the measurement to foundation depth are all very arbitrary.

Additional allowances need to be made for projections such as porches,

chimney stacks, etc. Other weaknesses of this method are that it does not give

any indication to a building client of the amount of usable floor area, it takes

no account of storey or plan shape and it produces a large cubic quantity that

will increase the possibility of further inaccuracy in the estimate.

28
Figure 2.2 Cube Method

29
2.6.7 Storey Enclosure Method

James (1954) as cited by Ashworth (1988) evolves a new method in an

attempt to overcome the many disadvantages of the other methods of

estimating using the following rules of calculation.

1. Twice t the area of the lowest floor.

2. The area of the roof measured on plan.

3. Twice the area of the upper floors, plus an addition of 15 per cent for the

first floor, 30 per cent for the second floor.

4. The area of the external walls.

The method attempts to take into account:

1. Plan shape (by measuring the external wall area)

2. Total floor area (by measuring each floor)

3. Vertical position of the floors (by using different multipliers for each floor)

4. Storey height (ratio of floor and roof areas for external wall area)

5. Overall building height (ratio of roof area to external wall area)

6. Extra costs of providing usable floor area below ground (by using

multipliers)

James as cited by Ashworth (1988) claimed that it would perform better, in

terms of accuracy than the other methods. The weightings used are subjective

and are unlikely to apply equally to every building. In addition, the

30
quantification does not easily relate to the client’s accommodation

requirements and as such fails from the same deficiencies as the cube

method.

2.6.8 Approximate Quantities

Approximate quantities provide a more detailed preliminary estimate

than any of the other methods described. They represent composite items

which are measured by combining or grouping typical bill measures items. In

practice only the major items that are of cost importance are measured. This

method does provide a detailed and reliable method of approximate

estimating, but it does involve more time and effort than any of the methods

previously described. No particular rules of measurement exist and the

composite items result from the experience of each individual in practice.

Considerably more information is required from the designed if the method is

to be applied adequately in practice.

2.6.9 Cost Planning

The first stage of cost planning can be used to determine the

approximate cost of a construction project. This method analyses the cost of

the project on an element basis often attempting to make use of the cost
31
analyses from other similar projects. Cost planning also seeks to do much

more. It provides cost advice during the design process, offering the client

better value for money. It also keep the designer fully informed of all the cost

implications of the design in relationship to an approved approximate

estimate and likely accepted tender sum. Full cost planning services would

also incorporate the attributes of life cycle costing. Two alternative forms of

cost planning have been develop, although in practice a combination of both

is sometimes used. The first form is known as Elemental Cost Planning

where the project must be designed within an overall framework of a cost

limit. It is often referred to as ‘designing to a cost’. In practice it is more

appropriate to public sector projects which often incorporate some form cost

limit.

The alternative form is Comparative Cost Planning where alternative

designed can be examined within an economic context. This method is

referred to as “costing a design”

2.6.10 Analytical Estimating

This is the method that is traditionally adopted by contractors’

estimators to determine their individual rates for measured items in bills of

quantities. Each individually measured item is analysed into its constituent

32
parts of labour, material and plants. Each part is then costed on the basis of

outputs, gang sizes, material quantities and plants hours. Particular emphasis

is placed upon such project factors as type, size, location, shape and heights

as being important factors affecting the contractor’s costs.

In theory the contractor will make extensive use feedback. Alternative

analytical methods may calculate cost on the basis of operations rather than

individual bill items.

Analytical estimating is not strictly a pre-tender method of price prediction,

because of the amount of time required and the type of data necessary. It will,

however, find application in those circumstances where, for example, a new

material or construction process is envisaged. In these circumstances where

existing data is not available, the design team may have no choice but to refer

to analytical estimating.

2.6.11 Cost Model

Cost models are the latest technique to be used for forecasting the

estimate cost of a proposal construction project. Although they were first

“discovered” during the early 1970s there is only scant evidence of their use

in practice. However, considerable interest has been shown and research has

been undertaken to convert the theory into practice.

33
 A mathematical model or formula is constructed that best describes the

data collected in terms of cost or price. The technique most widely used has

been that of multiple linear regression analysis, although evidence suggests

that a more appropriate technique might be that of simulation. The

development of cost model is a lengthy process requiring the collection and

analysis of large quantities of data, and then at an appropriate stage testing

the model against conventional methods before it can be put into practice. A

further disincentive towards the adoption of this method of estimating is the

radical approach to the treatment of the data. The use of a computer together

with appropriate software is essential when developing and using cost models

due to the large amounts of statistical analysis that is required.

2.7 Construction Cost

After the drawing and specification which represent the owner

requirements have been completed by the architect and engineers or the

owner himself, the costs of work have to be determined by the bidders

(contractors) who will make offers to do the work for the owner.

The cost of work is made up of different types of costs which constitute the

total cost. The analyze them, they may be classified as follows (Collier

1987):
34
1. Material costs.

2. Labors costs.

3. Equipment costs.

4. Overhead costs.

5. Profit.

2.7.1 Material Costs

Different elements of costs are involved when estimating material cost.

Storage, freight, transportation and inspection are different parts of the cost of

material (Collier 1987).

An estimator may keep current price lists of material for reference, and

he obtains as they are issued. But for basic materials or products that

represent a significant part of the total costs of a project, the estimator usually

receives specific quotation are desirable so that such important considerations

as price, status freight charges, delivery schedule and guarantees are

explicitly covered. It is common practice to enter material price as a lump-

sum amount on the tendering sheet.

2.7.2 Labor Costs

35
A detailed contractor labor cost estimate includes two types of component :

direct labor cost and indirect labor cost.

2.7.2.1 Direct Labor Costs

This is the cost of labor directly related to the project such as engineers,

carpenters, foreman, etc. It can be calculated as follows:

A = B * C * D (Collier 1987).

Where:

A = Estimated labor cost for a quantity work.

B = Labor hours or crew hours required to accomplish a unit of a given work

type (production rate).

C = Appropriate wage scales per hour.

D = Total number of units of work of this category. For an accurate

production rate, which is the largest area of uncertainly facing the estimator,

reliable labor productivity records from completed projects should be

available.

2.7.2.2 Indirect Labor Costs

36
 This is the cost of labor indirectly related to the project, such as payroll,

taxes, insurance and employee fringe benefits of wide variety such as health

paid vacations and pension plans. Indirect labor cost normally constitutes a

35 to 50 percent addition to the direct payroll costs (Collier 1987).

2.7.3 Equipment Costs

To evaluates and select one particular piece of equipment, it is essential to

determine its hourly cost very accurately. The equipment cost is divided into

owning cost and operating cost. The manufacturer’s data and past cost

records constitute means of determining the equipment costs. Some factors

have to be considered at this stage and they are (Collier 1987) :

 Number of hours used per day, month and year.

 Severity of job conditions.

 The way the equipment has been maintained.

 Demand for used equipment when it is sold.

The above factors should be considered and studied carefully in the light of

estimator’s experience.

2.7.3.1 Owning Costs

37
 Owning costs include the cost of depreciation, insurance and loss of

interest.

This cost, divided by the average number of hours utilized in a year will give

the hourly owning rate. The straight line, sum of the year, or the declining

balance method can be used in calculation of depreciation per year.

2.7.3.2 Operating Costs.

Operating costs include the cost for fuel, lubricants, filters, grease, tires,

repairs, maintenance and any other variable costs. The manufacturer data is

good reference but most of the time, for marketing reasons, they are lower

than the actual figures which put more emphasis on previous cost records.

One should also consider the job conditions.

An accurate estimate of total hourly rate for the operating costs is essential.

2.7.4 Overhead Costs

These are construction costs of any kind that cannot be attributed to any

specific item of work. Overhead cost can be classified into two types,

namely, job overhead costs and office overhead costs. If cost can be

attributed to a specific job site because the costs arise only out of that

38
particular job, these costs are job overhead costs. If cost cannot be attributed

to any particular job, they are office (operating) overhead cost (Ferry 1972).

Overheads are a significant item of expense and will generally run from 5 to

15 percent of the total project cost, depending somewhat on where certain

project costs are included in the cost estimate (Carr 1989).

2.7.4.1 Office Overhead

The item of adequate overhead expense is sometimes neglected by

many contractors, but it is of such importance that every contractor should

give it careful consideration.

Every contractor has certain fixed expense that must be paid regardless of the

amount of work done or contracts received and these items should be charged

to office overheads.

These include such as office rent, fuel, lights, telephone and stationery, office

supplies, advertising, trade journals and magazines, legal and accounting

expenses not chargeable directly to any one job, fire and liability, insurance

for office, club and association dues, office employees such as bookkeepers,
39
clerks, estimator, and services, along with travel and entertainment expenses

and depreciation of office furnishings and equipment.

2.7.4.2 Job Overhead

Each job will entail certain expenses that are chargeable to the job as a whole.

These are set forth in general conditions. These will include such items as

superintendent, temporary buildings, offices, utilities, protection, clean-up,

permits, survey, photographs, tools and equipment, insurance and benefits,

sales taxes, surety bonds and warranties. Sometimes, these are covered only

in a general way and it is up to the contractor to visit the site to determine

what is needed.

As discussed above, job overheads and office overheads are most

excellent kept separately although, occasionally the cost of employees,

insurance, tools and equipment and other items may be divided between

office expenses and job expenses.

Many contractors figure a certain percentage of the cost of the job to take

care of all overhead expenses and plant charge, but this is not the correct

method to use and does not give the contractor or estimator a reliable basis

for computing the cost of this work.

40
Each item entering into the cost job overhead expenses should be estimate in

the same way as any other branch of work.

2.7.5 Profit

The amount of profit to be added to the estimates cost of the work is a

question which a contractor must answer individually for each bid. There is

no set amount that can be added. It all depends on local conditions,

competition, and how badly the job is wanted.

On small job alterations, remodeling and similar work a contractor is justified

in adding twenty five percent to the actual cost for profit. On new work

where it is possible to estimate the cost with a fair degree of accuracy, a

contractor is entitled to ten percent on the actual cost of the work but, when

submitting competitive figures, it is safe to say there are many jobs let on a

five percent instead of an ten percent basis.

The amount of profit is generally computed as a percentage of the contract, or

in some cases, as a percentage of each item in the contract (Carr 1989).

2.8 Factors Influencing Estimating

Estimate costs are based on combination of historical data of previous

projects and price quotation received from suppliers or vendors. Cost

41
estimates are influenced by factors that arise from the operating environment.

For instance, the cost varies if the proposed project is constructed near a city

or in a rural location. Effective construction cost estimating is heavily

dependent on experience (Carr 1989). Since estimating process is a forecast

of the future cost of constructing a project, it is a process surrounded by

uncertainty and risk. To produce a reliable estimate numerous factors should

be considered. Errors during the estimating process have cost construction

firms millions of dollars all over the years. Usually estimator uses cost data

from past projects or published in estimating guides. Using such data

arbitrary without knowing their similarity at hand will produce an inaccurate

estimate because it is not based on the reality of the current project (Carr

1989).

There are many items that influence and contributes to the cost of a project,

each item must be complied and analyzed. Since the estimate is prepared

before the actual construction of the project, a great deal of study must be put

into the construction documents, and this makes estimating one of the most

important phases of any construction business (Dagistino, 1973).

The accuracy of any estimate is particularly important. Factors that influence

accuracy include the amount, type and quality of data available and the

proficiency of the estimator and the way that the data is interpreted. The
42
estimating expertise depends upon many factors such skill, experience,

judgement, knowledge, intuition and luck (Ashworth, 1983). Regardless of

the type, preparing an accurate estimate requires several skills. Andrian

(1993) classifies three essential elements to an accurate estimate stated as

follows :

1. Determination of the quantity of work.

2. Identification of the productivity needed to perform the most difficult to

estimate, project drawings and the cost of rework.

3. Calculation of the unit cost of the resources to be used for the work.

2.8.1 Quantity Surveying

The development of the quantities of work to be placed in appropriate

units is referred to the quantity takeoff or surveying (Halpin 1985).

Regardless of the type of the estimate, items to be estimated must be listed.

This is the most important look of the contractor’s estimating and bid

functions. Taking off the quantities from drawings and specification is a time

consuming step. Adrian (1983) assorts the required time and accuracy level

of quantity takeoff to be depending on :

 The skills and procedures used by the estimator.

43
  The quality of the project drawings and related documents prepared by

the designer.

 The definition of the work items to be taken off the drawings.

Quantity takeoff may be done manually or by using electronic digitizers in

conjunction with estimating software. Since it is one of the most time

consuming activities in the estimating process, contractors and owners more

frequently use computer system (Westney 1997). Traditionally, quantity

takeoff is done manually according errors are most likely produced.

According to Halpin (1985) list some of the most common errors as being :

1. Arithmetic, errors in addition, subtraction, and multiplication.

2. Transposition mistakes in copying or transferring figures, dimension, or

quantities.

3. Errors of omission, overlooking items called for or required to accomplish

the work.

4. Poor references, scaling drawings rather than using the dimensions

indicated.

5. Unrealistic waste or loss factor.

In addition to the foregoing list, Halpin (1985) has added two more common

errors that are

1) using wrong formula, and 2) using the wrong conversion factors.

44
2.8.2 Costing the Quantity Takeoff

Once the quantity takeoff is located to the work components, and the

quantities of each elements are tabulated, their cost must be indicated. First,

estimator deals with the direct costs that consist of the cost of materials,

labor, and equipment for each work components or elements. Doing so,

typical mistakes occur. Halpin (1985) includes the following :

 Errors in simple mathematics (careless extensions of quantities times

unit prices.

 Using old or unverified material unit prices.

 Using wrong labor rates.

 Transposing figures after extension are made.

 Inadvertently leaving elements of the work off the pricing sheet.

Basically cost estimates are prepared from three sources of cost related data.

These are 1) published cost information, 2) costs from similar projects and

costs of project equipment, and 3) historical company cost data files and in-

house projects. The sources of outside cost data are many, listed are some of

the most common ones.

45
2.9 Different Types of Costs.

Although the determination of cost is the final in the preparing of an

estimate, estimator has to determine all types of costs to be engaged. The

estimator has to have ability to understand the concept of a cost and its

components. This highlighted by the fact that the cost estimate serves to

initiate the project and to engage the contractor who will build that project

(Adrian 1993). Halpin (1985) classifies costs into four major genera 1) Direct

costs related to placing construction, 2) Subcontractor cost and repayment, 3)

Job indirect costs (for mobilizing), 4) Markup.

A direct cost of an activity is physically traceable to the activity in an

economic manner it is not counted if the activity is not performed. On the

other hand, indirect costs, known as overheads, are business costs other than

direct costs of construction activities, they are not physically traceable and

are counted even the activity is not performed (Carr 1989). Construction

direct costs are those resources costs required to place the elements of

construction in a project. Meanwhile Carr (1989) classifies direct costs as

costs of material, labor, and equipment. Halpin (1985) includes the cost of

small hand tools. Traditionally, most contractors cover the project overhead

costs by adding a percentages to the direct cost. This method to be inaccurate

and recommended that project overhead costs can be estimated with some
46
accuracy by carefully examining contract conditions since they consider

overhead cost is not part of actual construction cost but an indirect cost.

Estimating project overhead costs is the most difficult ones to estimate with

reasonable accuracy, especially for large and complex project (Collier 1984).

2.10 Tools and Methodologies for Cost estimating

Regardless of the cost estimating type, the preparation requires specific

tools and methodology in order to achieve the most excellent out of it.

According to Steward (1982) list five basic tools for a cost estimate as

follows 1) An estimator or team of estimators, 2) A methodological approach,

3) Knowledge or data concerning the project, process, product, or service, 4)

A computation capability, 5) A publication capability. Besides Westney

(1997) pronounces that cost estimating tools include the forms, hardware, and

software used to execute the estimating methodology. Estimating tools fall

into the two broad classes of manual forms and computer software.

Additionally the Project Management Institute considers that computerised

tools are widely used to assist with cost estimating. Parametric tools bring

speed, accuracy and flexibility to estimating process that are often bogged

down in unnecessary detail.

47
2.11 Summary

Thus chapter has reviewed previous theories and practical works

related to the process of construction cost estimating. The literature review

reveals that the most important types of construction cost estimates is the

preliminary estimates. Major decisions are based on this estimates therefore

the level of accuracy is an important issue. Many factors influence the

process of producing accurate estimates. Beside the estimator experience,

method and the amount of data available, are effective tools that will be most

likely aid the estimating processes. Indeed computers are practically the first

tools to consider in this task.

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 CHAPTER 3

COMPUTER AND COST ESTIMATING

3.1 Introduction

This chapter the role of computers, as an effective tool to increase the level of

accuracy and reduce the time required in preparing a construction cost

estimate.

Computer have tremendous number and type of applications in

construction business, which very from accounting to scheduling, estimating

and so forth. Fast and accurate estimate is one of the key factors that can

make the difference between gaining a reasonable profit and running out of

business. Therefore the use computers is essential to fulfill this obligation.

49
 In Malaysia, computers were used to prepare cost estimating since

1980’s (Chong WP,2001). At that time, Quantity Surveying System (Q.S.S)

was selected by the QS Department of Jabatan Perumahan Negara to handle

the taking off, cost planning, tender procedure, interim payment, variation

orders, cost estimating, tender report, specification, preliminaries, prime cost

and provisional sum.

In the mid 1990’s, when the computer are becoming more affordable and user

friendly and more contractor and consultant firm are using the computer to

facilities their work not only in the technical field but in administrative

works. At the same time, students and trainees in this field were exposed in

the importance of information technology and as a matter of fact, more

construction graduates are well-literate in computers.

On the development of computer software and application, more and more

complete, reliable and easy to use software was produced. More and more

specific and specialized software for construction industry were being

produced and being introduced to the industry. From a blue screen of

dimension sheet ( the old DOS version of specific software ), it has develop

in a 32-bit application with enhance 3D and digital imaging for instant

processing. The latest version of the software would be able to automatically

50
calculate quantity from CAD drawing and produced a complete BQ and cost

estimating in just a few mouse click.

3.2 Use of Computers in Construction

Most construction cost estimates in the past and newfangled are

performed manually accordingly errors are most likely to occur. Thus the use

of computers in the construction industry is growing rapidly. The early use of

computers in construction and general accounting functions. Nowadays,

computers increasingly are playing a big role in the contractor’s project

management functions, including estimating.

Computers have introduced modern technology to the construction industry.

The estimator in search of any advantage that can assist in preparing an

estimate (Jurkiewicz 1999). Computers play an essential role in cost

estimating because estimating may involve complex and advanced

mathematical calculations and techniques. Automating the process of

construction cost estimation is desirable not only for improving the

efficiency, but also for reducing human errors as much as possible (Wu and

Adeli 1998). Computers cannot do the entire estimating process, but they can

ease the estimating procedure. The use of computers in documenting cost

estimating, give estimators more times to study and analyze projects.

51
Consequently, estimators will be able to generate more accurate estimates

(Cost Engineering Journal 1998).

3.3 Computer the Estimating Tool

The accuracy of any estimate depends greatly on the tools used in the

tools used in its preparation. Cost estimators need tool that not only forecast

and tracks cost, but is able to reduce considerably the burden of data entry as

well as provide instantly reliable financial reports. One of the estimator’s

most important tools is the computer and associated software. Today,

personal computer is most often the estimator’s choice. ( Dyset and Elliott

1999). Once you learn to build an electronic estimate on the screen, you will

be able to turnout more estimates, faster, with less chance of making an error,

analyse and manipulate numbers before you finalised you bid.( Feldman

1996).

The use of computers with cost estimating can simply and facilitate rapid

consideration of many costing alternative (Ducan 1996). Listed are some of

the activities that computers can be used for (Duncan 1996) :

 Performing quantity take-off using digitizer.

 Performing extension of units of labor, material, equipment and other

expenses to develop the estimate.

52
  Developing spreadsheet for bid preparation.

With digitizer, contractors can electronically make measurement from

blueprints and prepare detailed estimates with a day ( Cost Engineering

Journal 1999). Hence computer estimating programs can greatly reduce the

time it takes to perform quantities take-off and prepare bids, increase

calculating accuracy and create a professional looking estimate. As well as

offering an easy way to evaluate job profitably.

3.4 Computer Software for production of Cost Estimates

There is a large number of estimating software available to the construction

industry. Yet computer programs encompass a significant portion of

computer software that are prepared by the process known as programming.

Andrian (1993) defined programming as being a prepared set of computer

instructions that provides the mode of solving a specific problem. These

programs are available to perform complex pricing, estimating, and analysis

functions. It is difficult to generate overall ground rules of thumb for

computer software cost estimating because of the increasing number and

types of computers and computer languages (Steward 1982). Steward (1982)

has grouped cost estimating software programs into two kinds:-

53
1. Industry-dependent systems based on predefined historical data and

equations with specialized reporting facilities. The equations are usually

concealed in the source code or in the data files, out of reach of the user.

Normally they are written in a high –level language like C,

C++, or Visual Basic.

2. Systems primary focusing on production of cost reports generators.

Historical data and algorithms are usually kept separate from the estimating

system. These systems are written in a spreadsheet language or database.

The utilization of estimating software allows the contractors to

breakdown costs to the last minute. They provide wide range of capabilities-

from conceptual to final estimate, also they simplify the task of providing

different cost views of an estimate. Most estimating computer programs are

either written in-house or purchased from vendors. In both cases the result

has not been entirely satisfactory in achieving the desired results because this

satisfaction requires both the engineer and programmer to be highly trained

and experienced in the field of estimating. Steward (1982) has ranked the

elements that affects the development of estimating software as following:-

1. System size and complexity (in terms of the number of code lines or of

function. Modules or program features).

2. Personnel capabilities and experiences

54
3. Hardware constraints.

4. The use of modern software tools and practices.

5. User understanding of the software.

Several software developers sell their estimating software with own quarterly

database updates or third parties database. In addition of considering most

estimating programs to be based on the use of some vendor’s database. Hicks

(1992) listed the similarity of these programs as:-

 Difficult to learn and to operate in a reasonable length or time.

 They have a tendency to shift the user’s attention from estimate

preparation to program manipulation.

 They have many auxiliary features more or less to estimating but

unnecessary for estimate preparation.

They lack the ability to do what is necessary for estimate closure and bid.

Although, Steward (1982) has listed the advantage of these programs as the

consistent organization and format for estimating, the capabilities of

estimating item by item.

He also listed the disadvantages as giving a rigid format and very few short

cuts are permitted. In the same manner, Miller (1998) provides some of the

problems that might be encountered by the use of vendors’ database 1) a

database that has been developed in another country or state and does not
55
match how things are done in the geographic area where the company is

located 2) The database generate too much information ( i.e. the number of

nails needed for forming). 3) The database contains formulas that use

multiplication factors with no explanation of why they are there ( in case of

calculation quantities). Furthermore, as a solution for these problems Miller

suggested to create own database from scratch, starting by the determination

of the basic coding structure with respect to the industry standards. The

database available from vendors can be good guide on how to build a

database with the requirement of modifying them in order to fit individual

estimating methods.

3.5 Industry Programs

In general, the available estimating programs in the market typically

require few days of training to get familiar with and to operate. Additionally,

if other functions are to be tied into the estimating process then a modular

package is required and in this case the training time span will extended..

Software developers have designed computer programs to meet the needs of a

specific industry. Since industry programs are developed for a specific

56
business or industry, they are referred to as the vertical market, because they

are sold to one business type rather than many.

MASTERBILL, BUILDS SOFT, RIPAC, GENERALCOST ESTIMATOR

AND GOLDENSEAL ESTIMATES are a few of many industry programs.

Some other computer application aid in improving the efficiency and

accuracy of the construction estimating process, such as Computer Aided

Design (CAD) application, math

Conversion applications, Database applications, and simulation applications (

Andrian 1993).

3.5.1 Masterbill 3 (MB3)

MB3 is being developed by Master bill Micro System Ltd. It is one of the

leading software for QS in Malaysia. MB3 is a fully featured BQ production

package comprising pricing, tender analysis, estimation and valuations

features, plus multiple libraries and ability to transfer data between projects.

However, MB3 only have a simple format for estimate calculation.

57
 Figure 3.1 : Sample of Interface Masterbill 3 (MB3)

3.5.2 Ripac for Microsoft Windows

Ripac dominates the world market for QS software. Ripac is produced and

supported by CSSP, an international software house specializing in

construction solutions. Ripac is used by Quantity Surveyor for quantities

measurement, tender analysis, contract administration and management

(CSSP,2002).

58
Every measurement with Ripac will simultaneously create a database from

which every calculation, every analysis, every report can be produced for pre

and post – contract administration without recreating data. Ripac gives QS

the power to integrate all their activities at pre and post contract stages,

maximizing the productivity of their resources and increasing the range of

their services. Ripac can do the following process comprehensively :-

a. Bill preparation

b. Estimating

c. Tender appraisal

d. Payments

e. Cost reporting

f. Final accounts.

59
 Figure 3.2: Sample of the Ripac Measurement Screen

3.5.3 Builds Soft

Global Estimating is an estimating program that has been tailored for

commercial use in the building and construction industry. It produces Bills of

Quantities or detailed Estimates and Cost Plans. Designed primarily for use

by commercial building contractors and professional Quantity Surveyors it

includes features which allow it to be used in other industries where

estimating is required.

60
Information that is entered into the program can be re-sorted or analysed by

the use of powerful grouping columns. For example, the estimate can be

summarised to produce totals by area, block, stage, cost centre, accounting

group, or any user defined set of codes.

Figure 3.3 : Four Level Estimating System in Build Soft

Figure 3.4: Interface of Trade Breakup ( Level 2 )

61
 Figure 3.5: Interface of Rate Breakup ( Level 3)

3.5.4 General Cost Estimator for Excel 4.0

General Construction Cost Estimating System for Excel. Designed

specifically for contractors, builders, cost estimators, architects and

construction professionals.

General COST Estimator contains industry standard cost data in the CSI

format (16 division) for all cost categories covering general construction.

Unit prices include material and labor including labor hours. City indexes are

automatically applied to adjust costs for your local area. Easily modify and

add cost data to suit your local conditions and business.

62
General COST Estimator instantly creates user-modifiable, onscreen or

printed estimate reports including price quotation. Built-in Step-By-Step

tutorial makes learning fast and easy. Use General COST Estimator as an

estimating and bidding tool to save time, improve accuracy and achieve

greater success.

General COST Estimator is designed and developed in the USA by CPR

International, Inc., a leading provider of cost estimating software tools and

cost data for the construction industry since 1986.

Figure 3.6: Sample Interface of General COST Estimator

63
3.5.5 Goldenseal Estimating Software

The Goldenseal estimating program includes many cost estimation features

that help users to increase the accuracy of the project estimates, and reduce

the time it takes to prepare a bid:

• Dimensions calculate quantities from a few simple measurements

• Unit costs and assemblies calculate an accurate cost for the work – and

update automatically when prices change

• Competitive bid tracking handles price quotes from suppliers and

subcontractors

• Project templates make it easy to estimate "standard" types of projects

Goldenseal estimate, can automatically get other useful information from it--

including a project schedule, contracts and material takeoff lists. Goldenseal

has many features that are simply not available in other estimating programs

for construction and other fields. The Goldenseal project estimator program

includes "smart dimensions" which take simple project measurements, and

convert them into actual quantities for the items in estimates.

64
Figure 3.6: Interface Goldenseal Startup Guide

65
 Figure 3.7: Interface Goldenseal Estimates

3.6 Review of Software

Review of software were done by running the software or intensively

studying on the demo disc provided by supplier. The results of the review

were classified into the following categories for easier comparisons and

documentation:

a. System Feature

b. Screen Layout Features

c. Cost Estimating Features

d. Dynamic Link

3.6.1 System Features

66
Computer technologies has been growing at a very fast pace. All systems

must be able to be up-to date so that user can benefit more from the new

enhancement in the information technologies. At present, the operating

system that were widely use were Microsoft Windows with XP version being

the entry level to new computers.

Although there are users who use other operating system such Linux, Mac

OS, DOS etc, most of the software developers are concerning on the

Microsoft Windows platform for is huge share in the market.

Watkins (2002) recommended that the software system worth considering

must be a true 32-bit Windows system. It should no be an 8/16 bit hybrid or

DOS with a Windows-like front end system. Starting from the Windows 95

version, Microsoft and the computer world are moving into 32-bit

environment. Obviously,

32-bit system provides a better computing platform than the old 16-bit

system.

To understand the difference we must first go back a little while. The very

first IBM PC caused quite a stir when it was released as it used 16-code and

as a result ran 16-bit applications. Prior to this, the most powerful computers

had 8-bit processors and could only stores only up to 255. However, these

new 16-bit processors could handle 16-bit numbers (i.e 0 to 65,535) quite
67
efficiently, but still to deal with larger numbers it was forced to do some extra

work carrying out double the instruction in order to get round its number

handling limitations.

Modern 32-bit applications can handle 32-bit quantities as easily as a 16-bit

application handles 16-bit quantities. Basically 32-bit is superior when

handling 32- bit values (i.e. o to 4,294,967,295) and as a result will probably

run faster because fewer instructions and fewer memory accesses are

required.

Besides that, 32-bit application also has a greater capacity for dealing

with larger quantities of data. A 16-bit programmed can deal with only 64K

of data at a time, but a 32-bit application can work with up to 4GB. This

means a 16 bit application must do more work to read and write large

quantities of data. The difference is insignificant when an application is

dealing with arrays, data structures and others smaller than 64K in length, but

when the data size exceeds 64K the larger segment size available to 32-bit

applications pays great dividends because an application does not have to

load and reload segment registers to access all the data.

The extent to which 32-bit code speeds up an application depends on the

extent to which the application performs these kinds of tasks; moving data

around in memory; adding, subtracting, multiplying, dividing, comparing,

68
and in other ways manipulating 32-bit values; and handling large arrays. 32-

bit applications won’t be superior in every circumstance but given the size of

a typical application carrying out the same tasks.

Furthermore in Windows a 32-bit application is a accorded special treatment

by the operating system :

 32-bit Windows application are pre-emotively multi-tasked, while 16-

bit windows application are cooperatively multi-tasked.

 32-bit Windows application can spawn additional threads of execution

to do work in the background such as printing that can dramatically

increase an application’s speed and responsiveness.

 32-bit Windows application have access to the richer Win32

application programming interface (API); 16-bit application are still

stuck with the old Windows 3.1 API.

In general Windows 95/98 is a better operating system if use 32-bit

applications and the situation is likely to be even more dramatic in the fully

32-bit environment of Windows 2000. With the trend now showing sign of

moving into a 64-bit system, where AMD has managed to produce the 64-bit

processor, it will be soon that the 32-bit system becomes obsolete.

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3.6.1.1 Builds Soft

Build Soft is Microsoft Windows compatible where they can be installed in

all version of Windows. They are a 32-bit application and can support up to a

64-bit environment (for future upgrade only). It has a similar Microsoft

product ‘look and feel’ in order for new user to quickly adapt to their

environment. Besides, Build Soft employed Windows such as right mouse

button functionality and can link to other Windows product.

On the database part, Build Soft uses the SQL database format. SQL stand for

Structured Query Language and SQL database have been used in the IT

industry for a number of years. In its previous version, i.e Builds Soft, it

adopt a third party SQL called Sybase SQL. Anywhere in their products

which involve the software being installed on both the server and the terminal

machine in order to make the data available across the network.

The main advantages of using a SQL are speed and stability. An SQL

database provides a ‘true client/server’ networking, which is ideal for use

over either a Local Area Network (LAN) or Wide Area Network (WAN).

True client/server networking means that the server will only supply specific

data in response to client request. An a result, the software will not be

vulnerable when hardware or networking problem occurred. A SQL database

70
also ensures that ‘open database architectures’ is adopted. This mean that

other application can have access to the database with little application.

3.6.1.2 Ripac

For the Ripac system, it is not known whether it is a 16-bit or 32-bit system.

However, it is developed for all version of Microsoft Windows including the

earliest version being the Windows 3.1. Ripac need a very low system

resource in order to run. Based on the technical specification, it only needs a

486 – 50 MHz PC with 8Mb of RAM and 20Mb of hard disk space.

3.6.1.3 The proposed application (COES)

The proposed system will not have anything to concern in the regards.

Whether it is a 16-bit or 32-bit system or even the future upgrade 64-bit

system, it will have no effect on the COES application. This is because COES

is will just another application which resides inside Microsoft Office. As long

as the Microsoft Office is upgraded, the application will be upgraded too.

The system required for the COES will be determined by the system

requirement of the Microsoft Office version. This should not give any threat

to this software as the entry level of the computer today is at Pentium IV 2.60

GHz processor with 256Mb of RAM while the latest Microsoft Office 2003
71
version only needs a Pentium III processor with 128Mb of RAM (Halbrok,

2004).

On the COES database, it does not employ an external database system.

Since COES is true Microsoft Office application, it has no problem sharing

its database with any other external program. Moreover, COES will only

required a simple 2D database for keeping its description library and as such,

it does not need the sophisticated external database system. Initially, this

application proposed to use Microsoft Excel as its database system but in the

end, it was determined that Microsoft Access itself will be more than enough

for such a simple database.

3.6.2 Screen Layout / Graphical User Interfaces (GUI)

For normal and average user, this is the feature that determined whether the

software is good or not. Therefore, it is important that this feature was given

high emphasis on the development stage. Screen Layout Features / GUI does

not have to be “beautiful” in terms of it back screen, icon, dialog boxes, etc.

More important aspects are the interfaces and the navigational tools that have

to be kept as simple as possible. For example, a user shall only be require to

click one or two buttons for him to go to a required page rather than navigate

here and there which is time consuming.

72
A GUI with mouse intensive is much preferable than the keyboard shortcuts.

However, it is still important not to discount the much faster keyboard

shortcuts for advance users and sometimes inaccessible function by mouse.

Besides that, single/double clicked menu, drop-down list, check boxes and

tools button are much more preferable than the traditional coding and

keyboard system.

As explained, Masterbill and Build Soft is developed in a Microsoft

Windows Environment and utilized the Microsoft Features. Therefore, all its

Graphical user Interface are to Microsoft standard and all of the them are

accessible by mouse click.

Moreover, it has a similar text editing features and use Windows fonts.

In additional to that, Masterbill and Build Soft allow user to view on their

dim sheet, selection ofitem (libraries) and calculation cost estimate.

Furthermore, it has a user defined headers and footers as well as numbering

and referencing.

Ripac has menus, entry routines and reporting which are totally compatible

with Microsoft Windows. Ripac leads the user through project setup and data

entry in a simple and intuitive style.

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3.6.2.1 The proposed application (COES)

Starting with the Access 95 version, the interface has allowed user to create

custom forms, dialog boxes, check-boxes, user-define tools and etc as a

method of simplifying the data-entry processes. Nevertheless, there are not

many of the users who were able to utilize this tools as it needs some basic

programming knowledge to create a transfer the entered data into the relevant

form.

The COES application will fully utilize this tools to match the user interface

of the specific software while making sure that the data entered will reach its

true destination. Moreover, COES is an application build with Microsoft

Access.

Therefore, all Microsoft Access interfaces, shortcut keys, function, formula,

tools, etc will still be available to the user.

3.6.3 Cost Effectiveness for Specific Software

The main purposes of using computer software are to save time and reduced

error for double-handling work while maintaining the accuracy of cost

estimate. The time saving will subsequently generated in cost saving as the

companies can save on resources (particularly salary and office overhead)

74
spend on each project. Besides that, it also increase the efficiency and

motivation of estimator as he no longer needs to got through long, tedious

and repetitive tasks.

A research by Chong S Y (2001) found that the most important factors that

affect the cost effectiveness of the specific software are :-

a. Reliability of software

b. User-friendliness

c. Sufficient feature of the software

d. Maintenance

e. Number of computers

These factors plays a big part in determining whether a software success or

not. Therefore, these factors were seriously studied and incorporated into the

application.

3.6.3.1 Reliability of Software

Good and reliable software must be consistently functional so that cost

effectiveness for the usage of that software can be achieved. Unreliable

software will cause havoc where the result will not be accurate. Besides,

more time and resource will be spent in order to check and rectify all those

mistakes. (Chong SY, 2001) Unreliable software can be defined as software

75
which always caused the system to crash and hang. Besides, there were

computer bugs all around and sometimes cannot perform some important

function that it have. Moreover, some system will not be able to handle a

large amount of data or will cause to use a huge amount of computer

resources such as a hard disk spaces and the memory.

However, nowadays, established software such as Microsoft Windows and

Microsoft Office which were running on a 32-bit Windows system shall have

eliminated much of these problems. Nevertheless, this might not always

happened with all the specific software. From some user experience, the

software did hang up and crash especially when the amount of data exceed

the capabilities of the computer.

3.6.3.2 User-friendliness

Software that is user-friendly will be easy to learn and use. New user or

employee will not encounter big problem to use user-friendly software even

without through and proper training. The staff will not have to waste time in

looking for the supplier help once there are any problems if the software is

user-friendly (Chong SY, 2001). A user friendly and efficient system with

proper training and motivation will bring more effective as well as economic

service (Kelly 1990).

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There is some specific software which is actually not user friendly. For all

novice and average users, the modern trend is to use the mouse and the click,

and the drag and drop command. Undoubtedly most software has this

interface in their system. However, what is really lacking is the shortcut

command in which most advance user are familiar with. It is a sure bet that

most specific software have their own shortcut key assignment which is

totally different to Microsoft Windows standard interface. This is extremely

troublesome and can cause a lot of accidental errors.

Therefore, the system developed must be as similar to the Microsoft Window

system.

3.6.3.3 Sufficient Features of the Software.

Software ought to have sufficient features in order to have an efficient

performance or else saving in terms of time value failed. (Scott, 1987). In

actual fact,

Cost Estimating production software shall have a full feature of automatically

producing cost estimate from the measurement sheet. However, most specific

software come with other feature such as analysis of cost estimating,

comparison of bids and tender appraisal, monthly or interims valuation,

variation control and scheduling.

77
Of course, these additional features are very good in nature but does anyone

really need it. As a matter of fact, the more feature that the specific software

has, the more expensive it will be. Therefore, does this feature add to the cost

effectiveness of the software or reduce it?

3.6.3.4 Maintenance

Maintenance of software can be defined as service provided by the

supplier/technical staff of the software developer periodically to ensure

smooth functioning of the software. Maintenance ensures that the software is

always fully functional and the work will not be stop as an effect of corrupted

software. If problem always occur because of no proper maintenance

schedule, it will cause delays in estimator works. Therefore, cost

effectiveness will not be able obtained .(Chong SY, 2001).

As a matter of fact, the maintenance service does not come cheap. For

example, the supplier for specific system charged a minimum fee of

RM3,000.00 per annum for annual support maintenance charge. Of course

maintenance is important but what if a software that does not need

maintenance or need only simple maintenance. This can be achieved if the

software is kept in the simplest format where any staff with some computer

technically could reinstall the software if any problem occurs. Besides that, if
78
the software is properly developed and tested, there shall have little problem

with the software.

3.6.3.5 No of computer

According to the specific software suppliers, number of computers will give

effect to the cost effectiveness of specific software. In order to get optimum

cost effectiveness, the optimum ratio of computer to user is 1:1 (Chong

SY,2001)

3.7 Justification for Using Microsoft Access

The research is focusing cost estimating system with Microsoft Access 2003.

From the study majority of the respondents using Microsoft Excel in

preparing cost estimating and the user has to develop the formula before

develop cost estimating. As we all concerned, Microsoft Access has been one

of the most common and easy to use application to develop simple

programmed for Windows. Initially, this research is to use the Microsoft

Access as the programming language. Another key point of programming in

Microsoft Access is that output application can be used as an Add-ins.

This Microsoft Access programming language offers a lot of advantages

Among them were :-

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a. Prevent access to the programmed code.

End user cannot view the programmed codes in the workbook.

b. Avoid confusing users.

If an end user loads the application as an add-ins, the file is not visible and is

therefore less likely to confuse novice users or get in the way

c. Easier access for users.

The steps were in a multiple path ( where clicking here and there ) and this

have made the system to be error-prone..

d. Always a read only

User cannot make accidental (or intentional) modifications to the workbook

or code.

In fact, the concept that made this application distinguished from other

specific software development is that it only Microsoft Access to create an

application that can match the ability of the specific software.

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 CHAPTER 4
ANALYSIS AND RESULTS
4.1 Introduction

A through planning and scheduling had been organised on the methodology

and research sequence to ensure a smooth running of the research program

from literature review, data collection, data analysis until discussion of result

and conclusion.

Literature review involved a through searching and investigating project

manager related issues through different primary and secondary sources such

as textbooks, articles, and journals. In additional, there also effort on

searching and browsing through internet web pages, internet websites,

electronic database and online articles and journals to seek for supplementary

information. The purpose of literature review is to gather important

information related to the topic and deepen the understanding of cost

estimating.

4.2 Data Collection

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Despite literature review, interviews were conducted with relevant parties

who have involved in preparing cost estimating, to find out hands-on issues

and experiences related preparing cost estimating. This was preceded by a

pilot study in which the interviewers were asked to consider the layout, order,

complexity, intelligibility and the length of the questionnaires. In other hand,

series of question were set for conducting a survey to obtain feedback and

response from the local construction industry. Then, the questionnaires were

distributed through mail to several contractor Class A, Class B, Class C and

Class D who have been registered with Pusat Khidmat Kontraktor (PKK) and

Construction Industrial Development Board (CIDB) in Johor Bahru. Both the

interviews and questionnaires were conducted to support the literature

review.

4.3 Data Analysis

Upon the collection of questionnaires, every type of data received under

different questions will be separated and segregated to answer different

research objectives. The data will be categorized under different variables to

represent the result of the research objectives. Different statistical methods

such as frequency analysis and average index analysis were being used in the

data analysis.
82
4.4 Frequency Analysis

Frequency analysis will be using tabular form to represent result of data

analysis of frequency of response that respondent give to the different

variables in the questionnaires. The result was tabulated in the form of

frequency number and percentages according to total respondents. For

graphic result presentation, bar chart and pie chart will be used as summary.

4.5 Average Index Analysis

In average index analysis, the result will further summarized to obtain the

level of efficiency of methods and computer software uses by contractor to

prepared cost estimating. The respondent were requested evaluate methods

and computer software on five point scale starting with 1 for extremely

inefficient, 2 for inefficiently, 3 for moderate efficient, 4 for very efficient

and 5 for extreme efficient.

The classification of the rating scales proposed by Abd. Majid, M.Z.,

McCaffer, R., (1998), have been referred in this study. The classifications of

the rating scales are as follows:

Average Index Level of Importance or Evaluation

4.50 ≤ Average Index ≤ 5.00 Extreme efficient/used

83
3.50 ≤ Average Index < 4.50 Very efficient/used

2.50 ≤ Average Index < 3.50 Moderate efficient/ used

1.50 ≤ Average Index < 2.50 Inefficiently/less used

1.00 ≤ Average Index < 1.50 Extreme inefficiently/not used

All the collected data from the questionnaires were analysed in frequency

analysis as preliminary analysis. This method shows the frequency and the

percentages.

The frequencies are then represented in the form of tables and pie charts.

4.6 Data Analysis

A detail analysis of data and result will be shown and elaborated by using

Frequency Analysis and Average Analysis. In order to complete the master

dissertations C and Class D. Among 60 sets of questionnaire forms

distributed, there were 37 sets of replied with complete questionnaire from

that cover 62% of the total 60 sets of questionnaires in the study.

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Table 4.1 : Response Percentage

Figure 4.1 : Response Percentage

4.7 Section A :

Estimating Model

85
4.7.1 What kind of cost estimating method applied by your company?

The respondents were asked to identify, from the list given, the method that

the respondent represents in order for preparing cost estimating. The results

for question

A.1 shown in table 4.2 below:

Table 4.2: Method use for Preparing Cost Estimating

Figure 4.2: Percentage of Method use for Preparing Cost Estimating

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Table and figure 4.2 shows the percentage of method use for preparing cost

estimating where majority (78%) of the respondents were used approximate

quantities method for preparing their cost estimate.. From the total number of

respondents, 70% were used elemental cost analysis method while only 3%

of the respondents were use interpolation method.

4.7.2 What are the factors of choosing the cost estimating method as

mentioned?

The respondents were asked to identify, from the list given, factors of

choosing the cost estimating method as mentioned. Table and figure 4.3

shows the percentage of factors choosing the cost estimating method.

Table 4.3 : Factors of Choosing Cost Estimating Method

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88
Figure 4.3: Percentage of Factors Choosing Cost Estimating Method

From the analysis it was found that 62 percent or 23 out of the total 37

respondents were choose information given by client as a important factors

for choosing the cost estimating method in order preparing cost estimate.

Time factor were contribute 57 percent or 21 out of the total 37 respondent,

types of contract contribute 49 percent or 18 out of the total 37 respondent

and size of project contribute 35 percent or 13 out of the total 37 respondent.

The others factors such as easy to apply, client requirement and cost estimate

obtained is more accurate only contribute 32 percent or 12 out of the total

respondent.

The number of contractors involved in this questionnaire survey will

provided a good result in terms of their knowledge and experience which can

contribute to this investigation.

4.7.3 What types of cost estimating method, which your company applied

to the project?

The respondents were asked to identify, from the list given, types of cost

estimating method used for several types of contract. Table 4.4 shows the

percentage of factors choosing the cost estimating method.

Table 4.4: Cost Estimating Method used for Several Types of Contract
89
Legend:

A : Unit method B : Cube method

C : Superficial or floor area method D : Storey-enclosed method

E : Approximate quantities F : Elemental cost analysis

G : Comparative estimate H : Interpolation method

Table 4.4 shows the analysis of cost estimating method used in preparing cost

estimate for several types of contract. According Hashim Sikan (1999), work

order contract in general used in public sector for small project and the

interim payment base on schedule of rate. It was found that unit method is the

high frequently method used in preparing cost estimating for work order

90
contract, where represents 32% out of total 37 respondents. Percentage for

approximate quantities method using in work order contract only 27% out of

total respondents. From the analysis shows, overall cost estimating method

has been listed above represents below 50% from the total of respondents.

For lump sum contract, approximate quantities method were the highest

frequently used in preparing cost estimate. From the total number of

respondents, approximate quantities method represent 51% in lump sum

contract, 46% in bill of quantities contract, 27% in schedule of rate contract

and 24% in cost plus contract.

As a conclusion, majority of the respondents declared approximate

quantities method were the most popular technique in preparing cost estimate

for any type of contract. Elemental cost analysis is a secondary method or

child in approximate quantities in order for preparing cost estimate for

several types of contract.

4.7.4 How frequently the sources of unit rate that your company referred

to?

The respondents were asked to rate the degree of uses on the list of how

frequently the sources of unit rate that the contractor referred in preparing

cost estimate.. In analyzing the data, the following assumed values have been
91
considered for responses on the degree of frequently used by the contractors:

“Not Used” (1), “Less Used” (2), “Moderately Used” (3), “Very Used” (4),

and “Extremely Used” (5). The list provided was produced by the researcher

from the case study carried out and was arranged and classified according to

the research objective. The results presented in

Table 4.5 shows a full list of frequently used the sources of unit rate listed in

the questionnaire.

Table 4.5: Degree of frequently used the Sources of Unit Rate in

order of Preparing Cost Estimate

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The explanation and a review of the survey results received for each sources

listed in the table are presented in the section that follows.

4.7.4.1 Base on Catalogues or Supplier Quotation

This result reveals that 70 percent which 26 out of 37 respondents agreed that

it is extremely used that the catalogues or supplier quotation to be use as a

resources before prepared cost estimate. Another 30 percent (11 respondents)

approved that the resources should be referred in order to produced accuracy

cost estimate.. From the average index score which is 4.702, it can be said

that the catalogues and supplier quotation is “extremely used”.

4.7.4.2 Based on Built Up Rate

From the table, it can be seen that more than half (59 percent) of the

respondents accepted that it is extremely used the built up rate in order to

ensure that the cost estimate accurate and profitable. 15 numbers of

respondents (41 %) believed that it is very used resources base on built up

rate in order for preparing cost estimate. From the average index score which

is 4.594, it can be concluded that the feasibility study is “extremely used” and

should be taken into account in the referred resources for preparing cost

estimating.
93
4.7.4.3 Base on Past Project

A majority of the respondents classified this type past project resources

extremely used (63%) and 32 percent as very used resources in order for

preparing cost estimate. Only 5 percent of the respondents ranked the

resources under moderately used. It can be noted that this resources is

“extremely used” based on the average index result from the table which is

4.567. This may be due to the accuracy of preparing building cost estimating.

4.7.4.4 Base on Past Experience

Twenty respondents (76%) indicate that it is extremely used for the

contractor to referred resources base on their experience before they

produced their cost estimating.

Furthermore, 24 percent of the respondents realized that resources base on

previous experience is very used in order to prepared cost estimate. From the

average index score of 4.757, it can be seen that the past experiences

resources is “extremely used” and should be one of the contractors data

information in preparing their cost estimating.

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4.7.4.5 Base on Elemental Cost Analysis

Different levels of importance and frequent referred were established for

elemental cost analysis as shown in table 4.5, where the result for extremely

used, is 21 percent, for very used 65 percent and 14 percent for moderate

used. The average index score for referred resources base on elemental cost

analysis is 4.081 which is categorized under “very used”.

4.7.4.6 Base JKR’s Schedule of Rates

A majority of the respondents classified this type JKR’s schedule of rates is

moderate used (46%) and 38 percent as less used resources in order for

preparing cost estimate. Only 16 percent of the respondents ranked the

resources under not used. It can be noted that this resources is “less used”

based on the average index result from the table which is 2.297.

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 Figure 4.4: Frequently used the Sources of Unit Rate
in order of Preparing Cost Estimate

4.8 Do your company do any adjustment before applying the sources of

unit rates as mentioned above?

The respondents were asked to identify, from the list given, any adjustment

before applying the resources of unit rates in order preparing cost estimate.

Table 4.6 shows the option applying the resources of unit rates in order

preparing cost estimate.

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Table 4.6: Option of any Adjustment or no need any Adjustment in Applying

Resources of Unit Rates

It was found that 95 percent of the respondents accepted, there are need any

adjustment before applying resources of unit rates in order preparing cost

estimate, Contractors Class A (19), Class B (3), Class C (8) and Class D (5)

which contribute to the total numbers of 37 respondents The number of

contractors involved in this questionnaire survey will provided a good result

in terms of their knowledge and experience which can contribute to this

investigation. From the analysis shows only 5 percent or 2 out of total

number of 37 respondents declared there are no need any adjustment in

applying resources of unit rate in order preparing cost estimate.

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 Figure 4.5 :Percentage of any Adjustment before
Applying Resources of Unit Rates

4.9 Section B :

Application of Computer in preparing Cost estimating.

4.9.1 Do your company use computer to prepare cost estimating?

The respondents were asked to identify, from the list given, did the

contractors company used computer in order preparing cost estimating. Table

4.7 shows discretionary from the respondents. The ratings are as follows:

Table 4.7: Computer used to preparing cost estimating

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The study found, as shown in the table 4.7, that overall of the respondents

had dealt with the computer facilities in order preparing cost estimating.

From the table, it can be noted that computer is very important to prepare cost

estimating and other works in construction industries.

4.9.2 What kind of standard software which your company used to

prepare estimating?

The respondents were asked to identify, from the list given, types of standard

software they used to prepare cost estimating. Table and figure

4.8 shows the types of respondent against their discretionary standard

software in preparing cost estimate.

Table 4.8 : Standard Software used to Prepare Cost Estimating

99
From table 4.8 above, most of the respondents used Microsoft Excel in order

preparing cost estimating which the respondents were Contractors Class A

(19), Contractors Class B (3), Contractors Class C (8) and Contractors Class

D (7). A total of 26 percent of respondents Class A (5), 33 percent of

respondents Class B (1), 38 percent of respondent Class C (3) and 29 percent

of respondent Class D (2) used Microsoft

Word in order preparing cost estimating. This shows that most of the

respondents used Microsoft Excel as a standard software in preparing

building cost estimate.

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 Figure 4.6 : Percentage of Standard Software used by Contractors

in Preparing Cost Estimating.

4.9.3 Do your company use any special software that designed for

estimating?

The respondents were asked to identify, from the list given, any special

software used in their company in preparing cost estimating. Table and figure

4.9 shows the types of respondent against their discretionary in using special

software.

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 Table 4.9 : Special Software used in Preparing Cost Estimating

Table 4.9 shows that 5 percent of the respondents had used the special

software in preparing cost estimating. Only 2 out of 37 respondent

( Contractor Class A).used special software in order preparing cost

estimating. It was found that majority of the respondents ( 95 percent ) no

used any special software in preparation their cost estimate.

102
 Figure 4.7 : Percentage of used Special Software in Preparing Cost

Estimating

4.9.4 What kind of software which your company used?

The respondents were asked to identify, from the list given, what kind of

special software they used in preparing cost estimating. Table 4.10 shows the

types of respondent against their discretionary in using special software.

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 Table 4.10 : Type of Special Software used in Preparing Cost Estimating

The study found, as shown in the table 4.10,. it represented 100 percent of the

total respondent (2) from Contractors Class A were use special software in

preparing their cost estimating. .From the table, it can be noted that 100

percent from the total respondent were used special software acknowledged.

Master bill is the special software they used in prepared cost estimating.

4.9.5 What are the advantages or efficiencies of computer software used

in your company for preparing the estimating?

The respondents were asked to rate the degree of advantages on the list of

how efficiencies the special software in preparing cost estimate.. In analyzing

the data, the following assumed values have been considered for responses on

104
the degree of efficiencies by the contractors: “not efficient” (1), “less

efficient” (2), “moderate efficient” (3), “highly efficient” (4), and “extremely

efficient” (5). The list provided was produced by the researcher from the case

study carried out and was arranged and classified according to the research

objective. The results presented in Table 4.11 shows a full list of efficiencies

used special software in the questionnaire.

Table 4.11 : Efficiencies used Special Software in Preparing Cost Estimate

105
4.9.5.1 Complete work in shorter time

The study shows that 54 percent of the respondents ranked the complete work

in short time is extremely efficient. Another 46 percent were classified under

very efficient. From the average index score which is 4.541, it can be

concluded that the complete work in short time is “extremely efficient” and

should be part of listed advantages that should be in preparing cost estimating

used computer software.

4.9.5.2 User friendly

A majority of the respondents classified this type of user friendly as

extremely efficient (57%) and 43 percent as very efficient in user friendly. It

can be noted that this advantages is “extremely efficient” based on the

average index result from the table which is 4.568. This may be due to the

function and linkage of design computer software that might affect the

process in preparing cost estimating

4.9.5.3 Quality of work done

Seven respondents (19%) indicate that it is extremely efficient in quality of

work done in order using computer software for preparing cost estimating.

Furthermore, 43 percent of the respondents realized that quality of work done

106
is very efficient while the contractors used computer software. 38 percent of

the respondents felt that quality of work done is moderate efficient. From the

average index score of 3.810, it can be seen that quality of work done is very

efficient and should be one of the advantages using computer software in

preparing cost estimating.

Figure 4.8 : Rating Scale Efficiencies used Special Software

in Preparing Cost Estimating

107
4.10 Problem usually faced when using the computer software to prepare
the estimating.
The respondents were asked to identify, from the list given, what are the

problem usually faced when using the computer software in preparing cost

estimating.

Table 4.12 shows the types of respondent against their problem usually faced

when using the computer software.

Table 4.12 : Problem usually faced when using Standard Software

Table 4.12 shows 73% from contractors where used computer for preparing

cost estimating certainty, there is no standard format for preparing cost

estimating.

108
The contractors should be develop their own format before preparing

estimate. From the analysis 65% or 24 out of total 37 respondents decide

formula has be develop before preparing cost estimating. 59 percent decide,

lack of knowledge to use the computer is a weakness factor to be consider as

a problem usually facing when used the standard software for preparing cost

estimating, 41 percent decide have to refer past document and only 5% out of

total 37 respondents decide more time to spent in checking as a problem

usually facing when using standard software in preparing cost estimating.

Figure 4.9 : Percentage of problem usually facing when using Standard

Software in Preparing Cost Estimating.

109
4.11 Summary of Analysis and Results

Objective 1 : To study the various conventional methods of estimating

from contractors perspective.

From the study, it can be concluded that the approximate quantities is the

impressive method used by the contractors in preparing cost estimating.

Besides that unit method and element cost analysis as a partake of the method

decide by the contractors Class A, Class B, Class C and Class D who has

registered with Pusat Khidmat Kontraktor (PKK) and Construction Industrial

Development Board (CIDB) in Johor Bahru. Base on the analysis, researcher

can be considering from that method for develop building cost estimating

database system .The data obtained from the questionnaires with contractors

involved in preparing cost estimating were analysed in terms of frequency

and average index.

Data in section A showed that majority of the respondents used computer in

preparing cost estimating, 78 percent from total 37 respondents decide

approximate quantity as a method in preparing cost estimating. Data obtained

in section B, showed from the total 37 respondents using computer in

preparing cost estimate only 2 contractors from Class A used Masterbill as a

special software in order preparing cost estimating. Microsoft Excel as a

standard software used by the total 37 respondents in preparing cost

110
estimating and finally, no standard format costing is the highest problem

facing when using standard software in preparing cost estimating.

Objective 2 : To identify software use by contractor for cost estimating

and the problems.

The result shows 100% of the total 37 respondents used computer in

preparing cost estimating and Microsoft Excel as a standard software

intentionally used by the respondents. From the study only 2 respondents

(Contractors Class A) used Masterbill as a special software in order preparing

cost estimating. Finally 73% or 27 out of total 37 respondents decide there is

no standard format and 65 percent make a decision formula has be develop

before key in data as highest problem usually facing when using standard

software in preparing cost estimate..

Objective 3 : To develop an application which is capable of producing

cost estimating using Microsoft Office Access.

Cost Estimating Database has been develop used Microsoft Access 2003 and

the system is base on building work concept with approximate quantities and

element cost analysis as a basis for cost estimating. The system has been

develop with the minimum cost and accomplished to produce cost estimating

easily and efficiently.

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 CHAPTER 5
CONCLUSION AND RECOMMENDATION

5.1 Conclusion

After extensive research on the specific software for producing cost

estimating

and analysed data from respondents, finally Cost Estimating System (COES)

was being develop. It is Microsoft Access 2003 application designed

specifically for doing building cost estimating. Cost Estimating System have

the ability to automatically produce cost estimating from the calculation form

has be develop according to approximate quantities and element cost analysis

method. Moreover, user-friendly interfaces features such as selecting built up

rate development and producing summary of cost estimating making this

system easy to use application. Nevertheless, there are still some features

which are lacking such as formatting errors. Actually, the problem can be

solve by either reprogramming or using a patch file. As a final conclusion,

this research has achieved its objective of developing an application which is

capable of producing building cost estimating using Microsoft Office Suite.

5.2 Research Contribution

The contribution of this research reside in the following :

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􀂃 A unique cost estimate computer system has been developed that is

particular for the construction industry.

􀂃 An operational database system has been designed and implemented using

windows environment and utilizing Microsoft Access 2003applications.

This advances the field of MIS (Management Information System)

applications in the construction industry, which is known to lack behind other

industries in this area. This will aid practitioners in the construction industry

to perform conceptual estimates within the short time available to study a

project.

The developed system is intended to assist owners, contractors, and

estimators in preparing fast, efficient, and reliable cost estimates. It provides

the user with the option of selecting the of division to use. It reduces the time

required to build costs list for the project activities so that this reduction can

be beneficial for the quantity take off time process. It provides professional

output reports that can be used for bidding purposes. The system includes a

structured database, which can be extended, enhanced and modified

depending on the user needs.

5.3 Recommendation

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The research has generated a milestone result for automatically producing

building cost estimating from Microsoft Access 2003 despite that this

research introduces a functional system as a tool for contractors and

estimators to use in preparing cost estimates for the construction industry, it

is a platform that can be potentially enhanced by future works. These may

include:

􀂃 Detailed cost database models so that the user will be able to prepare all

types of estimates in accordance with the different phases of the project.

􀂃 Automatic integration between the detailed estimate and scheduling tools

allowing the user to schedule the activities according to the crew productivity

after generating the estimate.

􀂃 Integration between AutoCAD and the detailed cost estimate database

model to enable the user to automate the quantity off process directly from

the drawings while preparing the estimate.

􀂃 Using neural networks or regressions to forecast the cost items of the

preliminary cost estimate database model.

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