Evaluating the budgetary reliability of design stage elemental cost plan in building procurement: a New Zealand study
Adafin, J; Wilkinson, SJ; Rotimi, JOB; Odeyinka, HA
Abstract
Accurate prediction of final tender sums (contract sums) of building projects depends on
reliable projections of baseline cost plans developed at the design development stage.
However, no matter how much care and effort is put into the preparation of design stage
elemental cost plans, deviations are usually observed between these cost plans and the final
tender sum. This makes accurate predictions challenging for construction practitioners in
New Zealand. The major attributable factors for the observed variability are inherent risks
in the design stage elemental cost plan development. Whilst this is recognised, this study
evaluates the reliability of elemental cost plans in traditional building procurement. The
study seeks to answer the question: is elemental cost plan a reliable budgetary tool for
construction projects? The study was undertaken based on 20 completed building projects
from which secondary data were collected within the New Zealand construction industry.
Data analysis was carried out using document analysis and percentage deviation of final
tender sums from the cost plans. Further analyses were carried out using root mean square
and relative mean absolute deviation methods of analyses. The results showed that the
budgetary reliability of elemental cost plans varied depending on project types. Whilst a
deviation of -3.67% and +3.95% was obtained on the residential projects analysed, the
deviation on educational projects was between -3.98% and +12.15%. Commercial projects
attracted -14.22% and +16.33% while in the case of refurbishment projects, a deviation of
-10.07% and +30.14% was obtained. These findings suggest that the larger or more
complex a project is, the less reliable it is to use elemental cost plans to guarantee cost
certainty.