Study about Cost Estimation Risk Techniques in Construction Project

Introduction:
This study helps to develop the various skills needed to prepare, review, approve, supervise,
monitor, and use cost estimates techniques and economic evaluations in research, development,
design, and management inorder to avoid the overrun of estimated cost.
One of the first tasks when managing a project is the cost estimate. It must be accurate,
transparent and reliable. Standard techniques in cost calculations give accurate results, and their
reliability is high as long as the inputs used for the calculations are exact. When we calculate
project costs using effective cost-estimating techniques, we will be able to assign corresponding
resources and develop schedules to manage the project successfully.
Objective:
To study and evaluate the factors that contribute to cost estimation techniques in a
construction projects.
To achieve a specific estimated cost of the construction project
To identify main factors that causes delay and cost overruns in construction of projects
and to examine their relative importance.
Knowing the importance of cost estimation techniques and recommending the most
accurate parameters that we have found in this project.
Problem statement:
In general most of the construction industries are facing the issue to meet the total cost as
estimated because of deviation in cost estimation, time delay in completion and also the cost of
construction increased,. It is the probable amount that is computed to complete a construction
work or the prediction of amount for a project based on available data at the time during
planning.
The construction industry is large in size and plays a significant role in the economy but
throughout recent years it has witnessed an increasing number of construction financial failures
due to improper estimated cost. A number of studies have been conducted to address and control
the industry's problems in the developing countries. However, lack of progress was noted in
solving such problems due to many reasons. These reasons as outlined by Ofori (1994) include:
in-appropriateness of some of the recommendations and the initiatives adopted poor executive
capacity of the implementing agencies, lack of resources for implementation and initiatives,
neglect of the construction industry by governments and their lack of commitment to solve its

problems, and absence of measurable targets in programmers for improving the industry's overall
performance.
Problems Encountered
Competent application of the cost estimation process throughout the construction
project life cycle is vital to obtaining the goal of a quality cost estimate. Although extremely
important and often overlooked, project cost estimating has many obstacles to overcome
throughout the process. Some common obstacles include:

Cost over runs

Schedule delays
Changes of scope
Environmental & legal factors
Inflation in Materials.

Literature reviews:
1. Most organizations use multiple methods for cost estimating projects, Notes Dr.
Valerdi. My favorite ones are parametric cost models and analogy. In the case of analogy, it is
beneficial to consider the similarities between a previous system and the new system being
estimated. This also provides an opportunity to explore the feasibility of reusing components
from a similar system, he adds.
2. As per Geetika Batra & Kuntal Barua, Asst Professor, Department of Computer
Science, L.N.C.T, Indore, The Project completion within a time and budget depend on the
accuracy of estimation. In survey, comparison of all methods like expert judgment, estimation by
analogy etc and highlights its advantages and disadvantages. The new approach of collapsing the
data mining technique with software engineering is introduced for estimation.
3.Mrs. Shubhangi Mahesh Potdar Assistant professor, IBMRD, Ahmednagar,
India.Cost estimation is the key part of projects management. Accurate cost estimation plays
main role to complete the project within time and budget. There are many software cost
estimation methods, which can be classified into two types algorithmic methods and nonalgorithmic methods. This classification is depends upon use of mathematical expressions for
estimating cost. In Algorithmic Cost Estimation there is use of mathematical expressions for
estimating cost associated with software development. While in Non Algorithmic Cost
Estimation there is no use of mathematical expressions for software development cost estimation
Inaccurate cost estimation may lead to project failure, huge overruns and performance
compromises.

Methodology:
Introduction:
This study is to investigate the effect of projects in Tamilnadu, India, based on the study
of a sample of 5 construction projects in Chennai between 2013 -2016 , We have found a
solution to avoid overrun of estimated cost value. Here certain parameters are directly &
indirectly affecting the cost estimation of projects and they are

Project scope
Feasibility of the project
Climate & Environmental issues. (Plannable)
Skill of the estimator
Collecting the historical data (Periodical )
Project Size, location & Transport conditions
Availability resources (Manpower, Material, Machinery & Funds for project)
Construction period, (Long term, Short term)
Method of estimation and techniques (Most Accurate)
Competition
Special Construction
Specification of project

To control the project cost estimate with accuracy in cost estimation of construction
project, we are using parametric estimation technique along with Analogous Estimating
techniques with basic computerized software, in this technique we have analyzed our
datas by each item wises and various type of works and also we are try to create standard
detailed report for influencing the cost estimation in Construction project.
Based on detailed data report we are easily identify further projects issues and forecast
the project cost estimation with plan & estimated cost properly. Typical resources include
equipment, material, services and labor. We can get costs for equipment, material and services by
consulting price lists. While defining the parameters and analyzing the research for the problem
causes care and ethics should be strictly followed, because it should be accurate to the top of our
knowledge. The team which is doing those works are must be the through professionals who can
able to meet any causes that will arise for the above mentioned points in methodology of this
project. Ending up one parameter wrong will directly affects the progress of project.

Research & Analysis

We are collecting the historical data of similar projects as a basis for the cost estimate.
Based on Inflation, market condition, environmental factors funds and resource availability we
can adjust the cost of estimate by avoiding the overrun of what we have estimated with 5
different projects by putting the different parameters in a graphical representation . from that we
are comparing the differences and finding relation of depth of parameters with problems that
arise in project. In graphical data we are taking coefficients to calculate arithmetic calculations
which is more effective for project estimators to identify and to take consider things while
forecasting cost estimations.
Conclusion
This project helps in identifying the exact decision for cost estimation whether the project is
moving in linear constant progress or with any discrete variation in progress with proportional to
time, cost, market situation and environmental issues.
This can fulfill all company construction projects progress by avoiding time delays and also
preventing the cost overrun issue than the estimated one. Since this estimation can be adjusted
with parameters it can be use for any development of the project