1.1 Introduction
Cost estimating in construction refers to the systematic process of forecasting the financial resources required to complete a building project based on available drawings, specifications, materials, labour, equipment, and prevailing market conditions. It is a fundamental function in construction management that provides a financial framework for planning, budgeting, and decision-making throughout the project lifecycle. According to Ashworth and Hogg, cost estimating is not only concerned with predicting project expenses but also with ensuring that resources is allocated efficiently to achieve project objectives within acceptable financial limits. In building construction, accurate estimating serves as the foundation for project feasibility, contractor selection, contract pricing, and cost control (Ashworth and Hogg, 2007).
In the construction industry, cost estimating practices vary widely depending on the level of project information available and the expertise of the estimator. Common approaches include preliminary estimating, detailed estimating, approximate quantity surveying, and experience-based judgment. Each of these methods is applied at different stages of project development to provide a reasonable forecast of expected costs. However, Flyvbjerg, Holm, and Buhl (2002) argue that construction cost estimates are often subject to optimism bias and strategic misrepresentation, leading to significant deviations between estimated and actual project costs.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.
1.2 Background of Study
The evolution of cost estimating practices in construction can be traced to the early development of organized building measurement systems in the United Kingdom during the 19th century, where quantity surveying emerged as a formal profession to standardize building cost calculations. According to Ashworth and Hogg (2007), the early practice of cost estimation was primarily manual and relied on measurement rules, experience, and basic arithmetic applied to drawings and specifications. Cost estimating in construction is a critical process that determines the financial feasibility, planning accuracy, and successful execution of building projects. Cost estimating is the prediction of the probable cost of a project based on available information, including drawings, specifications, market conditions, labour, materials, and equipment. It serves as the foundation for budgeting, tendering, and cost control throughout the project lifecycle. In building construction, accurate cost estimation is essential because it directly influences project viability, contractor competitiveness, and client satisfaction (Ashworth and Hogg, 2007).
Flyvbjerg, Holm, and Buhl (2002) stated that, construction projects across the world frequently suffer from cost overruns due to inaccurate forecasting and optimism bias in initial estimates. The authors reported that large-scale infrastructure and building projects often experience significant deviations between estimated and actual costs, which affects project delivery and stakeholder confidence. In many cases, cost underestimation occurs due to strategic misrepresentation or inadequate technical capacity during the estimating process.
Olawale and Sun (2010) reported that, construction cost control problems are driven by several factors including poor planning, inadequate risk assessment, and ineffective estimating techniques. The authors asserted that many contractors rely heavily on experience-based judgment rather than structured estimating methodologies, leading to inconsistencies in project budgeting. They further stated that weak cost management systems contribute significantly to project delays and financial overruns. In the Nigerian construction industry, these challenges are intensified by economic instability, inflation, and fluctuating prices of building materials.
Aibinu and Jagboro (2002) stated that, project delays and cost escalation are closely linked to inadequate cost planning and ineffective estimating practices in construction projects. The authors affirmed that poor estimation at the early stage of project development often leads to unrealistic budgets, which eventually affect project execution and completion timelines. They contend that accurate cost estimation is a key determinant of successful project delivery and effective contract administration. In Lagos State, where construction activities are rapidly expanding due to urbanization and population growth, the need for reliable estimating practices is even more critical.
Ashworth (2010) asserted that, modern construction estimating has evolved from simple manual calculations to more sophisticated approaches involving computer-based systems and Building Information Modelling (BIM). The author reported that digital tools improve accuracy, reduce human error, and enhance cost planning efficiency. However, despite these advancements, many building contractors in developing regions still depend on traditional estimating techniques due to limited access to technology, inadequate training, and resistance to change.
In the Nigerian construction environment, particularly in Lagos State, building contractors adopt various cost estimating practices such as preliminary estimating, detailed estimating, approximate quantity methods, and judgment-based estimation. According to Akintoye and Fitzgerald (2000), cost estimating practices in developing countries are largely influenced by project complexity, contractor experience, and availability of historical cost data. The authors stated that the absence of standardized cost databases makes it difficult for contractors to produce accurate and consistent estimates. Oke, Aigbavboa, and Mphephu (2017) affirmed that, Building Information Modelling (BIM) and other digital estimating tools have the potential to significantly improve cost accuracy and project performance if properly implemented. However, they contend that many contractors are still reliant on manual estimation methods, which are prone to errors and inefficiencies.
This study is set against the backdrop of increasing construction demand in Lagos State, persistent cost overruns in building projects, limited adoption of modern estimating tools, and the need to identify the dominant cost estimating practices adopted by building contractors in the region.
1.3 Statement of Problems
Investigation revealed that building contractors in Lagos State adopt varying cost estimating practices such as preliminary estimating, detailed estimating, approximate quantities, and experience-based judgment. These methods is often influenced by contractor experience, project complexity, and time constraints rather than standardized procedures or modern digital estimating tools. Additionally, poor standardization of estimating procedures and weak regulatory enforcement in cost planning practices further exacerbate inconsistencies among contractors.
Furthermore, inadequate integration of technological tools such as Building Information Modelling (BIM) and computer-based estimating systems among contractors in Lagos State contributes to inefficiencies in cost planning. Many estimators still rely on manual calculations and historical intuition, which reduces accuracy and increases the likelihood of error in project budgeting (Oke, Aigbavboa, & Mphephu, 2017). It is against this backdrop that this study seeks to examine the dominant cost estimating practices adopted by building contractors in Lagos State.
1.4 Aim and Objectives of Study
The aim of this study is to investigate the dominant cost estimating practices adopted by building contractors in Lagos State. In achieving this aim, the following specific objectives were laid out as follows:
- To identify the common cost estimating methods used by building contractors in Lagos State.
- To examine the factors influencing the choice of cost estimating practices among contractors.
- To assess the level of accuracy associated with the dominant estimating methods used.
- To evaluate the extent of adoption of modern estimating tools and technologies among contractors.
- To determine the challenges affecting effective cost estimation in Lagos State construction projects.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What are the common cost estimating methods used by building contractors in Lagos State?
- What factors influence the selection of cost estimating practices among contractors?
- How accurate are the dominant cost estimating methods used in construction projects?
- To what extent are modern estimating tools and technologies adopted by contractors?
- What challenges affect effective cost estimation in Lagos State construction industry?
1.6 Research Hypotheses
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis 1
- H0: There is no significant relationship between cost estimating methods and project cost accuracy among building contractors in Lagos State.
- H1: There is a significant relationship between cost estimating methods and project cost accuracy among building contractors in Lagos State.
Hypothesis 2
- H0: There is no significant effect of modern estimating tools on cost estimation accuracy in Lagos State construction projects.
- H1: There is a significant effect of modern estimating tools on cost estimation accuracy in Lagos State construction projects.
Hypothesis 3
- H0: There is no significant influence of contractor experience on the choice of cost estimating practices.
- H1: There is a significant influence of contractor experience on the choice of cost estimating practices.
Hypothesis 4
- H0: There is no significant impact of material price fluctuations on cost estimation reliability.
- H1: There is a significant impact of material price fluctuations on cost estimation reliability.
Hypothesis 5
- H0: There is no significant relationship between training level of estimators and accuracy of cost estimates.
- H1: There is a significant relationship between training level of estimators and accuracy of cost estimates.
1.7 Significance of Study
It is believed that at the completion of the study, the outcome of this research will support contractors in improving budgeting accuracy and reducing cost overruns in building projects. Also, this research will assist project clients in making informed financial decisions during construction procurement processes.
Furthermore, the research will support quantity surveyors in improving professional estimating standards and adopting better cost control techniques. In addition, this study will help government and regulatory bodies in developing improved construction cost management policies and standards.
Lastly, the outcome of this research will enhance academic knowledge in quantity surveying and construction management fields.
1.8 Scope and Limitations of the Study
The study covers building contractors within Lagos State construction industry, focusing on their dominant cost estimating practices and the factors influencing them. It excludes civil engineering and industrial construction firms outside Lagos State.
The limitation of this study was that access to some construction firms was restricted due to confidentiality policies, which limited the amount of primary data collected from selected contractors.
1.9 Definition of Terms
Cost Estimating:
Cost Estimating refers to the process of predicting the financial resources required for completing a construction project based on drawings, specifications, and market conditions. According to Ashworth and Hogg (2007), it is a structured method used to forecast project costs for planning and control purposes.
Building Contractors:
Building Contractors are individuals or firms responsible for the execution and delivery of construction projects in accordance with contractual agreements. According to Oyedele (2013), contractors manage labour, materials, and equipment to achieve project objectives.
Cost Overrun:
Cost Overrun refers to the excess of actual project cost over the estimated cost. According to Flyvbjerg, Holm, and Buhl (2002), it is a common issue in construction projects caused by inaccurate forecasting and poor planning.
Building Information Modelling (BIM):
Building Information Modelling (BIM) is a digital construction tool used for designing, planning, and managing building projects. According to Eastman et al. (2011), BIM improves coordination and enhances cost estimation accuracy.
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