The Effect of Labour and Material Costs on the Total Cost of Construction

The Effect of Labour and Material Costs on the Total Cost of Construction

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Reference ID: PS-627-TM

DEDICATION

This research material titled “The Effect of Labour and Material Costs on the Total Cost of Construction” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.

ACKNOWLEDGEMENT

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TABLE OF CONTENTS

PRELIMINARY PAGES


CHAPTER ONE

INTRODUCTION


    CHAPTER TWO

    LITERATURE REVIEW

    • 2.1 Introduction
    • 2.2 Conceptual Review
    • 2.3 Theoretical Framework
    • 2.4 Empirical Studies

    CHAPTER THREE

    RESEARCH METHODOLOGY

    • 3.1 Introduction
    • 3.2 Research Design
    • 3.3 Population of Study
    • 3.4 Sampling and Sampling Technique
    • 3.5 Validation of Research Instrument
    • 3.6 Method of Data Collection
    • 3.7 Method of Data Analysis
    • 3.8 Questionnaire Administration
    • 3.9 Ethical Consideration
    • 3.10 Statistical Analysis

    CHAPTER FOUR

    DATA ANALYSIS, RESULT AND DISCUSSION

    • 4.1 Introduction
    • 4.2 Presentation and Analysis of Data
    • 4.3 Re-statement of Research Questions
    • 4.4 Test of Hypotheses
    • 4.5 Discussion of Findings

    CHAPTER FIVE

    SUMMARY, CONCLUSION AND RECOMMENDATION

    • 5.1 Introduction
    • 5.2 Summary of Findings
    • 5.3 Conclusion
    • 5.4 Recommendation
    • 5.5 Suggestion for Further Study

    REFERENCES

    APPENDIX A - “QUESTIONNAIRE”


    The Effect of Labour and Material Costs on the Total Cost of Construction

    CHAPTER ONE

    1.0 Introduction

    1.1 Background Of The Study

    Labour cost is defined as the sum of all wages paid to employees, as well as the cost of employee benefits and overall taxes paid by the employer. The cost labour is broken into direct and indirect costs. Direct costs include wages for the employees physically making a product, like workers on an assembly line. Indirect costs are associated with support labor, such as employees that maintain factory equipment but don’t operate the machines themselves.

    When manufacturers set the price of a good they take the cost of labor into account. This is because they need to charge more than that good's total cost of production. If demand for a good drops or the price consumers are willing to pay for the good falls, companies must adjust the cost of labor to remain profitable. They can reduce the number of employees, cut back on production, require higher levels of productivity, reduce indirect labor costs or reduce other factors in the cost of production.

    The construction industry is strongly dependent on subcontractors and material suppliers. Costs for purchasing material and services represent 75% of the turnover for Sweden's three largest construction companies (Dubois & Gadde, 2000), and purchases of material correspond to at least 40% of the contract sum in a construction project (Boverket, 2005). Although material suppliers have a great impact on costs, quality and time in construction projects, there are few studies investigating how supplier's performance affects these parameters. Hadikusumu et al. (2005) state that material delivery deviations, such as delayed deliveries, incorrect quantity and quality defects, are common in the construction industry, but measurement of material delivery deviations is a neglected area in construction, both by contractors and by construction management researchers.

    The amount of money invested in the production of a product. The ingredients of a meal or the pasts of the machine would be things that incur material costs. This cost is apart from the cost of labour to produce the product. The material cost of together with the cost of labour helps determine the total cost of a product and its eventual sale price (Hadikusumu et al. 2005).

    The growing need for construction of all types coupled with a tight monetary supply has provided the construction industry with a big challenge to cut cost. According to Mendelson and Greenfield (1996) the remaining part of the twentieth century would involve corporations, institutions and government in a race to survive. The attendant dwindling economic fortune of nations economies around the World have geared up the participant in these sectors (the client in particular) to take up the challenge of ensuring efficient use of their resources to obtain value for money in terms of performance.

    The total cost of construction in normal circumstances is expected to be the sum of the following cost:materials, labour, site overheads, equipment/plant, head office cost and profit but in many parts of the world particularly in Nigeria, there are other costs to be allowed for.

    Therefore, this study is carried out to investigate the effect of labour and material costs on the total cost of construction.


    1.2 Statement Of The Problem

    Investigation revealed that the demand for more construction of all types, coupled with a tight monetary supply has provided the construction industry with a big challenge to cut costs. The problem of high contract costs of all aspects of construction is becoming obvious. Consequently, substantial increases are being observed in projects.

    This substantial increase has brought about loss of client confidence in consultants, added investment risks, inability to deliver value to clients, and disinvestment in the construction industry.

    CHAPTER TWO

    2.0 Literature Review

    2.1 Introduction

    This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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