Back ground

Presenter:Supervisors: Mr. Dela Adobor (BSc BT)Dr. Theophilus Adjei-KumiDr. Gabriel NaniMr. Ernest Osei-Tutu

15th April 2014

Kwame Nkrumah University of Science and TechnologyCollege of Architecture & PlanningDepartment of Building Technology-KNUST Kumasi

DEVELOPMENT OF CONSTRUCTION COST INDICES USING UNIT RATE11PRESENTATION OUTLINE1.0 INTRODUCTION

2.0 METHODOLOGY

3.0 RESULTS & ANALYSIS

4.0 RECOMMENDATIONS2Rising cost of contraction input resources (Osei Tutu et al, 2008)Prevalence of delayed payment to contractors (Eyia, 2003)Uncertainties in supply of input resources (Laryea, 2010)

1.1 BackgroundFluctuation clauses in contracts1.2 Problem statement Late release of dataLow contractor confidence in cost recovered A new cost indices to overcome short falls of existing methods.Contractor confidence, improved cash flow.CSIR BRRI Indices (1996-2007)GETFund PBCI1.0 INTRODUCTION31.3 AIM & OBJECTIVES To develop cost indices using unit rate Objectives: To identify existing methods of evaluating fluctuations

To determine specific short-comings with application of existing methods

To determine the components modal work items - basket of goods for inclusion in formulating the new cost indices.

To formulate a new cost indices (NCI) overcoming the shortfalls identified Aim: 43.1 Questionnaires to contractors and consultants Table 3.1SPSS and Microsoft Excel Frequency analysis, Relative Importance Index to rate factors identified r= summation of weightings given to each factors A = highest rating, N = total number of respondents for that factor Type of RespondentNo. of questionnaire sentNo. returnedNo. responsivePercentage responsive (%)Consultants39262667Contractors 41272561Total 805351643.0 METHODOLOGY53.2 Identification of Work Items For Inclusion3.2.1 Modal item:Those work items occurring in more than 50% of BQ analysedBQ content analysis was done using BQ from 11 different consultants for GETFund projects.Only new buildings were considered for the analysis Democratic method: (An item is a candidate for inclusion in the basket if the proportion of households purchasing it exceed a certain percentage). 3.2.2 Determination of modal work itemsFrom literature a product and services accounting for 90% by households in each group are included.6

Table 3.27Standard output rates

Mark-up

Collection of prices of input resources in Accra

List of major suppliers obtained from the quantity surveyor magazine

Prices of labour obtained from TUC (collective bargaining agreement)3.3 FORMULATING THE INDICES 83.3 FORMULATING THE INDICES CONTINUEDBase month December 2011Price collection begun in October 2011, full prices were collected in December 2011Prices were generally stable between October December 2011.Rate analysis was done for the selected items, using the standard output rates and the prices collected for the monthsTo obtain an index for a particular work item and mouth, the rate obtained for that mouth was divided by the rate for the particular work item for December 2011. The coefficient obtained constitutes the index.94.0 RESULTS AND ANALYSIS 4.1 Computation methods used for evaluating fluctuation Table 4.1COMPUTATION METHOD FREQUENCYPERCENTAGE (%)PBCI1973.07CIEIG-GH/BRRI623.07Traditional13.86Others00Total2610010

Fig. 4.2 Computation Methods114.2 Reasons for choice of method Fig. 4.2

Clients instruction12Table 4.24.3 Problems associated with usage of existing methodsItemProblems associated with usage of existing CCIRatingWeightRAxRank54321ALate release of data1634211090.8381BInadequate recovery of costs410921920.7082CParticular work item of interest not included in published indices231218680.5233DComponents of a weighted sample513017550.4234ENon-familiarity with computation method001322310.2385FHigh subscription fees001124290.2236GHuman error001124290.2236HIndices based on historical data000125270.2087JObsolete methods and components000125270.2087134.4 Contractors satisfaction with level of cost recovery Fig. 4.3

14Generally the formula method measures the average movement of construction costs irrespective of actual cost incurred. The level of cost recovered using the PBCI is further reduced as a result of late release of data, forcing consultants to either apply provisional indices or use outdated indices.4.4 Contractors satisfaction with level of cost recovery continued 15Identified work itemsFreq (n)Percentage (%) = [n x 100% ]/ 33D: GroundworkRemoval of trees2061Clearing site vegetation33100Topsoil preservation26Pit excavation33100Trench excavation33100Reduce level excavation721Removal of surplus excavated materials2164Breaking existing hard material1236Filling to excavations (backfill)33100Filling to make-up levels33100Termite treatment1442E: In situ concrete Large precast concreteReinforced in situ concrete, 1:1.5:326Reinforced ditto 1:2:433100Plain in situ ditto, 1:3:62164Ditto, 1:4:833100formwork to sides and soffits,33100Ditto, to edges3310020mm diameter mild steel reinforcement bars257616mm ditto309112mm ditto329710mm ditto23706mm ditto134.5 Work items identified for inclusionTable 4.3 Extract of work items identified frm BQ analysis164.6 Modal Work Items128 work item were enumerated from the BQ content analysis64 items occurred in more than 50% of the BQ. These were selected as the modal work items or the basket of goods and were further reduced to 32 by grouping similar work items and choosing the most frequently occurring as the representative.17DescriptionQuantityUnitPrice(GH ) Amount (GH) materialscement62.08bags20 1,241.61 sand4.22m345 189.81 chippings8.44m382.05 692.18materials subtotal 2,123.61plant300/200 concrete mixer1.39days60 83.33 diesel1.39gallon7.67 10.65poker vibrator1days20 20.00 plant sub-total 113.99 labourTotal labour cost646.92Total prime cost2,884.51Add: over heads10%288.453,172.96Add: Profit10%317.303,490.26Add: Tax5%174.51TOTAL COST FOR 10m33,664.77COST PER m3366.484.7 Unit Rate Build-up And Formulation of IndicesTable 4.418Table 4.6 Extract from the developed indicesConstruction Work CategoryDecJanFebMarAprMayJuneSite ClearanceManual1.0001.2371.2371.2371.2371.2371.237Machine1.0001.0581.0581.0581.0581.0831.083EarthworksManual excavation1.0001.2371.2371.2371.2371.2371.237Machine1.0001.0581.0581.0581.0581.0831.083Filling and CompactingManual1.0001.0511.0511.0511.0510.0001.073Machine1.0001.0581.0581.0581.0581.0861.086Concrete WorkUsing crushed agg.1.0001.1461.2041.2111.2111.3821.327Reinforcement1.0001.0501.0501.0501.0501.0501.050Formwork1.0001.1211.1211.1211.1211.1211.121Brickwork/BlockworkBrickwork1.0001.0341.0441.0441.0441.2731.259Blockwork1.0001.1391.1841.1841.1841.3211.252WoodworkCarcassing-roof str. etc.1.0001.1401.2891.2891.2891.2891.306Joinery-frame1.0001.1491.2831.2831.2831.2831.283Doors & fittings1.0001.2931.2931.2931.2931.2931.293Ironmongery1.0001.0271.0271.0271.0271.0271.027MetalworkLouvre Carriers1.0001.0161.0161.0161.0161.0161.016Collapsible burglar proofing1.0001.0401.0401.0401.0401.0401.040Plumbing WorksPVC pipes 1.0001.1801.1801.1801.1801.1801.279Sanitary Fittings, etcWater closets wash hand basin, etc1.0001.0151.0151.0151.0151.0151.391194.8 Comparison of Mean IndicesTable 4.7 Comparison of Mean IndicesMONTHLY MEAN INDICES Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12NEW CSIR-BRRI1.0001.1031.1371.1421.1431.1711.203PBCI1.0001.1191.1191.1201.1201.1201.12420Fig. 4.6 Graph of NCI vs PBCI

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Fig. 4.7 Graph of NCI vs CIEIG-GH (In situ Concrete)4.9 Comparison with CIEIG-GH224.10 Comparing costs recovered (NCI, PBCI & Trad.b= adjustable component of the contract pricePc= relative charge in cost indexIt= index at the time t, applicable month Io= base month indexa= non-adjustable component of the contract price23Indices Type20112012DecJanFebMarAprMayJunRaw PBCI 1,589.50 1,777.90 1,779.10 1,780.10 1,780.10 1,780.60 1,785.90 PBCI converted to Dec 2011 base 1.000 1.119 1.119 1.120 1.120 1.120 1.124 New CSIR-BRRI 1.000 1.103 1.137 1.142 1.143 1.171 1.203 Table 4.10 Monthly Indices (NCI & PBCI)24 INDICES TYPE MONTH JAN FEB MAR APRMAY JUN MEAN INDEX ( It) CSIR-BRRI )1.1031.1371.1421.1431.1711.203 PBCI 1.119 1.119 1.120 1.120 1.120 1.124 APPLICABLE FACTOR [ Pc = (It-Io)/Io] CSIR-BRRI 0.103 0.137 0.142 0.143 0.171 0.203 Pc = [0.1+0.9It/Io]-1 PBCI 0.107 0.107 0.108 0.108 0.108 0.112 Table 4.11 Fluctuation Factors25COMPARISON OF COSTS RECOVERED USING NCI, PBCI and TRADITIONAL METHODS (JANUARY JUNE 2012)CONTRACT START DATE:1ST JANUARY 2012BASE DATEDECEMBER 2011CONTRACT SUM (Less Prov. Sums +Contingencies) 123,878.00 COMPLETION DATE 30TH JUNE 2012 A B APPLICABLE INDEX ('C) AMOUNT OF FLUCTUATION (GH) CUMM. VALUE OF WORKS NET VALUE OF WORKS DONE CSIR-BRRI ('C)PBCI (D)CSIR-BRRI PBCI TRAD. Valuation No.1 ( 31/01/12) 24,775.60 24,775.60 0.103 0.107 2,551.89 2,650.99 1,166.99 Valuation No.2 ( 28/02/12) 49,551.20 24,775.60 0.137 0.107 3,394.26 2,650.99 1,484.42 Valuation No.3 (31/03/12) 68,132.90 18,581.70 0.142 0.108 2,638.60 2,006.82 406.40 Valuation No.4 (30/04/12) 92,908.50 24,775.60 0.143 0.108 3,542.91 2,675.76 1,497.00 Valuation No.5 (31/05/12) 105,296.30 12,387.80 0.171 0.108 2,118.31 1,337.88 1,162.07 Valuation No.6 (30/06/12) 123,878.00 18,581.70 0.203 0.112 3,772.09 2,081.15 494.08 TOTAL 123,878.00 18,018.06 13,403.60 6,210.96 Table 4.12 Amounts Recovered26

Fig. 4.1027T-TEST FOR DIFFERENCES IN MEANS MONTHLY MEAN INDICES Jan-12Feb-12Mar-12Apr-12May-12Jun-12NCI1.1031.1371.1421.1431.1711.203PBCI1.1191.1191.1201.1201.1201.124T-TEST FOR EQUALITY OF MEANS Two Sample t-test for equality of means at95% C.I. of differencessignificancet-valued.fp-value0.052.1293100.0591Table 4.14Table 4.15284.11 T-test for cost recovered using NCI & PBCITable 4.16T-TEST FOR EQUALITY OF MEANS Two Sample t-test for equality of means at95% C.I. of differencessignificancet-valued.fp-value0.052.3323100.0419Since P=0.0149