DEVELOPING A PROACTIVE COST MANAGEMENT MODEL FOR BUILDING PROJECTS IN NIGERIA

ABSTRACT

Scholars posit for the reengineering of the traditional management concept that is still significantly applied in managing building projects. Blending with the conventional understanding of the theory of production and the uniqueness of construction projects, the concept clogs the wheel of progress in the practice of construction art. Apart from being late, the traditional management model, which is reactive in nature, responds to management challenges sub-optimally. This underscores poor cost and time efficacy in building contracts. While it is widely recommended that proactive management is a feasible way of addressing cost escalation (cost growth), the subject has so far received poor research attention. Synthesis suggestsan array of existing remedies to diverse cost management challenges, but with dearth of proactive tendencies. This thesis developed a proactive cost management model (PCMM) for building projects in Nigeria. Being proactive is essentially being preemptive in management. Theorising also is that cost growth which culminates from the dual dimensions of market forces and process flaws is fueled if not caused by poor prediction techniques. This work established four sub models, including: Lessons Learnt Mechanism, Graphical Models, Best Practice Modules and a Mathematical Model which formed the components of the PCMM. The Grubb‘s Method test of outliers, ANOVA, Kolmogorov-Smirnov Test of normality, Geometric Mean and Linear Correlation were applied to mass historical cost data collated over ten years. Analyses established the validity of the cost data as research samples. Computed were the historical total cost and the cost growth factors of various elements of a specified building design. Findings established annual elemental cost growth factors as: Substructure-0.1540; Frames-0.1580; Upper Floors-0.1180; Roof-0.1100; Staircase-0.0236; External Walls-0.3260; Internal Walls and Partitions-0.1720; Wall Finishes-0.0525; Floor Finishes-0.0810; Ceiling Finishes-0.0760 and Fittings and Fixtures- 0.0710. Cost growth in construction projects in Nigeria was found to be significant over short period. Construction materials were classified into two categories, each category exhibiting a unique pattern of response to market forces. A mathematical model developed was used to predict the cost of a prototype building at various milestones. Values were compared with estimates obtained from first principle. A strong positive linear correlation coefficient of 0.92571 and a ―no significant difference‖ between the samples were established. These pieces of information were fused into a PCMM that should be used to predict cost changes due to market forces and process flaws in ongoing building projects. Managers should also be mindful in the sequence of the assembly process, and the choice of inventory keeping and consumption, putting into cognisance the varying response levels of materials to market forces towards cost efficacy. A computer programme can be developed to implement this concept better. More historical cost data can be collated for another timeframe so as to compute and compare the cost growth factors towards establishing permanent values.