EXPLORING THE TYPES OF EXPLORING THE TYPES OF CONSTRUCTION COST MODELLING FOR CONSTRUCTION COST MODELLING FOR INDUSTRIALISED BUILDING SYSTEM (IBS) INDUSTRIALISED BUILDING SYSTEM (IBS)

PROJECTS IN MALAYSIAPROJECTS IN MALAYSIA

Nor Azmi Ahmad BariNor Azmi Ahmad BariUniversiti Putra MalaysiaUniversiti Putra Malaysia

Introduction:Introduction:

Construction cost is an important element that should be monitorConstruction cost is an important element that should be monitored ed at different phases of the building construction process.at different phases of the building construction process.Construction cost is a factual process designed to give a reliabConstruction cost is a factual process designed to give a reliable le estimation or prediction of its financial cost. estimation or prediction of its financial cost. Cost estimating is Cost estimating is

‘‘a fundamental activity which combine of a mechanical process anda fundamental activity which combine of a mechanical process andsubjective expertise undertaken to assess and predict the total subjective expertise undertaken to assess and predict the total cost cost executing of construction works. It consists of application of executing of construction works. It consists of application of appropriate appropriate methods of estimating to the measures finished quantities of appmethods of estimating to the measures finished quantities of appropriate ropriate buildingbuilding’’..

The purpose of construction cost estimation is to provide informThe purpose of construction cost estimation is to provide information ation for construction decisions including areas in the procurement anfor construction decisions including areas in the procurement and d pricing of construction, establishing contractual amount of paympricing of construction, establishing contractual amount of payment, ent, and controlling actual quantities.and controlling actual quantities.

IntroductionIntroduction

As the construction industry is encouraged to adopt innovation iAs the construction industry is encouraged to adopt innovation in its n its trade, it came to the industry playerstrade, it came to the industry players’’ fore to review the prevalent fore to review the prevalent method of cost estimation for cost planning and control of IBS method of cost estimation for cost planning and control of IBS projects.projects.Drawing from that, and appreciating the need to reform the Drawing from that, and appreciating the need to reform the construction industryconstruction industry’’s practices, it was conceived that reviewing the s practices, it was conceived that reviewing the existent construction cost modelling used in the preparation of existent construction cost modelling used in the preparation of cost cost planning and control for IBS projects would be most expedient anplanning and control for IBS projects would be most expedient and d vitalvitalIts strength should be the ability to adhere and remain relevantIts strength should be the ability to adhere and remain relevant to to the everthe ever--changing technology and design dynamics being changing technology and design dynamics being manifested from a progressive construction process.manifested from a progressive construction process.

Definition:Definition:Industrialised Building System (IBS)Industrialised Building System (IBS)Author/Researcher Definition CIDB, 2003b A construction system which components are manufactured in a

factory, on or off site, positioned and assembled into structures with minimal additional site work

Trikha, 1999 A system in which concrete components such as wall, floor slab, beam, column and staircase are mass produced at site or in factory are assembled to form the structure with minimum in situ construction.

Warszawski, 1999 A set of interconnected elements that joint together to enable the designated performance of a building.

Esa and Nuruddin, 1998 IBS is a continuum beginning from utilizing craftsmen for every aspect of construction to a system that make use of manufacturing production in order to minimize resources wastage and enhance value for end users.

Wardi, 1997 A system which uses industrialized production techniques either in the production techniques either in the production of components or assembly of the building or both.

Junid, 1986 IBS is a process by which components of a building are conceived, planned and fabricated, transported and erected at site. The system includes a balanced combination between software and hardware component. The software element include system design, which is a complex process of studying the requirement of the end user, market analysis and the development of standardized components.

Definition:Definition:Industrialised Building System (IBS)Industrialised Building System (IBS)

CIDB, MalaysiaCIDB, Malaysia

‘‘A construction system which components are A construction system which components are manufactured in a factory, on or off site, manufactured in a factory, on or off site, positioned and assembled into structures with positioned and assembled into structures with minimal additional site workminimal additional site work’’

Definition:Definition:Industrialised Building System (IBS)Industrialised Building System (IBS)

Classification of types of IBS according to CIDB;Classification of types of IBS according to CIDB;

Type 1: Precast Concrete Framing, Panel and Box Type 1: Precast Concrete Framing, Panel and Box SystemsSystemsType 2: Steel Formwork SystemsType 2: Steel Formwork SystemsType 3: Steel Framing SystemsType 3: Steel Framing SystemsType 4: Prefabricated Timber Framing SystemsType 4: Prefabricated Timber Framing SystemsType 5: Blockwork SystemsType 5: Blockwork Systems

Definition:Definition:Cost ModellingCost Modelling

Ferry et al. (1997)Ferry et al. (1997)““The symbolic representation a system, expressing the content of The symbolic representation a system, expressing the content of that that

system in terms of the factors which influence its costssystem in terms of the factors which influence its costs””..Seeley (1996)Seeley (1996)

““a procedure developed to reflect, by means of derived processes,a procedure developed to reflect, by means of derived processes,adequately acceptable output for an established series of input adequately acceptable output for an established series of input datadata””..Ashworth (1999)Ashworth (1999)

““techniques used for forecasting the estimated cost of a proposedtechniques used for forecasting the estimated cost of a proposedconstruction projectconstruction project””..

Therefore, all methods, techniques or procedures used by quantitTherefore, all methods, techniques or procedures used by quantity y surveyors for cost estimation or cost forecast may be termed as surveyors for cost estimation or cost forecast may be termed as cost cost models.models.

Type of Construction Cost ModellingType of Construction Cost Modelling

Cost estimation models can be classified into three main Cost estimation models can be classified into three main generations:generations:

i. i. Traditional modelTraditional modelConference,Conference,Financial method,Financial method,Functional unit,Functional unit,Superficial,Superficial,SuperficialSuperficial--perimeter,perimeter,Cube,Cube,Storey enclosure,Storey enclosure,Approximate quantity,Approximate quantity,Bill of quantities.Bill of quantities.

Type of Construction Cost ModellingType of Construction Cost Modelling

ii.ii. NonNon--traditional modeltraditional modelStatistical / Econometric model (Regression analysis and Causal Statistical / Econometric model (Regression analysis and Causal model),model),Risk / Simulation model (Monte Carlo simulation and Value Risk / Simulation model (Monte Carlo simulation and Value management),management),KnowledgeKnowledge--based model,based model,ResourceResource--based model,based model,Life cycle model.Life cycle model.

iii. iii. New wave modelNew wave modelArtificial intelligent system (Neural network and Fuzzy logic),Artificial intelligent system (Neural network and Fuzzy logic),Other models (Environmentally and Sustainable development).Other models (Environmentally and Sustainable development).

Type of Construction Cost ModellingType of Construction Cost Modelling

Choices of estimation models will be influenced by many factors:Choices of estimation models will be influenced by many factors:

Information and time availableInformation and time availableExperience of the estimator/quantity surveyorExperience of the estimator/quantity surveyorThe amount and form of cost dataThe amount and form of cost dataPurpose of the estimatesPurpose of the estimatesTechniques to be adoptedTechniques to be adopted

Objective of the StudyObjective of the Study

To identify the most widespread or preferred To identify the most widespread or preferred incidenceincidence--inin--use (IIU) of cost estimation use (IIU) of cost estimation model being employed by the Malaysian model being employed by the Malaysian QS for projects using IBS.QS for projects using IBS.

MethodologyMethodology

Adopted a selfAdopted a self--administered, 6 pages postal administered, 6 pages postal questionnairequestionnaireThe questionnaires were sent to all QS firms The questionnaires were sent to all QS firms registered with Board of Quantity Surveyors, registered with Board of Quantity Surveyors, Malaysia (N=278)Malaysia (N=278)15% firms responded and than computed and 15% firms responded and than computed and analysedanalysed descriptively using SPSS.descriptively using SPSS.

Analyses of DataAnalyses of DataDemographic profile of the respondentsDemographic profile of the respondents

Majority (94.9%) have between 10Majority (94.9%) have between 10--30 years of working experience 30 years of working experience in construction industry.in construction industry.Majority (61.5%) have between 1Majority (61.5%) have between 1--10 years of working experience in 10 years of working experience in the the organisationorganisationMajority (64%) posses a high level of academic qualification; Majority (64%) posses a high level of academic qualification; ieie. . Degree holders.Degree holders.Majority covers a spectrum of high ranking personnel in which haMajority covers a spectrum of high ranking personnel in which half lf (52.7%) of the respondents belong to the Top Management level, (52.7%) of the respondents belong to the Top Management level, such as director, principal, managing here director, etc.such as director, principal, managing here director, etc.

Therefore, the information provided by the respondents can be Therefore, the information provided by the respondents can be considered as highly reliable and authoritative.considered as highly reliable and authoritative.

CurrentlyCurrently--used Cost Estimation Modelused Cost Estimation Model

Table 1: Incidence-in-use (IIU) of Traditional Types of Cost Estimation Model Modelling Average Point Average Incidence-in-use

(IIU), N= 41 Rank

Conference 2.2 1% - 33% 8 Financial method 2.9 1% - 33% 6 Functional unit 3.0 34%-66% 5 Superficial 3.9 34%-66% 2 Superficial-perimeter 2.2 1% - 33% 7 Cube 1.8 0% 10 Storey-enclosure 2.1 1% - 33% 9 Approximate quantities 4.0 67%-99% 1 Elemental estimating 3.7 34%-66% 4 Bill of quantities 3.9 34%-66% 3

CurrentlyCurrently--used Cost Estimation Modelused Cost Estimation Model

Table 2: Incidence-in-use (IIU) of Newer Non-Traditional Types of Cost Estimation Model Modelling Average Point Average Incidence-in-

use (IIU), N=41 Rank

Regression analysis 1.5 0% 4 Causal model 1.5 0% 5 Monte Carlo simulation

1.3 0% 6

Value management 2.4 1% - 33% 1 Knowledge-based model

1.3 0% 7

Resource-based model 2.0 1% - 33% 2 Life-cycle model 1.7 0% 3

CurrentlyCurrently--used Cost Estimation Modelused Cost Estimation Model

Table 3: Incidence-in-use (IIU) of New Wave Types of Cost Estimation Model Modelling Average Point Average Incidence-

in-use (IIU), N=41 Rank

Neural network 1.2 0% 2 Fuzzy logic 1.2 0% 3 Environmentally & Sustainable development

1.6 0% 1

FindingsFindings

Traditional types of cost model were, in general, still the mostTraditional types of cost model were, in general, still the most widely widely used.used.The newer, only the value management, resource based model, and The newer, only the value management, resource based model, and lifelife--cycle cost model costs being in general use.cycle cost model costs being in general use.

Brandon (1982), had proposed to the construction industry to shiBrandon (1982), had proposed to the construction industry to shift ft towards a more innovative and dynamic cost modeltowards a more innovative and dynamic cost model

From the study, it can be surmised that the continued and From the study, it can be surmised that the continued and overwhelming use of the traditional types of cost model at the overwhelming use of the traditional types of cost model at the expense of the newer nonexpense of the newer non--traditional types have somewhat traditional types have somewhat stigmatisedstigmatised BrandonBrandon’’s call for paradigm change.s call for paradigm change.

FindingsFindings

Reasons why the traditional cost estimation Reasons why the traditional cost estimation modellingsmodellings is still being is still being widely used :widely used :

1.1. lack of familiarity with the newer techniques; lack of familiarity with the newer techniques; 2.2. time constrain, plus lack of information and knowledge; time constrain, plus lack of information and knowledge; 3.3. doubts whether these techniques are replicable to other projectsdoubts whether these techniques are replicable to other projects; ; 4.4. most construction projects are not large enough to warrant the umost construction projects are not large enough to warrant the use se

of these techniques or research into them; of these techniques or research into them; 5.5. they require the availability of sound data to ensure confidencthey require the availability of sound data to ensure confidence; e; 6.6. the degree of sophistication is seen as too superfluous for an the degree of sophistication is seen as too superfluous for an

average project;average project;7.7. the vast majority of risks are contractual or constructionthe vast majority of risks are contractual or construction--related, and related, and

are fairly subjective such that they can be dealt with better onare fairly subjective such that they can be dealt with better on the the basis of personal experience or from previous contracts undertakbasis of personal experience or from previous contracts undertaken en by the company.by the company.

ConclusionConclusion

The traditional type of cost estimation models continue to The traditional type of cost estimation models continue to be in widespread use irrespective of be in widespread use irrespective of organisationalorganisational type type and size.and size.This phenomenon is comparable to findings from other This phenomenon is comparable to findings from other similar researches conducted in countries like the UK, similar researches conducted in countries like the UK, Hong Kong, Australia and Nigeria.Hong Kong, Australia and Nigeria.

ConclusionConclusion

An appraisal or review of the cost estimation practices in An appraisal or review of the cost estimation practices in construction projects is essential particularly of those construction projects is essential particularly of those using IBS. using IBS.

This is vital in order for IBS to be well placed, and This is vital in order for IBS to be well placed, and accordingly evolve with the various innovations that accordingly evolve with the various innovations that transpire within construction industry.transpire within construction industry.

If need be, the appraisal must also be reIf need be, the appraisal must also be re--strategisedstrategised to to take advantage of the various benefits presented by the take advantage of the various benefits presented by the newer nonnewer non--traditional and new wave cost estimation traditional and new wave cost estimation models in cost planning and control practices.models in cost planning and control practices.