THE PROBLEM AND ITS SETTING
Statement of the problem
Statement of the sub-problems
-The second problem is the identification of important factors that influence the overrun of construction costs in public works projects. -The fourth problem is to determine what constitutes completing a project within budget in an effective project cost management system.
Hypotheses
-problem three is to analyze the cost control measures used on public works projects. What factors constitute completion of a project within budget in an effective project cost management system?).
Delimitations
A third hypothesis is that future project costs are not adequately analyzed and reported, making cost control measures ineffective. The fourth hypothesis is that the project cost management system can be modified to suit specific projects, which can lead to successful financial control and project completion.
Definition of terms
Deliverable" is any measurable, tangible, verifiable result, outcome or item to be produced to complete a project or part of a project. Rework" means action taken to bring a defective or non-conforming item into conformity with requirements or specifications.
Assumptions
Research methodology
The national population of the number of firms registered as consultant quantity surveyors with the Public Procurement and Asset Disposal Board of Botswana to handle category "D" projects was 30 in 2000. All of this population was sought to participate in the research , so there was no need for sampling.
The importance of the study
This study established the effective cost management for better planning, cost control and reporting to ensure the successful financial completion of the construction project. It also highlighted the need for analysis of future costs so that corrective measures could be taken to ensure targets are met.
INTRODUCTION
PROJECT COST PLANNING
- Introduction
- History and need for cost planning
- Cost planning factors
- Project cost estimating
- Project cost plan
- Conclusion
In the above biblical quote, it is clear that cost planning is essential to the successful completion of the project. This means that the statement of work (sometimes called the scope of work) is a narrative description of the work required for the project.
PROJECT COST CONTROL
- Introduction
- Cost control defined
- Project change control
- Earned value analysis
- Cost report summary
- Conclusion
These functions must be incorporated into the project's cost control system for it to be effective. It is the expected cost of the project once the defined scope of work has been completed. This is the measure of the variance between the earned value (BCWP) or and the actual cost of doing the work (ACWP).
Project final cost forecasting is vital information required by the client and senior management. If a project is to be successfully completed, all relevant project participants must be kept informed of the project's status. In cost reporting, it is important to indicate the total estimated cost at the completion of the project.
FINANCIAL PROJECT CLOSURE AT COMPLETION
- Introduction
- Contractual basis for financial closeout
- The closeout process
- Control of late changes
- Closeout analysis and documentation
- Final reports
- Post mortem
- Conclusion
It is a contractual stipulation in contracts that the final account of money due to the contractor or employer be prepared and its payments made. The period in which the final account must be prepared is usually specified in the contract. Therefore, effective project cost management must adhere to the relevant clauses in the contract, for example, clause 34.1 in the main agreement of JBCC states that,.
The Principal Agent shall prepare a final invoice for submission to the Contractor within ninety (90) business days of the date of practical completion.". Final cost reports should be compiled and submitted, along with cost variances, analysis and comments. This is an administrative task that must be completed on or before the contract to ensure successful project cost management.
SUMMARY
This is the cost planning phase of a construction project and is very critical. The majority of respondents indicated that project specifications and description of work are preferred in relation to the project cost plan. According to the above findings, most construction professionals place more emphasis on design specifications and.
Referring to when the employer was informed of the cost variations in the project, the answers varied. Furthermore, the presentation of the cost report was found to be inadequate by the majority of respondents. 33% of the respondents indicated that the contractual requirements were resolved after the completion of the project.
RESEARCH FINDINGS
Sample size
The above graph of the research results shows that the project specifications were hardly complete at the time the cost plan was established. The above responses indicated that the employer was often aware of the cost variances on projects and always approved the cost variances. The answers to the main content of the report are given in table 13 (question 12 answers).
Most respondents indicated that the final billing statements were settled after 6 months when the project was practically completed. The analysis and interpretation of the data from the study findings are presented in the following paragraphs. With regard to the approval of cost variances by the employer or representative, the majority of respondents indicated that approval had been made (Table 8, Chapter 3).
The above order shows that the main cause of cost variance was scope of work change, followed by project specifications. Referring to table 13, 74% of the respondents indicated that they did not include graphs in the cost report.
Composition of questionnaire
Research response
The analysis of the effectiveness of cost management and cost implications for the employer is discussed in the next chapter. According to the above results, the majority of respondents were of the opinion that the main causes of cost variations on construction projects are in the following order. Regarding cost reporting, the majority of respondents indicated that there was cost reporting on each project.
The frequency of expense reports was every 3 months, as indicated by 95% of respondents. Therefore, the content of the cost reports depended on the consultant for each project. The response of 95.6% (Table 14, Chapter 3) of respondents indicated that the project consultant responsible for cost reporting is the quantity surveyor.
Pre-contract phase research findings
Post-contract phase research findings
Summary
This chapter presented the data of the research findings from the population sample as indicated earlier. The findings were divided into 2 sections, namely the pre-contractual phase of a construction project and the post-contractual phase. The research findings of the pre-contract phase revealed how cost planning was done for the projects and the post-contract phase revealed the findings of how cost control was done on the projects.
Introduction
Model for interpretation of the data
The research findings showed the following results as the best description of the employer's task according to the consultants (Table 4 and Figure 5 in Chapter 3). The answer shows that the employer was not only informed about the cost deviations, but also approved the cost deviations on the projects. Regarding the frequency of reports, 95% of respondents indicated that reports were made every 3 months.
Most indicated that most final accounts of projects were agreed and completed later than six. Despite delays in finalizing the final accounts, final cost reports have been prepared for the projects. An assessment of the cost impact of changes in the scope of work and specifications on the overall budget for a public works project in Botswana.
Pre-contract phase – analysis and interpretation of the data …. 78
- Analysis of the specifications and employer’s brief …
Post-contract phase – analysis and interpretation of the data …
- Cost variances and approvals
- Causes of cost variances
- Cost report analysis
- Responsibility or involvement in cost reporting
- Analysis of settlement of claims
Summary
The limitations, assumptions, research methodology and significance of the study were also stated in this chapter. Cost planning techniques exist for public works, but they are not effective due to inadequate description of the scope of work of projects, which is one of the main factors of cost planning. The main causes of cost overruns are changes in scope of work and project specifications.
This is because the main identified causes of cost overruns include changes in scope of work and project specifications. In most contracts, the period of final measurement and completion of final accounts is no more than six months after the practical completion of a project. The Botswana BIPD contract allows 6 months from the date on the certificate of practical completion of the works (unless specified in the contract appendix).
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
However, it was stated that there are cost overruns in Botswana government projects and the study assessed cost management by category. Due to the limited literature, particularly applicable to Botswana, a critical analysis of what other researchers found in other countries was included in the study. This chapter covered ideal project cost management as analyzed by various researchers and authors.
Conclusions
Milestone schedules are considered the least important cost planning factor in cost planning. Consequently, it can be one of the causes of indirect costs leading to cost overruns on a project if not monitored. The reason for this is that, although cost planning factors were included in the cost plan, they were not effective due to the fact that the statement of work (scope) and the project specifications were not complete when the cost plan was established.
The significant factors identified in the research that cause cost variances, listed in the following perceived order of importance:. The study found that cost analysis of the variations was mostly carried out at the time when the contract changes were carried out/or after being carried out and the employer was informed thereafter. Future project costs are not adequately analyzed and reported, causing cost control measures to be ineffective.
Recommendations
- Research recommendations
- Recommendations for future research
These should be clear and concise to confirm project requirements, especially as most government construction projects are standardized. This is because this time parameter has indirect cost implications that should be considered especially when changes are made. However, this should be done before the changes are implemented so that the employer has the opportunity to make decisions and consider alternatives.
The lead consultant, who is an architect under the current procurement system, should be responsible for project cost reporting. The contractual requirements and the final accounting should be settled and agreed upon as soon as they arise or are stipulated in the contract. Following this report, a post-mortem examination should be carried out to compare the actual expenditure with the original estimate, which is useful in pointing out mistakes to be avoided when estimating or executing future projects.
LIST OF APPENDICES
