The degree of accuracy and factors that influence the uncertainty of SME cost estimates

ABSTRACT

The study examines the degree of accuracy and factors that influence the uncertainty of cost estimates. A critical review of literature conducted and was followed with two SMEs case studies executing four projects for different clients. The data collection methods used were documental review, observations and interviews. A total of 12 interviews were conducted and analysed using qualitative thematic analysis. The findings reveal an unquantifiable average cost drift or inflated risks of 19% in cost estimates which is significant as compared to other studies. Ten main factors were identified as the influential factors to the uncertainty of cost estimates, which included type of client, terms and conditions of payments, availability of cost information, experience, repeated work and guarantee of the job. This study contributes to existing literature and it reveals that in the UK post-2008 era, cost of construction remains higher and it could be reduced.

KEYWORDS:

• Cost estimate
• cost management
• project
• risk management
• SMEs
• uncertainty

Acknowledgments

I wish to sincerely thank all the case studies companies and the participants who immensely contributed to this study.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

Their study was not based only on SMEs but also large contractors.