International Journal of Construction Management

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An appraisal of cost management techniques used

in the construction industry

C. K. Tembo, F. Muleya & A. Kanyemba

To cite this article: C. K. Tembo, F. Muleya & A. Kanyemba (2022): An appraisal of cost
management techniques used in the construction industry, International Journal of
Construction Management, DOI: 10.1080/15623599.2022.2132355

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INTERNATIONAL JOURNAL OF CONSTRUCTION MANAGEMENT
https://doi.org/10.1080/15623599.2022.2132355

An appraisal of cost management techniques used in the construction industry

C. K. Temboa, F. Muleyab and A. Kanyembab
a
School of Construction Management and Economics, Copperbelt University, Kitwe, Zambia; bConstruction Economics and Management,
Copperbelt University, Kitwe, Zambia

ABSTRACT KEYWORDS
Numerous methods of managing cost on projects throughout the project life cycle exist yet construction Consultants; contractors;
projects globally are marred with cost overruns, an indicator of poor cost management. A study was con- cost management;
ducted to identify cost management tools and techniques used in the various stages of a project in the techniques; Zambia
Zambian Construction Industry (ZCI). A positivist approach was used following in a cross-sectional manner
using a self-administered questionnaire for data collection. The respondents were consultants and con-
tractors carrying out the cost management function in their organizations/firms in the construction indus-
try. A total of 118 questionnaires were distributed. The response rate was 79%, and the reliability test
using Cronbach alpha of 0.779 was attained. A census was done for consultants and stratified random
sampling for medium-large-scale contractors. Analysis was done using descriptive and inferential statistics.
Of the various techniques used the most utilized were meetings and expert judgement during the plan-
ning phase, detailed estimating and expert judgement during the estimating phase while expert judge-
ment and cost comparisons were used to some extent in the budgeting phase. Cash flow and
forecasting were the most utilized in the control phase. Both contractors and consultants were more
likely to use subjective cost management techniques.

Introduction
Cost management is an important aspect of managing projects.
Cost is in fact one of the success determination parameters aside
from quality & time and is one of the knowledge areas in project
management (PMI, 2017). Nevertheless, there is overwhelming
evidence of poor cost performance of construction projects glo-
bally mainly evidenced by cost overruns (Okereke et al. 2022;
Aljohani et al. 2017; Vaardini et al. 2016; Mostafa et al. 2016).
Vaardini et al. (2016) highlights reduction in contractors profit,
resulting in loses and other ills associated with poor cash flow as
a result of poor cost management. Some efforts have been made
to improve cost management especially for projects with use of
building information modelling specifically the 5th dimension
(Huang 2021) and block chain technology (Abad-Segura et al.
2021). BIMs 5th Dimension is centred on cost estimation, ana-
lysis, and budgetary tracking and is useful in cases where budget
analysis and cost estimation are required from the beginning of
any project. Block chain is a technology that constitutes an
accounting system that revolutionizes the process of registration,
verification, transparency, and reliability of the accounting infor-
mation system which includes cost management (Lemieux 2021;
Tapscott and Kirkland 2016; Abad-Segura et al. 2021)).
Notwithstanding very few countries are utilizing BIM to the 5th
dimension and block chain technology is not so wide spread in
the construction industry, much less in developing contexts like
Zambia. This means the benefits of the aforementioned such as
efficiency, quality and precision of cost management are not
being harnessed. Various studies have been conducted to identify
the causes of the cost overruns which is one of the major indica-
tors of poor cost performance in different types of construction
projects such as buildings, roads, dams, bridges and others
(Aljohani et al. 2017; Vaardini et al. 2016; Mostafa et al. 2016).
Studies have been conceptualized from a developing and devel-
oped context in small, large and mega projects alike and also in
simple and complex projects. Poor cost management approaches
have been blamed for poor project performance in the construc-
tion industry (Okereke et al. 2022; Muya et al. 2013). However,
it is unclear what these approaches are in the Zambian context.
The Zambian construction industry is no exception to poor
cost performance especially on public sector projects (NCC
2019). Auditor general reports from as far back as 2003 to date
indicate that there is poor cost performance in the public sector
projects. Similarly Muya et al. (2013) indicated that clients, con-
sultants, contractors and financiers identified insufficient initial
analysis of costs’ and ‘change orders’ as the most frequent and
severe factors that caused cost escalation in Zambia. The
Zambian public procurement act of 2020 outlines that cost
should not exceed 25% of the contract sum otherwise; a new
contract must be formulated. Mainza (2017) found that some
projects go as high as 90% over the contract sum. Poor cost per-
formance on construction projects often offsets the intended
contribution of the industry to the economy. It is therefore of
great importance that all the construction projects are completed
within the proposed budget. This can be achieved by the appro-
priate use of cost management tools and techniques (PMI, 2017).
Tembo-Silungwe and Khatleli (2017) and Muya et al. (2013)
found that cost management is one of the areas to be focussed
on in the Zambian Construction industry so as to manage proj-
ects better. This study was therefore undertaken to ascertain the
various techniques used in cost management in the Zambian
construction industry among contractors and consultants from
the planning to the project execution stage.

CONTACT C. K. Tembo chipozya@yahoo.co.uk Construction Economics and Management, Copperbelt University, Kitwe, Zambia
ß 2022 Informa UK Limited, trading as Taylor & Francis Group
2 C. K. TEMBO ET AL.
Table 1. Cost management tools and techniques.
Tools and techniques Project phase
Expert judgement Planning

Analytical techniques

Meetings

Fuzzy set techniques/theories
Expert judgement Estimate Cost

Analogous estimating

Detailed estimating

Three-point estimating

Reserve analysis

Vendor bid analysis

Cost of quality

Group decision-making techniques
Tools and techniques Project phase

Expert judgement Determine budget

Cost aggregation

Reserve analysis

Historical relationships

Funding limit reconciliation

Earn value management (EVM) Cost control

Forecasting

To-complete performance

Performance reviews

Project management software

Reserve analysis

Cash flows/ S-curve

Variance

Bayesian networks plus EVM
The next section reviews the literature in the cost manage-
ment body of knowledge with a bias to cost management meth-
ods and technique used in the construction industry. Thereafter,
the methodology for the study is presented. Then the study
results are given, analyzed and discussed before concluding the
study. Directions for future research are also given.
Cost management in the construction industry
Cost management is used to handle the financial aspect of proj-
ects, and ensures that the costs of resources are managed during
all project phases to structure the project in the most efficient
way (Kerzner 2018) throughout the life cycle of the project. The
benefits of cost management include accountability, increased
efficiency, savings, reduced projects costs and procurement value
(PMI 2017). However, these benefits do not seem to be realized
given the industry’s track record of poor cost performance. Ling
et al. (2021) point out that cost management is influenced by
design related factors (alterations, choices, adjustments), cost
related factors (suitability of comparable, cost data sources), time
related factors (availability of time, priority, sufficiency/insuffi-
ciency of time), experience related factors (capability, accuracy,
reliability) and information related factors (reliability, fullness,
accessibility). More specifically poor leadership & inappropriate
management, inefficient deployment of resources, excessive wast-
age of materials on sites, complex payment mechanisms, theft of
materials on sites and variation during construction works are
the prevailing factors affecting construction cost management
practice (Fagbenle et al. 2018). Additionally, Obi et al. (2021)
found competencies, team qualities and collaborative practices as
important elements for cost management influencing its success
or failure. The factors that affect cost management imply that
there are certain constraints (theory of constraints, Kadhim et al.
2020) and resources (resource based view, Barney 1991) needed
for effective management of costs. Cost management includes
the processes of planning, budgeting, financing, funding, manag-
ing, and controlling costs so that the project can be completed
Author
Wysocki and Mcgary (2003)
Kerzner (2018)
PMI (2017
Lam et al. (2001)
Wills (2010)
Helgesen et al. (2015)
Sawalhi and Enshassi (2014) Georgas and Vallance (1986),
Author
Vasista (2017)
Helgesen et al. (2015)
Smith et al. (2014)
Helgesen et al. (2015)
Shirina and Gaybarian (2018)
Dragija and Ivanko (2014)
Colin (2014)
Memon et al. (2011)
Malkanthi et al. (2017)
Jarosław and Sz ostak 2020)
Jarosław and Sz ostak 2020)
within the approved budget (Wills 2010). For the purposes of
this article, processes highlighted in the PMI body of knowledge
(2017) planning, estimating, budgeting and controlling will be
used to discuss the tools and techniques used at each stage as
shown in Table 1.
The cost planning stage of construction projects is very crit-
ical and is the first stage where decisions are made. Ideally; when
the project is planned carefully, the success of the project is
guaranteed (Kerzner 2018). This entails that, successful manage-
ment of costs on construction projects is linked to good planning
and taking into account all the factors that may cause cost over-
runs. Wysocki and Mcgary (2003) found that analytical techni-
ques were applied during the planning stage. Analytical tools
involve choosing strategic options to fund the project such as
self-funding, funding with equity, or funding with debt (Kerzner
2018). Examples of some of the analytical tools include analyses
such as net present value, return on investment, payback period
and discounted cash flow. Additionally, the project teams may
hold planning meetings to develop the cost management plan
(Ling et al. 2021). PMI (2017) adds expert judgement and data
analysis as tools and techniques for cost planning. Alternative
identification and brainstorming (Colin 2014) could be used as
planning methods. Systems (2010) in their study stated that pro-
ject management software could also be used during the plan-
ning stage, where various tools could simplify the process of
allocating resources for the purposes of time-saving, even if the
software may be costly to implement. Programs such as
Microsoft excel, Hive, JIRA, ProWorkflow and Office Timeline
can be utilized. Once the planning is complete estimates can
then be made.
Some of the tools and techniques used for cost estimating are
analogous estimating, parametric modelling, bottom-up estimat-
ing, three-point estimating, the Delphi method, expert judgement
(PMI 2017), reserve analysis, cost of quality (ActiTime 2021) and
computerized tools such as Microsoft Excel, Estimator 360 and
Microsoft project. Further, cost estimating approaches include
economic evaluation, project investment cost and cost forecasting

(Georgas and Vallance 1986). Analogous estimating, and para-
metric estimating are some of the common methods used at the
cost estimating stage (Helgesen et al. 2015; Sawalhi and Enshassi
2014). Wills (2010) points out that expert judgement is applied
during the estimating stage which provides valuable insight about
the environment and information from previous similar projects.
Analogous cost estimating depends on the expert judgement and
used mostly to prepare the earliest price estimate (Sawalhi and
Enshassi 2014) so as to crosscheck the detailed estimates and
give the decision-makers support whether or not to tender for a
project (Helgesen et al. 2015). The most common method in
Malaysia is the elemental cost estimate (Memon et al. 2011).
Sawalhi and Enshassi (2014) further stated that parametric esti-
mating is not extensively used by contractors though used for
verifying detailed estimates. It was observed in their study that
most companies are interested in the detailed estimating method,
which is the most accurate for estimating rather than others. The
aforementioned study highlighted analogous analysis, parametric
estimating, detailed estimating, best guess estimating as popular
methods of estimating. In spite of the tools or techniques used
Ling et al. (2021) argues that the accuracy of an estimate is
majorly influenced by estimator experience and information
available. Once estimates are developed a budget can then
be formulated
The budgeting techniques available are incremental budgeting,
activity-based budgeting, value proposition budgeting, zero-based
budgeting, historical information review, and expert judgement
(Colin 2014; PMI, 2017). Helgesen et al. (2015) stated in their
study that cost aggregation is applied during the budgeting stage
where the cost estimates are aggregated by work packages follow-
ing the work break down structure (WBS). Budget reserve ana-
lysis may also be applied during this stage. The budget
establishes both the contingency reserves and the management
reserves for the project (Vasista 2017). Expert judgement, guided
by experience in an application area, knowledge Area, discipline,
industry, or similar project, aids in determining the budget
(Smith et al. 2014). In Malaysia tender budgets are most effective
and highly utilized (Memon et al. 2011). The budget provides a
basis for cost control. However, Kazar et al. (2022) advocate for
Zero-based budgeting (ZBB) pointing out that the method is
effective and has been proven in different industries over many
years. It should be adopted in the construction industry as it
may provide savings of up-to 0.81% of the total project budget
and 4.74% of the focussed cost (Ibid). Once budget is approved
project can then commence and what remains is to control
the costs.
In developed societies, cost management and control practices
are shifting to systems and software based methods that are
more robust, efficient and reliable. Chen (2022) states that with
project management getting more complex; driven by large and
complex projects, big data technology is gradually applied to the
construction projects. Their study proposed scientific, effective,
and in line with the needs of national conditions based on the
large database in order to have effective cost management and
control regardless of the complex nature of projects.
Nevertheless, earned value management is the main technique in
cost control used for performance measurement (Helgesen et al.
2015; Jarosław and Sz ostak 2020). However, due to its inability
to cater for dependences and uncertainties it has been expanded
by Bayesian networks (Jarosław and Szostak 2020). Forecasts are
generated, updated, and re-issued based on work performance
data that is provided as the project is executed. The work per-
formance information covers the project’s past performance and
INTERNATIONAL JOURNAL OF CONSTRUCTION MANAGEMENT 3
any information that could impact the project in the future
(Shirina and Gaybarian 2018). The earned value technique has
the demerits of; difficulty in the correct and accurate determin-
ation of the percentage of completed work, and incomplete data
on the actual costs incurred on the day of the audit.
Nevertheless, in the United States, Great
Britain, Australia, and South Korea, the use of the earned
value method is common and encouraged by regulation
(Jarosław and Sz ostak 2020). Other tools and techniques applied
in this stage include, To-Complete Performance Index (TCPI),
performance reviews, project management software and reserve
analysis. When risks are anticipated additional reserves are added
to the project budget (Dragija and Ivanko 2014) resulting in
reserve analysis as a requirement. In Palestine a study on project
cost management used by public owners and contractors in Gaza
indicated cash flow/S-curve, variances, and earned value as popu-
lar control methods (Sawalhi and Enshassi 2014). Among cost
control practices, cash flow was found to be the most used tool,
while the earned value was the least used on Malaysian construc-
tion projects and less effective ones being are value management
and cost code system (Memon et al. 2011). The main reason for
the low level of value management is the unawareness of value
management (Memon et al. 2011). In Sri Lanka earned value
management is one of the main techniques used in the construc-
tion industry, nevertheless, contractors are not inclined to prop-
erly implementing the cost control techniques due to lack of
resources (Malkanthi et al. 2017). The programs used at this
stage include Microsoft Project, Estimator 360 and Pro-
Contractor Estimating while techniques include earned value
management, cost change control, additional planning, perform-
ance measurement, variance analysis, trend analysis, and reserve
analysis. Though an important stage, cost control is not without
challenges, Adjei et al. (2018) identified several challenges of cost
control in the construction industry namely use of obsolete
methods, lack of knowledge, lack of control processes, abandon-
ment of complicated strategies, lack of consistency in cost man-
agement, decision failure, poor attitude, difficulty in monitoring
different sources of cost data, contract variations and lack of
financial commitment.
There are various methods and techniques used to manage
cost as highlighted in the review. The various methods have dif-
ferent levels of accuracy which therefore influences final cost of
a project. The varying accuracy levels depend on their nature;
subjective methods þ/- 20% to 40% accurate (e.g., expert judge-
ment, meetings); parametric methods (e.g., unit rate, factoring)
þ/- 10% to 20% accurate, comparative methods þ/- 10% and
analytical methods þ/- 5% (Kerzner 2018). Aside from the
accuracy of methods used for cost management, experience is
one of the key needs for effective cost management (Obi et al.
2021) and quality of the data relied upon (Ling et al. 2021). It
can be concluded that the project cost management tools are not
widely used and the level of utilizing the cost estimating and
control is not satisfactory (Sawalhi and Enshassi 2014). This gen-
eral conclusion could be relied upon as cost overruns have con-
tinued to characterize the performance of construction projects
in many parts of the world. The next section discusses the meth-
odology adopted in this study.
Research methods
The research sought to identify techniques used in cost manage-
ment among contractors and consultants in the Zambian con-
struction industry due to poor cost performance. The research
4 C. K. TEMBO ET AL.
Figure 1. Research flow chart.
Table 2. Cost management tools and techniques.
Population Respondent details Population
Contractors Grade One 8 3
Grade Two 15
Grade Three 13
Grade Four 52
Consultants Quantity surveyors 30
Total 118
took a positivist approach as it was deductive in nature and uti-
lized a survey to collect data in a cross-sectional manner. Figure 1
shows the research process undertaken in this study. The popula-
tion of this research was composed of two groups’ medium to
large–scale contractors and consultants, as shown in Table 2. The
research focuses on construction companies in category B (build-
ing) of the National Council for Construction registration catego-
ries as an entity that registers contractors in the country. The
consultants targeted were those involved in building projects and
registered under the Quantity Surveying Registration Board
(QSRB). The grades of contractors considered were grade 1 to 4 of
the National Council for Construction register. Stratified probabil-
ity sampling was used on determining the sample size for the con-
tractors the stratified sampling formula shown below. A confidence
level of 95% was used and a precision of ±5%.
nh ¼ ½Nh=N 
where nh ¼ Sample size, N ¼ population size, N ¼ Total popu-
lation size and n ¼ Total sample size.
The questionnaire had closed questions and open-ended ques-
tions. The questionnaire had three sections. Section A comprised
of demographic information such as gender, section, qualifica-
tions and nature of works engaged in. Section B was factors
influencing cost management (not reported in this article). The
last section (C) was focussed on the tools and techniques used
for pre-contract contract phase (planning, estimating, and budg-
eting) and during the execution of the contract (controlling).
The questionnaire utilized a four point (A ¼ always, B ¼ often,
C ¼ sometimes, D ¼ never) and a five point (1¼ Applied to a
very great extent, 2 ¼ Applied to a great extent, 3 ¼ Applied to
some extent, 4 ¼ Applied to a small extent, 5 ¼ Never applied) to
determine frequency and application respectively; and six point
scale of 1 ¼ Applied to a very great extent, 2 ¼ Applied to a great
extent, 3 ¼ Applied to some extent, 4 ¼ Applied to a small extent,
5 ¼ Never applied, 6 ¼ Not indicated for utility of a method.
Closed-ended questions were analyzed using statistical pack-
age for social sciences (SPSS 23). The data was analyzed using
Sample Distributed Received Response rate %
3 3 100.00%
8 8 3 37.50%
6 6 5 83.33%
56 26 22 84.62%
30 30 27 90%
73 73 64 79.09 %
descriptive statistics (percentages, means, standard deviations)
and inferential statistics (one sample Wilcoxon test, Shapiro
Wilk and Cronbach Alpha). For The Wilcoxon test the hypoth-
esis test for each stage in terms of methods used was H1: The
Median of methods used for cost management stages (planning,
estimating, budgeting, controlling) equals 2. To test for normally
a hypothesis of Ha; the sample comes from a normal distribution
was used using the Shapiro Wilk test.
Results presentation
Data and sampling characteristics
The Cronbach alpha was used to test the reliability of the instru-
ment and it was found to be 0.779 for 65 items. This meant that
the instrument was reliable (Kothari 2014). The overall response
rate from the sample was 79%. Although many contractors were
registered, few were found at the registered address or were
unreachable by phone or email using the registered contact
details hence a low response rate for contractors as shown in
Table 2. To determine the distribution of the data the Shapiro
Wilk test was done. The test statistic used a hypothesis of Ha.
The sample comes from a normal distribution and the alternative
Hb The sample does not come from a normal distribution with
the significance a ¼ 0.05 using a single tail test. Therefore to
reject the null hypothesis using Shapiro Wilk test at 0.05 the p-
value should be less than the threshold. Shapiro-Wilk test ranged
from .781 to 884 (DF ¼ 64, p ¼ 0.000 to 0.002 < 0.05). There is
therefore strong evidence that the population from which the
sample is drawn was not normally distributed. This meant that
non-parametric statistical tests could be utilized.
Demographic information
As indicated, the sample consisted of contractors and consul-
tants. The gender for the respondents constituted 29% Females
and 71% Males for Consultants; and 30% Female and 70% Male

Table 3. Tools and techniques during the planning stage of the projects.
Contractors
Planning tools and techniques N Mean
Expert judgement 37 1.51
Meetings 37 1.62
Net present value 37 3.38
Return on investment 37 3.43
Payback period 37 3.46
Internal rate of return 37 3.46
Discounted cash flow 37 3.54
Valid N (list-wise) 37
for contractors. Of these 27% of the consultants are from the
public sector while 73% are from the private sector. These results
still indicate that the construction industry is still male domi-
nated despite the rise in the female participation over the years.
Nature of work carried out
Slightly over half (51%) of the contracting firms only handled
building works, 32% handled building, civil and road works, 14%
handled building and civil works and only 3% handled building
and road works. On the other hand, 41% of the consultancy
firms’ respondents handled building projects only, 37% handled
building and civil works, 15% handled building, civil and road
works 4% handled building and road works while the remaining
3% handled building, civil, road and other works.
Source of cost management services
One area of interest was the source of the cost management services.
83.8% of the contractors use in house services for cost management
while 5.4% outsource and 10.8% use a mixture of in-house and out-
sourced services for their cost management. For Consultants 85.2%
use in house services and 14.8% use a mixture of in-house and out-
sources for areas where they do not have expertise within the firm.
Respondents’ average value of projects
The average value of projects handled by the quantity surveying
consultancy firms’ respondents were as follows with 1US$¼
K17.98. 37% handled projects of about 9 to 13 million Kwacha,
26% had projects of 13 to 25 million Kwacha in value, 15% of
handled valued from 25 to 55 million Kwacha and 4% of them
handled projects of about 55 million kwacha and above. 11% of
the respondents were not sure of the value of the projects they
handled while the remaining 7% stated that the projects’ value
was not applicable to them because they were non profitable
organizations. According to the data collected from the contract-
ing firms, 60% of the respondents were registered in grade 4
under the national council for construction (NCC) register, 13%
were in grade 3, 19% were in grade 2, and only 8% were in grade
1. These statistics indicate that lower grades such as four to six
have the largest population of contractors which is a true reflec-
tion of the NCC register.
Tools and techniques used to manage costs
The respondents were asked to state the tools and techniques
they use at various stages of the building projects to manage
costs. This was ranked using a six-point scale given in the
methodology.
INTERNATIONAL JOURNAL OF CONSTRUCTION MANAGEMENT 5
Consultants
Std. deviation Rank N Mean Std. deviation Rank
.731 1 27 1.81 .962 2
.721 2 27 1.67 1.109 1
1.401 3 27 3.56 1.553 4
1.463 4 27 3.67 1.617 5
1.464 5 27 3.33 1.593 3
1.483 6 27 3.70 1.589 6
1.406 7 27 3.74 1.509 7
27
Planning stage
The consultants’ respondents indicated (Table 3) that of all the tools
and techniques are used to some extent but priority is given to
meetings which they used to a great extent with expert judgement
being the most used among the consulting firms. Payback period,
net present value, return on investment, internal rate of return and
discounted cash flow were neglected tools. The reason given by con-
sultants was that the tools were investment appraisal tools hence
they were only useful to the clients. The contracting respondents
indicated that they prioritize expert judgement and meetings which
they used to a great extent. Qualitative measure is seen to be priori-
tized in the planning stage for quantitative issues.
Using a hypothesized median of 1, 2 and 3 in the Wilcoxon
one sample test, none of the tools and techniques were found to
be significantly applied in the planning phase with (Z ¼ 5.969 to
3.148, p < 0.005). This entailed that various methods were used
in the planning of various projects.
Both the contractors and the consultants prioritized meetings
as a common tool to use during the planning stage nonetheless
they still experienced causes of overruns like: poor project speci-
fications and unclear scope. Meetings as a cost management tool
are aimed at mitigating these factors. This shows that the tool is
not applied effectively. This was also confirmed by some of the
respondents who stated that meetings are not so effective
because in most cases the architect would only have the brief
with the client and prepare the full drawings without any consul-
tations from the quantity surveyors and the other parties
involved on the project. The only meetings that happen in most
cases was when the architect and the engineers were giving the
drawings to the quantity surveyor to prepare estimates and when
the quantity surveyor was making enquiries on the drawings as
opposed to all the parties meeting together to share ideas and
advise each other on how best the costs can be kept to a min-
imum and how they would be controlled when the project starts.
Estimating stage
The respondents were asked to state the tools and techniques
they applied at cost estimating stage of the projects. Table 4
shows the rank of the tools and techniques included when esti-
mating the project cost.
For the QS respondents, detailed estimating was applied to a
very great extent followed by expert judgement, reserve analysis,
comparison with other project and unit area which were applied
to a great extent by a good number of the respondents but not
as much as detailed estimating. Unlike the quantity surveying
consultancy respondents, the majority of contracting firms’
respondents applied expert judgement to a very great extent
when preparing cost estimates. Detailed estimating was also used
to a great extent. Comparisons with other projects, reserve ana-
lysis, cost of quality and group decision were also used to a great
6 C. K. TEMBO ET AL.

Table 4. Tools and techniques during the estimating stage of the projects.
Consultants Contractors
Estimating tools and techniques N Mean Std. deviation Rank N Mean Std. deviation Rank
Detailed estimating 27 1.44 0.892 1 37 1.57 .603 2
Expert judgement 27 2.00 1.271 2 37 1.43 .689 1
Reserve analysis 27 2.11 1.050 3 37 2.16 .866 4
Comparison with other projects 27 2.22 1.155 4 37 2.03 .645 3
Cost per unit area 27 2.37 1.043 5 37 2.24 .548 5
Vendor bid analysis 27 2.81 1.442 6 37 2.51 1.096 8
Cost of quality 27 2.85 1.292 7 37 2.27 .693 6
Group decision 27 2.96 1.192 8 37 2.38 .721 7
Three-point estimating 27 3.63 1.334 9 37 3.00 1.106 9
Valid N (list-wise) 27 37

Table 5. Tools and techniques during the determine budget stage of the projects.
Contractors Consultants
Determine budgeting tools and techniques N Mean Std. deviation Rank N Mean Std. deviation Rank
Expert judgement’s 37 1.62 .758 1 27 2.00 1.301 2
Cost aggregation’s 37 1.70 .878 2 27 1.59 .747 1
Reserve analysis 37 2.24 .760 3 27 2.26 .813 3
Funding limit reconciliation’s 37 2.30 .618 4 27 2.67 1.109 5
Historical relations/ comparisons with other projects 37 2.35 .753 5 27 2.44 1.050 4
Valid N (list-wise) 37 27

Table 6. Tools and techniques during the cost control stage of the projects.
Contractors Consultants
Cost controlling tools and techniques N Mean Std. deviation Rank N Mean Std. deviation Rank
Forecasting 37 1.76 .796 1 27 2.15 .989 1
Performance reviews 37 2.11 .843 2 27 2.33 1.209 2
Earned value management 37 2.19 .776 3 27 2.41 1.421 3
Reserve analysis 37 2.35 .919 4 27 2.44 1.188 4
S-curve’s 37 2.38 1.010 5 27 3.11 1.155 7
Variances 37 2.43 .987 6 27 2.44 1.013 5
Complete performance index 37 2.68 .884 7 27 3.04 .980 6
Valid N (list-wise) 37

extent but raked according the number of firms who used them,
meaning that comparison with other projects was used more to
a great extent than reserve analysis but not as much as detailed
estimating. Both the contractors and the consultants prioritized
detailed estimating, expert judgement, and reserve analysis to a
great extent. These tools are aimed at mitigating factors like
inaccurate estimates, material cost due to inflation and poor
specifications during the estimating stage of the project.
However, the contractors experience, inaccurate estimates and
poor project specifications which shows that consultants do not
apply the tools effectively. The one sample Wilcoxon test
revealed that only comparisons with other projects and reserve
analysis techniques were greatly applied at a hypothesized mean
of 2 as the hypothesis was retained.
Budgeting stage
Table 5 shows the ranking of the tools and techniques used when
determining the budget of the projects. The consultants use cost
aggregation to a great extent. Expert judgement, reserve analysis and
historical relations were also prioritized in order of their ranking, as
shown in Table 5. Funding limit reconciliation was the least utilized.
Just as in the estimating stage, many of the respondents from
contracting firms’ ranked expert judgement as the most applied
tool during the budget stage. Cost aggregation was equally
applied to a great extent as it was ranked second. Reserve ana-
lysis, funding limit reconciliation and historical relations were
also applied to a great extent and ranked in that order respect-
ively as shown in the table above. The one sample Wilcoxon test
revealed that comparisons with other projects and reserve ana-
lysis are the most significantly applied to tools to a large extent
as the hypothesized median of two was retained.
Controlling stage
Consultants apply forecasting to a great extent during the cost
control stage. The same results were obtained in a study by
Memon et al. (2011) in Malaysia. Second in ranking was per-
formance review, then earned value management and reserve
analysis as shown in Table 6. These tools were applied to a great
extent on building projects by both groups of respondents.
The contractors however, ranked s-curves as being applied to
a great extent after reserve analysis. Complete performance index
was ranked as the least applied during this stage by the contract-
ing firm respondents. The one sample Wilcoxon test revealed
that earned value management, performance reviews and fore-
casting are the most significantly applied to tools to a large
extent as the hypothesized median of two was retained.
Discussion
The subject of poor cost performance is of concern on any pro-
ject as it is an indicator of project failure. Poor cost performance

indicates the inability to meet the objective of keeping a project
to cost and within budget. The study identified the techniques
that are used for managing costs on projects from planning to
control stage on a project in the Zambian building sector. These
will now be discussed in view of the findings and reviewed litera-
ture. The common applications used in the ZCI are Microsoft
Excel and Microsoft Project for cost management used by over
half of the respondents.
It was found that during the planning stage of the projects,
meetings, and expert judgement were the popularly applied tools
implying the accuracy expected ranges from þ/- 20% to þ/- 40%
(Kerzner 2018) and payback period with the least applied being
internal rate of return and discounted cash flow. The methods
relied upon for planning are qualitative in nature except for pay-
back period which has demerits of not focussing on the value of
investments, is short term and unrealistic (Colin 2014). Of the
methods used for planning no single method was found to be
significantly applied. This is an indication that the methods used
vary from project to project and it was indicated that the QS is
not brought in early to give cost advice. There is a need to make
use of quantitative methods as the planning is based on qualita-
tive methods which are subjective in nature. This is congruent
with the findings of (Obi et al. 2021). Additionally, inclusion of
team members such as the QS early could help in offering cost
information at the initial stages of design. Projects have become
more complex and qualitative methods of planning which are
not very accurate may be contributing to inaccurate cost plan-
ning which normally rely on cost based predictions for accuracy.
The construction industry has become more sophisticated by
using methods such as fuzzy sets techniques and other analytical
techniques (Lam et al. 2001) yet the ZCI lags behind therefore,
techniques and methods that can address current poor cost per-
formance should be considered.
During the estimating stage of the projects, the most applied
tools and techniques were detailed estimating, expert judgement
and comparisons with other projects. The least applied techni-
ques were: group decision and three-point estimating. In a simi-
lar study, Wysocki and Mcgary (2003) concluded that expert
judgement was the most applied tool by contractors in most
developing countries as is the case in Zambia. Many of the con-
tractors indicated applying expert judgement to a great extent
from the initial stages of the project. Comparisons with other
projects and reserve analysis were found to be significantly
applied so the expected accuracy for this method is þ/- 10%
(Kerzner 2018). This would infer that there are parameters of
comparison from project to project based on cost data and that
reserves are normally needed to complete the project. The need
for a reserve implies that there is always some level of uncertain-
ties associated with building project in Zambia like any other
construction project. This is compounded by poor sources of
information at times. Ling et al. (2021) argues that the quality of
the estimates is influenced by availability of cost information
which may also negatively affect the estimate. Estimates are then
used to create budgets.
During the budgeting stage, cost aggregation and expert
judgement were found to be the most applied tools with the least
being, historical relations and funding limit reconciliation though
historical comparisons were significantly used. The budgeting
methods have not yielded results as the industry continues to
experience poor cost management. It may be prudent to adopt
methods such as Zero based budgeting as advocated for by
Kazar et al. (2022) especially on large projects due its accuracy.
INTERNATIONAL JOURNAL OF CONSTRUCTION MANAGEMENT 7
Performance reviews and forecasting were found to be the
most applied tools during the cost controlling stage of the build-
ing projects with the least applied tools found to be variances,
complete performance index and s-curve. Cash flow forecasting
was also found to be the most applied tool during cost control-
ling stage of the project in Malaysia (Memon et al. 2011). Poorly
performing projects clearly show that the tools are not efficiently
applied. In their study, Malkanthi et al. (2017) concluded that
Value management was the most effective cost management tool
which was used in Sri Lanka to reduce cost overruns on building
construction projects. This could be considered for use in the
ZCI to improve the cost control.
The hypothesis of methods having a mean of two (applied to
a great extent) were achieved for estimating and budgeting using
comparisons with other projects and reserve analysis as techni-
ques. For cost control methods utility of earned value manage-
ment, performance review and forecasting were significantly
used. Generally, methods used for cost management in the
Zambian building sector do not demonstrate that they are effect-
ively applied as the industry continues to face poor cost manage-
ment evidenced by cost overruns (NCC 2019; Auditor General
Office 2020; Muya et al. 2013). This study provides evidence that
there is need to consider migrating to more accurate cost man-
agement tools such as digital and software based intelligent sys-
tems. Specifically, more accurate methods should be used at the
planning and estimating stages as methods relied upon are
mainly subjective in nature. Additionally, the methods used do
not specifically control for uncertainty and interrelations which
are common in the construction industry (Jarosław and Sz ostak
2020). What is generally needed is to use a combination of quali-
tative and quantitative tools and techniques that are more accur-
ate and more sophisticated. This however implies that cost data
bases and platforms must be well developed and managed by
reliable and well established regulation organizations such as the
Zambian Public Procurement Agency.
While the cost management practices are underpinned by
theory such as the theory of constraints (Kadhim et al. 2020)
and resource based theory (Barney 1991) the implications are
that cost management methods like any other methods in
other sectors like accounting and finance keep evolving from
time to time resulting in changing tools, systems and practices
that promote accuracy and efficiency of cost management on
construction projects. Policy makers and decision makers must
accept the reality that more effective and accurate cost man-
agement systems such net present value, computer system
based cost management such as big data and smart cost data
bases interfaces will need to be part of the revised policies and
guidelines for the construction industry in Zambia. This means
the relevant constraints need to be identified and the necessary
resources need to be provided. This is in light of the evidence
of cost overruns that have not spared public projects where
cost management of public funds should be subjected to the
best tools and systems possible.
This research is important because it has provided justifica-
tion for not using the ineffective methods of cost management
which are slowly fading away at a global level creating room to
embrace internet of things based technology on cost manage-
ment as a way of improving efficiency and reliability. The results
from the study indicate that current cost management tools and
techniques used in Zambia are ineffective and less accurate.
Literature on the other hand presents modern and smart meth-
ods and techniques which include smart systems, smart data
bases, big data, block chains, BIM and cost estimating software.
8 C. K. TEMBO ET AL.
With varying development capacities from country to country,
the study proposes future research around these areas but moti-
vated by locally driven concepts and solutions. This implies that
the internet infrastructure must be upgraded to accommodate
such changes in cost management. Lastly, the findings suggest
that training is required for modern methods of cost manage-
ment to be embraced. This also implies that curriculum in higher
institutions of learning must respond to the new and advanced
methods of cost management. This further suggest that training
institutions in Zambia must be improved in order to fully
embrace and appreciate Internet of things (IoT) and intelligent
cost management systems.
Conclusion
Cost is one of the most important parameters in deciding the
success of a project through cost management. Cost manage-
ment has various stages which need cost, design, time and
information related parameters to be utilized by skilled and
experienced professionals. Planning in the building sector is
done using meetings and expert judgement both viewed as
ineffective due to the subjective and imprecise nature of the
approaches. Estimating and budgeting significantly uses com-
parisons with other projects and reserve analysis usually based
on poor cost data at best hence not so reliable. The controlling
stage significantly uses earned value management, performance
reviews and forecasting. Generally more precise and methods
of cost management need to be used in the ZCI specifically for
planning and estimating. The implication of this study is that
the construction industry in Zambia and other developing
countries with similar footing to Zambia need to migrate from
subjective, analogous and manual methods of cost management
to modern methods that are more accurate in order to improve
cost management. This requires investment and decision mak-
ing at managerial levels. The study was limited to construction
firms in grades 1 to 4 of the National Council for Construction
(NCC) register because this is the grade spectrum that is likely
to invest and utilize cost management techniques. The study
left out grades 5 to 6 which constitute part of the larger popu-
lation of contractors. Future research could focus on this
bracket of contractors. Further, the study did not establish the
inertia to migrate to digital and intelligent methods of cost
management. This would have expanded the scope of the study
way beyond the current study boundary. Additionally, future
studies can take a multiple case study approach which would
incorporate qualitative methods to understand the reasons
behind selection of the methods used.
Disclosure statement
No potential competing interest.
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