AKLILU and Tolera Proposal

Assessment Of Challenges Of Cost Planning And It Impact Of Building Project In Mattu Town
MATTU UNIVERSITY
COLLAGE OF ENGINEERING
DEPARTEMENT OF CONSTRUCTION TECHNOLOGY
AND MANAGEMENT
The Title: Assessment on challenges of cost planning and it impact 0f
Building project in Mattu town
PRPARED BY:-
1. Aklilu mulatu …………………………………….. Ru 4699/12

2. Tolera bekele …………………………………….. Rt 10017/11
A RESEARCH SUBMITTED TO DEPARTMENT OF CONSTRUCTION TECHNOLOGY

AND MANAGEMENT FOR THE PARTIAL FULFILLMENT OF BSC DEGREE IN
CONSTRUCTION TECHNOLOGY AND MANAGEMENT.
Feburary, 2024
Mattu, Ethiopia
MATTU UNIVERSITY
COLLAGE OF ENGINEERING
DEPARTEMENT OF CONSTRUCTION TECHNOLOGY
AND MANAGEMENT
TITLE- The challenges of cost planning and its impact on
Scope of building project in Mattu town
PRPARED BY:-
3. Aklilu mulatu
4. Tolera bekele
A RESEARCH SUBMITTED TO DEPARTMENT OF CONSTRUCTION TECHNOLOGY

AND MANAGEMENT FOR THE PARTIAL FULFILLMENT OF BSC DEGREE IN
CONSTRUCTION TECHNOLOGY AND MANAGEMENT.
Feburary, 2024
Mattu, Ethiopia
DECLARATION
We hereby declare that work which is being presented in the proposal entitled Assessment of
challenges of cost planning and its impact on scope of building project in Mattu town is an
authentic record of our own work in partial fulfilment for the requirement of the award of
bachelor degree of science in construction technology and management under advising of .
Mattu University.
Prepared by Signature Date
1. Aklilu mulatu ………….. ………..

2. Tolera bekele …………. ……….
Name of advisor signature Date
1. Kebede chaka ……………….... ……………
2. Firaol Bekuma ……………………. ……………….
3. Geremu Assefa …………………… ………………..
4. Dechasa Dasalo ……………………. …………………..
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ACKNOWLEDGEMENT
Above all, we want to express our deepest and endless thank to almighty Jesus who protect
and gave us a life worth living and strength to accomplish and take part in this proposal
preparation without any problem. Our deepest gratitude goes to advisors Msc. Fuad Jemal,
Msc. Fadilu Shafi, Msc. Temesgen Daba and Head of the Department Msc. Geremu Assefa
for all their help and support.
Secondly, our deepest appreciation goes to those friends who help us by giving proposal
that’s done previously by them and those who support us in ideas. Finally, we have great
thanks to our family for their endless support.
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Executive summary
The construction industry plays a significant role in nation’s social, economic and political
development. Particularly in developing countries where there is lack of infrastructure and
other basic facilities. The demand of Building construction project has become one of the
major issues in Ethiopian construction because it is one of the means through which
development strategies achieved. Therefore, a key concern for project teams should be
completing the project within the given time, standard quality and with the specified
budget.Having a realistic planning is one of the means to achieve these objectives. From that
identifying the practice and challenges of cost planning in the industry helps to find out
where the impact on the scope of building project. This proposal tries to identify the practice
and challenges of cost planning and its impact on scope of building project in Mattu town.
This research work is aim at assessing the challenges of cost planning and its impact on scope
of building projects in Mattu Town with a view to establishing in debt measures to improve
the situation.The general objective of the study is to assess the challenges of cost planning
and its impact on building construction project. The specific objectives to achieve this aim is
assessing the challenges of cost planning , finding the impact of those challenges on project
scope and finally explore the best method and techniques of cost planning.The study begins
with review of the important aspect of cost planning and define scope of building project. It
then takes a survey study analysis to identify the practice and challenges of cost planning and
its impact on scope of building project. It further tries to address what has to be done to
improve this cost planning challenges and how to minimize their impacts on scope of
building project. By showing results of the study and concludes by suggesting the needs of
significant improvement on the challenges of cost planning practice in building project to
improve the awareness of stockholders. Our Findings show challenges of cost planning,
impact on scope of building project and its improvement.
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Table of Contents
ACKNOWLEDGEMENT.........................................................................................................4
Table of Contents.......................................................................................................................6
CHAPTER ONE........................................................................................................................8
1. INTRODUCTION..................................................................................................................8
1.1 Background of the study..................................................................................................8
1.2 Statement of the problem.................................................................................................9
1.3 Research question...........................................................................................................10
1.4 Objective the study.........................................................................................................10
1.4.1 General objective....................................................................................................10
1.4.2 SPECIFIC OBJECTIVES.......................................................................................11
1.5 Significance of the study................................................................................................11
1.6 Scope of the study..........................................................................................................11
CHAPTER TWO.....................................................................................................................12
2. LITRATURE REVIEW.......................................................................................................12
2.1 General...........................................................................................................................12
2.1.1 What is project?.......................................................................................................12
2.1.2 Construction project................................................................................................13
2.1.3 Stakeholders in construction project.......................................................................13
2.2 Project planning.............................................................................................................13
2.2.1 Types of construction project plan..........................................................................13
2.3 Project Cost and Cost Estimation...................................................................................14
2.4 Tools and Techniques used in project cost estimation:..................................................15
2.5 Factors affecting accuracy of cost estimate...................................................................18
2.6 Project scope..................................................................................................................20
2.6.1 Causes for Scope Change........................................................................................20
CHAPTER THREE..................................................................................................................25
3. RESEARCH METHODOLOGY.........................................................................................25
3.1 Introduction....................................................................................................................25
3.2. Study Area / setting.......................................................................................................25
3.3. Study Period..................................................................................................................26
3.4. Research Design / study design.....................................................................................26
3.5 Research Approach........................................................................................................26

3.6. Population.....................................................................................................................27
3.7. Sampling Techniques....................................................................................................27
3.8. Study Variables.............................................................................................................27
3.8.1. Dependent Variables..............................................................................................27
3.8.2. Independent Variable.............................................................................................27
3.9. Sources of Data.............................................................................................................27
3.10 Instruments of Data Collection....................................................................................28
3.11 Data Analysis and Presentation....................................................................................28
3.11.1 Qualitative data analysis.......................................................................................28
3.11.2 Quantitative Data Analysis...................................................................................28
3.12. Ethical Considerations................................................................................................28
CHAPTER FOUR....................................................................................................................28
4. RESULT AND DISCUSSION............................................................................................28
4.1. Work Plan......................................................................................................................29
CHAPTER FIVE......................................................................................................................30
CONCLUSION AND RECOMMENDATION.......................................................................30
5.1 Conclusion......................................................................................................................31
5.2 Recommendation..........................................................................................................31
References................................................................................................................................31
CHAPTER ONE
1. INTRODUCTION
1.1 Background of the study
The construction industry is complex in its nature because it comprises large numbers of
parties as owners (clients), contractors, consultants, stakeholders’, shareholders and
regulators. The performance of the construction industry is affect by national economies.
Construction industry plays a great role on the national scene. Not only does it touch the lives
of everyone on a daily basis, it also occupies a fundamental position in the national economy.
One cannot think of widespread investments in manufacturing, agriculture or service sectors
unless the construction results of infrastructure are in place. This shows that it is one of the
sectors that provide important ingredients for the development of an economy and it
accelerates economic growth of nations.
Construction projects in Ethiopia suffer from many problems and complex issues in
performance because of many reasons and factors. This thesis is very important to identify
and to evaluate the critical factors affecting the performance of construction projects and
performance problems and then to formulate recommendations to improve performance of
construction projects.
The cost of constructing a building project is a primary concern for the vast majority of
construction clients. Indeed one of the most common initial questions a client has is „what is
it going to cost me? ‟ often followed closely by „can we do it any cheaper?‟ Providing
answers to such questions is a key objective of quantity surveyors, whose task it is to predict
the likely cost of building work and to manage the evolving project design to ensure that the
client’s approve budget is not exceed.
Project scope is the part of project planning that involves determining and documenting a list
of specific project goals, deliverables, features, functions, tasks, deadlines, and ultimately
costs.
In other words, it is what needs to be achieve and the work that must be done to deliver a
project.
Thus Scope of work is the core of construction projects, fulfilling the scope of work is the
most important factor that Contributes to the effective performance in project management
and the project’s Success.
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 Matching between real project cost and available budget may become unbalance for the
several reasons and this will effect on the scope of work as explain below:
 Changing in budget availability for the project:
Budget availability for the project may change due to the political and economic instability
of country and this will affect directly to the scope of work because the client has to reduce
the work according to the new available Budget.
 Increasing the real cost of project:
Cost of project may increase due to the economic instability of country, improper cost
estimation (plan) and inflation and this also will lead to reduce the scope of work if the
budget is constant.
1.2 Statement of the problem

Iyer and Jha (2019) remarked that the factors affecting cost performance are: project
manager's competence; top management support; project manager's coordinating and
leadership skill; monitoring and feedback by the participants; decision making; coordination
among project participants; owners' competence; social condition, economical condition and
climatic condition.
Cost overruns in construction projects in Ethiopia is one of the most significant problems in
the field construction management.
Fetene (2019), examines factors that cause cost overrun during construction and their effects
on public building construction projects in Ethiopia. Utilizing questionnaire survey of 70
complete public building construction projects in Ethiopia. The authors identifies, and assess
the impact of cost overrun on the delivery of construction projects. From the results it will
find that 67 out of 70 public building construction projects suffers cost overrun.
The rate of cost overrun ranges from a minimum of 0% to the maximum of 126% of the
contract amount for individual projects. The most important causes of cost overrun were
found to be inflation or increase in the cost of construction materials, poor planning and
coordination, change orders due to enhancement required by clients, excess quantity during
construction.
The construction industry is the largest industry in developing countries like Ethiopia (next to
agriculture) and requires tremendous capital outlays. The building construction involves high
level of technology and employ huge resources of men, materials and machineries however,
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the industry has been experiencing such problems as cost overruns due to lack of effective
cost planning and challenges of those cost planning they affect the scope of building project.
Therefore, assessing the challenges of cost planning are identifies as the potential areas that
improve the scope of building project in Mattu town.
1.3 Research question

1. What are the challenges of cost planning of building project in Mattu town?
2. How much the contribution of those challenges on scope of building project in Mattu town?
3. What are the method of improving challenges of cost planning to minimize the effects on
scope of building project in Mattu town?
1.4 Objectives
1.4.1 General objective
 To assess the challenges of cost planning and its impact on scope of building project in Mattu
town.
1.4.2 SPECIFIC OBJECTIVES

 To assess the challenges of cost planning on building project in mattu town.
 To identify the problems associated with the cost planning on building project in
construction work in Mattu, specifically in public owned projects.
 To explore the best method of cost planning to minimize the impacts on scope of
building project in Mattu town.
1.5 Significance of the study
The result of this study expected to provide data and information that helps public sector,
Mattu town construction assessment challenges of cost planning and it impact of building
anyone wants to know about impact of planning in construction industry specifically in
Mattu town. Additionally, to assess challenges of cost planning and it impact of building
project in mattu town.
1.6 Scope of the study

The scope of this research project is limited on building construction projects in Mattu town.
Cost planning and its impact on scope aspects of planning are only interest and no effort are
made to correlate it with resource planning though it has significant contribution for a
complete work in this area. The data for this study has been gathered through questionnaire
survey.
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CHAPTER TWO
LITRATURE REVIEW
2.1 General
2.1.1 What is project?
Projects typically have identifiable phases and each phase has a unique set of challenges for
the project manager. If we view the project from the highest level, these basic project phases
can be also identified as major factors influencing the project success. If one of these phases
is planned or executed wrongly, the project will have a high probability of failure. According
to PMBOK PMI (2004) a project generally consists of four chronological phases:
1. Initiation – The conditions are analyzed and the project‘s objective is specified.
2. Planning – Plans and methods for the execution are developed.
3. Execution – The main work towards completion are done.
4. Closing – The project is evaluated and closed down.
2.1.2 Construction project

Projects, in general, and construction projects in particular are time bound and employ huge
resources of money, manpower, materials and machines. They involve heavy investments in
million to billions. They require an effective management of resources, which is addressed
through planning, organizing, staffing, directing and controlling; (K.KChitkara, 2004).
In construction all projects are constraint bound: a project needs to be finished within a given
time period, below a specific budget, to a given quality and standard. Thus, for the project to
be successful, it has to manage the constraints. The best way for construction managers to
handle these constraints is to prepare a thorough plan for the execution of the project.
(K.KChitkara, 2004)
2.1.3 Stakeholders in construction project

Client: - is the party (public or private) under whose tutelage the project is executed.
Consultant: - are professional bodies who design the project.
- Change the client project ide into economic and constructible artifacts.
- Make sure that design satisfies requirements
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- If assigned to supervise:
- Look after proper execution of project
- Certify payment certificates
- Issues provisional and final acceptance certificate
Contractors: - is the party that changes the drawing and specification made by the
architectural engineer in to a physical structure.
Statutory bodies: - are governmental bodies that looks after the project’s compliance with
the general public’s interest.
2.2 Project planning

Planning, in its broader perspective, involve advance thinking as to what is to be done, what
are the activities, how it is to be done, when it is to be done, where it is to be done, what is
needed to do it, who is to do it and how to ensure that it is done; all of this is channeled to
generate and evaluate options for evolving an action plan aimed at achieving the specified
goals (K.KChitkara, 2004).
2.2.1 Types of construction project plan

Construction project plan broadly classified in to two categories.
Those are:-
1. Time plan
2. Resources plan
2.2.1.1 Time plan

Time is the essence of all construction projects, and contractors often have
clauses outlining awards (bonus payments) or penalties (as liquidated damages)
for completing a work a head or later than a schedule date.
2.2.1.2 Resource plan

A resource plan combines manpower, material, equipment, budget or cash flow, is also
drown up for a project to show the overall requirement of the different resources in the
project.
Such a plan can be prepared only on the basis of the schedule of a project.
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2.2.1.2.1. Cost plan

Large construction projects require huge investments, and a long time complete.
It is obvious that all the money is not required at any one point in time.
The cost of constructing a building project is a primary concern for the vast majority of
construction clients. Indeed one of the most common initial questions a client has is „what is
it going to cost me? ‟ sssOften followed closely by „can we do it any cheaper? ‟
2.3 Project Cost and Cost Estimation

can be defined as the total economic cost of production and is made up of variable costs,
which vary according to the quantity of a good produced and includes inputs such as labor,
equipment and raw materials, plus fixed costs according to Wikipedia, the free encyclopedia
definition.
In general, the reliability of project cost estimates at every stage in the development process
of a country is necessary for responsible Project management. Unreliable project cost
estimate results in severe problems of programming, budgeting and planning process that
results in an ultimate budgetary decisions which impairs an effective allocation of budgets.
As defined by Project Management Body of Knowledge (PMBOK), Cost estimation is the
interactive process of developing an approximation of the monetary resources needed to
complete project activities.
According to Brook (2004), the role of the contractor’s estimator is vital to the success of an
organization. The estimator is responsible for predicting the most economic costs for
construction in a way that is both clear and consistent.
There is a distinct difference between cost estimating and pricing. A cost estimate is the cost
of the resources required to complete the project work. Pricing, however, includes a profit
margin. In other words, a contracting company performing projects for his client may do a
cost estimate to see how much the project is going to cost to complete the project. Then, with
this cost information, a profit will be added into the project work ((Africon, 2008).
A successful project manager must be able to plan, predict, budget, and control the costs of a
project. Costs associated with projects are not just the costs of goods procured to complete
the project. The cost of the labor may be one of the biggest expenses of a project. The project
manager must rely on time estimates to predict the cost of the labor to complete the project
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work. In addition, the cost of the equipment and materials needed to complete the project
work must be factored into the project expenses.
Besides to the most economic direct activity cost estimation, similarly the additional cost to
be incurred by contractors could also include additional overhead costs, costs of extension of
various bonds such as performance bond and bank guarantee, operational and maintenance
cost of facilities.
2.4 Tools and Techniques used in project cost estimation:

According to PMBOK, fourth edition section 7.1, the followings are common tools and
techniques to be adopted in project cost estimation.
Expert Judgment: use of knowledge gained from past project management experience.
Expert judgment, in conjunction with objective estimation techniques, provides valuable
information about the organizational environment and information from prior comparable
projects.
Analogous Estimating: use of the metrics from a previous, similar project as the basis of
estimation for the current project. Analogous estimating takes the actual cost of previous,
similar projects as a baseline and then adjusts for known differences (such as size,
complexity, scope, duration, etc.).
Parametric Estimating: use of a statistical relationship between historical data and other
variables to calculate an estimate for activity parameters, such as scope, cost, budget, and
duration. Used correctly, this technique can produce high levels of accuracy.
Bottom-Up Estimating: estimating all individual work packages/activities with the greatest
level of detail, summarizing higher-level estimates with the combination of the individual
estimates. The accuracy of bottom-up estimating is optimized when individual work
packages/activities are defined in detail.
Three-Point Estimates: use of three estimates to determine a range for an activity’s cost: the
best-case estimate, the most likely estimate, and the worst-case estimate.
Reserve Analysis: determination of contingency reserves to account for cost uncertainty.

Project Management Estimating Software use of project management cost estimating
software applications, computerized spreadsheets, simulation, and statistical tools. Such tools
can allow for rapid consideration of multiple cost estimate alternatives.
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Vendor Bid Analysis: determination of what the project should cost based on a review of
vendor bids/proposals. This technique may be used in conjunction with other cost estimation
techniques to ensure that cost estimates are comprehensive. Whereas the execution of
appropriate cost estimation techniques certainly contributes to the accuracy of cost estimates,
other project management knowledge areas also play an important role in cost estimation
accuracy. For example: Quality Management, Communications Management, Scope
Management, Human Resource Management, Risk Management, Procurements management
and time management.
There are five types cost estimating of civil engineering projects methods, (Keith Potts,
2008).
1. Single rate approximate method

2. Multiple rate approximate method
3. Approximate
4. Analytical
5. Operational
Single rate-Approximate Estimating
A) Unit of Accommodation Method
This method is commonly used by national bodies such as the education and health services
at the inception stage of construction. If a client has an amount of money to spend (a budget)
then it would be possible to consider the likely number of functional units which can be
provided (Brook, 2004).
B) Floor area method
The main reason for the popularity of the floor area method is its simplicity. A proposed
building is measured at each floor level (between inside faces of external walls); no
deductions are made for internal walls, stairs or lift zones. Previous similar building costs are
used by dividing the construction cost by the internal floor area. Adjustments can be made for
location and inflation; but specification adjustments are much more difficult to estimate.
Subjective judgments are made for size, shape, number of stores, services, ground conditions
and standard of finishes. A separate assessment should be made for external works,
demolitions, incoming services and drainage which can be significantly different for similar
buildings.
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C) Building volume method
There are several methods, which use the volume of a building as costing purpose, but they
are not widely used today. In some European countries, architects and engineers are familiar
with building costs expressed as cubic meter prices.
Multiple-rate approximate estimating
Elemental cost plans
A cost plan is prepared from the designer’s preliminary drawings. It is a list of the elements
of a construction such as substructure, superstructure, major item works and ancillary works
floors, each with its share of the total budget cost.
Approximate quantities
There are many ways in which approximate quantities are used depending on who uses them
and for what purpose. Measurements will be concentrated into as few items as possible for
grouped work components. A simple example is a hollow block wall measured and priced.
The rate will include forming, mortar used, beams and columns, plastering and pointing. A
contractor needs to produce bills of approximate quantities when tendering for work based on
drawings and specifications.
Analytical estimating
Analytical estimating is a method for determining unit rates by examining individual

resources and the amounts needed for each unit of work (Brook, 2004).
This method for pricing bills of quantities is described in the Code of Estimating Practice, in
four stages:
1. Establish all-in rates for the individual resources in terms of a rate per hour for labor, a
rate per hour for items of plant and the cost per unit of material delivered and unloaded at the
site.
2. Select methods and outputs to calculate net unit rates to set against items in the bill of
quantities.
3. Add to the net cost project overheads, contingencies, inflation and risk.
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4. Summarize resources and prepare reports for management.
Operational estimating
Operational estimating is a form of analytical estimating where all the resources needed for
part of the construction are considered together.
Operational estimating, which is the recommended method for estimating civil engineering
works, requires the estimator to build up the cost of the operation based on first principles,
that is, the total cost of the construction equipment, labor and permanent/temporary materials.
This method of estimating links well with the planning process as it embraces the total
anticipated time that the construction equipment and labor gang are involved in the operation
including all idle time (Potts, 2008).
2.5 Factors affecting accuracy of cost estimate

According to Journal of Construction in Developing Countries, Mohammed and Abdel Hadi,
(2013), an exploratory study of factors affecting the accuracy of pre-tender cost estimates was
conducted to determine the relative level of influence of each factor. The ranking of 64
factors revealed that the ten most influential factors affecting cost estimate accuracy are as
follows:
a) Material (prices/availability/supply/quality/imports)
Material prices obviously differ on the basis of time as well as from market to market. Some
of the availability of specific materials for project use might be insufficient or even out of
stock. In this case one will be forced to utilize imported items for tender preparation which
might inflate the overall cost of the project. In other words, if we have scarce specialized
suppliers of a given material, the risk of getting high tender cost as a result is also apparent.
b) Borders closure and blockade
Cost of materials to be used for tendering purpose is dependent upon the access to the type of
supply. A contractor can get delivered different construction items through road, air or sea
transport available. Sometimes even at the time of bidding an item that was used to get
delivered through air could be accessed only through sea transport as a result of blockade due
to certain circumstances. This kind of situations can end up with high and unexpected
material cost.
c) Project team's experience in the type of construction
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The estimator must have prior knowledge of site conditions to produce an accurate estimate.
Contractors are selected on the basis of price, experience in undertaking particular types of
construction project and their reputation or track record in producing high quality work
within budget and on time.
d) Experience and skill level of the consultant
This result indicates that to produce an accurate estimate, those involves in the estimating
process must have the relevant professional knowledge and skills. The accuracy of a cost
estimate is highly dependent on the level of estimator experience. Having an experienced
estimator is critical for producing high-quality and reliable cost estimates. Dysert (2003)
emphasized that if an estimator were more professional, budget and other related problems
could be greatly reduced.
e) Having clear and detailed drawings and specifications
To have a good estimate of a project, the estimator will be well conversant of the detailed
drawing and specifications and adhere to specifications. If the drawings lack detail and the
specification is not clear, the ultimate result of the tender estimate would be incorrect.
f) Quality of information flow
Cost estimates for construction work are produces at a specific point in time and the prices
used therein are relevant only for that time and for short near future. This is because prices
for items supplied and work undertaken are continually subject to market forces.
g) Completeness of cost information
The cost information to be uses for pricing will be complete. To estimate the price of
concrete, the estimator should gather all information related to labor, material and equipment
to be incorporated in the making of the concrete to price the concrete.
2.6 Project scope

Project scope is the part of project planning that involves determining and documenting a list
of specific project goals, deliverables, features, functions, tasks, deadlines, and ultimately
costs.
In other words, it is what needs to be achieved and the work that must be done to deliver a
project.
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Project management institution (PMBOK Guide Fifth Ed) mentioned that the project scope
management includes the processes required to ensure that the project includes all the work
required, and only the work required, to complete the project successfully.
2.6.1 Causes for Scope Change

Changes in construction projects are very common and likely to occur from different sources,
by various causes, at any stage of a project, unfortunately in Sudan Decisions are made every
day in construction processes based on incomplete information, assumptions and the personal
experience of the construction professionals. For that reasons Project changes and/or
adjustments are inevitable as they are a fact-of-life at all stages of a project’s life cycle.
Managing changes effectively is crucial to the success of a construction project.
Causes of scope change in Construction projects included but not limited to the following:
Those are:-
 Poorly Defined Scope of work (Requirements)

 Change in stakeholder requirements
 Regulatory Change
 Change in project Sponsor
 Business Strategy Change (Business needs changed)
 Updated Technology
 Unbalance between budget availability and real cost for the project
 Lack of knowledge about construction industry
 Change of design
 Errors and omissions in design
A. Poorly Defined Scope of work (Requirements):
A well-defined project scope enables successful completion of a project within the planned
time, budget, and quality parameters. In the field of project management, scope definition is
carried out during the pre-planning phase, which is a period that requires investing a
substantial amount of time and resources in activities leading to the final investment decision.
This effort is 18 proven to be an effective way of increasing the chances of project success
while significantly decreasing the risks that could arise during project implementation. It is
also prudent, especially in public infrastructure projects, to include the time for this pre-
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planning in the overall duration of a project. This can also assist in managing public delivery
time expectations and thus, in some sense, even positively influence project success.
A. Change in stakeholder requirements:

Construction projects attract interest from various stakeholders who express needs and
expectations about the project. These are often in conflict with each other and it is unlikely
that all of them can be fulfilled. The stakeholder management process involves evaluating the
needs and expectations of stakeholders in relation to the main objectives of the project. An
important basis for this evaluation is stakeholder analysis.
The approach is based upon established theory, knowledge of stakeholder management and
empirical data. The analysis consists of a stakeholder impact index to determine the nature
and impact of stakeholder influence, the probability of stakeholders exercising their influence
and each stakeholder's position in relation to the 19 project—are they proponents or
opponents? The analysis of the stakeholder impact index can help project managers to
formalize a stakeholder management process.
C. Regulatory Change:
When new regulations or legislation is introduced this can result in a change to project scope
or requirements, to make sure that the project scope remains compliant with the new
regulations or legislation requirements.
Changing in regulations or legislation can happen at any point in the project life cycle so the
earlier forecasting and getting aware about them will decreasing their negative impact on the
project ,Unfortunately sometime A legislative or regulatory change might lead to the close
the entire project.
D. Change in project Sponsor:
The project sponsor is an individual (often a manager or executive) with overall
accountability for the project. He or she is primarily concerned with ensuring that the project
delivers the agreed upon business benefits and acts as the representative of the organization,
playing a vital leadership role through a series of areas on the project.
A project sponsor is typically responsible for initiating, ensuring, approving, and establishing
a series of key aspects in relation to the project, which can be summed up under categories of
E. Business Strategy Change (Business needs changed)
A change in direction of business strategies could result changes to the scope or requirements
on project. This could happen at any point in the project life cycle, business strategies are
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often under constant review for competitive threats, even if the organization has published a
three- or five-year strategic plan. Ultimately, a change to the strategy could result in a major
change on project scope to be compliant with the new business strategies.
F. Updated Technology:
Refer to the rapid globalization especially on the construction industry ,new building
technology may existing after the planning process or during the execution of project and this
new technology of course will affect on scope of work for project in the positive way.
G. Unbalance between budget availability and real cost for the project:
Matching between real project cost and available budget may become unbalance for the
several reasons and this effect on the scope of work as explain below:
1. Changing in budget availability for the project:
Budget availability for the project may change due to the political and economic instability of
country and this will affect directly to the scope of work because the client has to reduce the
work according to the new available Budget.
2. Increasing the real cost of project:
Cost of project may increase due to the economic instability of country, improper cost
estimation (plan) and inflation and this also will lead to reduce the scope of work if the
budget is constant.
H. Lack of knowledge about construction industry:
In Sudan some owner who has no a well knowledge about construction industry he will not
have ability to reading out drawings and imagine the final picture of his house ,so during the
implementation of project he will arise new requirements according to his imagination which
he fail to reflect it during the design phase .
I. Change of design:
The construction industry involves different stages that are followed for the projects to be
executed. Designing is one among the stages involved. What is expected to be executed is
what had been designed but things may be different from this expectation.
The construction industry in general is accompanied by the changes of different aspects in it
in such a way some are inevitable. There are different factors that lead to change of design
during construction stage some of which lead to cause problems to the overall performance of
construction project. Changes in design are frequent in many projects in which construction
starts before the design is finalized. Such changes affect the project in various ways
depending on the timing of the change.
14
As put forward, construction projects are more difficult to manage because of uncertainty
factors inherent in the projects. The uncertainty of the projects is reflected in the difficulty of
obtaining design information during the design process. As a result, most projects end up
with high amounts of design changes during construction stage.
Changes of design in construction can be caused by various sources at different stages of the
work. The cause of change may originate from external or internal issues that may occur
during the development phases of project i.e. from basic design to construction.
 The following are internal factors that lead to change of design during construction
stage categorized according to the parties of project.
Owners Factors:
 The owner instruction to modify a design.
 Owner’s change of schedule due to financial problem.
 Incorrect information given by owner.
 Owner fails to make decisions or review document at the right time.
 Additions of new works/scopes (not part of original scope)
 Omission of works/scopes (reduction on original scopes).
 Unclear initial design brief.
Design consultant’s factors:
 The unrealistic period to design.
 The failure of a consultant to provide adequate and clear information in the tender
documents; errors and omission of consultants.
 The consultants who are not familiar with the regulations and construction permits.
 The presence of conflicts between contract documents
 The low consultant fee and poor coordination of design team members.
 Lack of consultant’s knowledge of available material and equipment.
 The underestimate of the cost of the project.
 Unclear and inadequate details in drawings.
 Production of Structural detail does not match Architectural detail.
Contractor’s factors:
 The unrealistic construction’s schedule.
 The changes initiated by contractors to improve quality and constructability.
15
 Lack of contractor’s involvement in design.

 Contractor’s desired profitability, cost escalation & financial problem.
 Poor project management and planning by contractor.
 Contractor’s change requests for easier operations, higher income, within the
allowable limits for the project.
 Lack of coordination among members with design team.
 Rectify construction mistakes.
Managing consultant’s factors:
 Failure of communication amongst parties involved within a construction project.
 Improper supervision of the work executed by contractor.
 Lack of precise decisions.
 Insufficient careful checking and correct planning documents
 Lack of rapid decisions
The following are the external factors that lead to change of design during construction stage:
Environmental factors:
 Changes of weather conditions.
 Occurrence of natural disaster such as flood, earthquake.
 Insufficient information on geological conditions.
 Unforeseen ground conditions
. Third party’s factors:
 The complaint from neighborhood.
 The request made by end user.
 The request from investor who came while construction has started.
 The request from regulatory bodies.
Political and economic factors:
 The changes in policies and regulations.
 Inflation and price fluctuation.
 Unavailability/shortage of materials.
 Change of market demand of the intended use of Project
J. Errors and omissions in design:
When asked to define "design error," not all disciplines in the construction process agree on a
common definition. Depending on which discipline you address, the owner, the designer or
16
the contractor there will be a common understanding surrounded by varied conclusions, "a
mistake." From the basic definitions of "design" and "error" we conclude that a design error
is a deviation from a drawing or specification, also including omissions and ambiguities. It is
the seriousness of this error that must be considered to determine its consequences on the
overall outcome of the project, one of the most important challenges facing management
today is controlling the too frequent cost and schedule overruns that effect the construction
industry.
CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Introduction
This chapter discusses the methodology adopted for the study. Project methodology involves
the systematic rule and procedure up on which the project agenda is based. It covers study
area and period, the research design, research approach, source of data, sampling method,
data collection procedure and methods of data analysis in relation to the challenges of cost
planning and it impact of building project in construction.
3.2. Study Area / setting
Mattu is a city in south- west Ethiopia. The administrative center of the illubabor Zone. It
has a latitude and longitude of 8°18′N 3′E with an elevation of 1,605 metres. .The town is
located at a distance of 525.1 km from Addis Ababa.
17
Figure 1 Map of Mattu town
3.3. Study Period

The study period required to conduct our research is about four months or a study time of
four weeks in each months.
3.4. Research Design / study design

The researcher employs explanatory type research design. The reason to select this design is
that it helps to explain the existing situation on the assessment of challenges of cost planning
and it impact of building project in mettu town. The research design will also help the
researcher to recommend appropriate cost planning practices that may be uses in promoting
good cost plannig in the study area.
3.5 Research Approach
The study employs both qualitative and quantitative approaches. The rational that we use a
mixed approach is that, it provides a god opportunity to understand the challenges of cost
planning and it impact of building project during construction phase in depth and breadth.
This will be due to that in this study the data obtained through field observation,
18
questionnaire, and interview. Moreover, combining both approaches will provide a richer
pool of data and it helps the study to be more valid and reliable.
3.6. Population
The populations which are going to use are stakeholders (contractor, consultants, and clients)
involved in public building and sampling methods; this is going to use both probability and
non-probability resources.
3.7. Sampling Techniques
Method of sampling used is random sampling. Samples were categorized to two based on
status, completed and under construction, because quality problems are manifested as age of
building increase buildings is randomly selected from completed buildings and the remaining
buildings is randomly selected from under construction buildings. For the second part of the
study, Interview, questionnaires were developed and distributed to all consultants,
contractors, clients and users engaged on Public buildings were addressed. And to assure the
quality of data only professionals which have engineering knowledge were included.
3.8. Study Variables
3.8.1. Dependent Variables
The dependent variable for my research is the challenges of cost planning construction
project that happened during the construction in Mattu town.
3.8.2. Independent Variable

The independent variable for our research includes the variable of poor communication of
design requirement factor, design difficult to build factor, and supervision factor, complex
contract document and unrealistic time and cost assessment and finance related factors.
3.9. Sources of Data
The researcher use both primary and secondary data as a source of information.
Combinations of qualitative and quantitative data are gathered through interview and
questionnaires as a primary source of information for the study. The information obtained
from primary sources is supported by secondary data. Secondary Data which include
narrative reports, legal documents; journals, books from internet, and proclamations is used.
19
3.10 Instruments of Data Collection

The instruments will be employ for data collection by the researcher in this study include
questionnaires and field observation. The questionnaires prepared will be closed type and
easy for communication purpose. Information will collected from respondents by the group
members involved in this study.
3.11 Data Analysis and Presentation
3.11.1 Qualitative data analysis
The primary and secondary data are analyzed to address the research questions. The data
collected through interview and analyzed using content analysis. The first step in qualitative
data analysis is organizing and preparing the collected data for analysis by balancing with
document notes. After analyzing and interpreting the data, the research findings are presented
using a variety of data presentation tools such as tables, charts and, photographs.
3.11.2 Quantitative Data Analysis
In analyzing quantitative data the researcher will use excel mainly for the data to be obtained
from questionnaires? To analyze the data descriptive analysis used to analyze the frequency
of respondents and their level of agreement with the given statement under each question. .
Mean index ═∑ (n*d)/t,
Percentage%=100* ∑ f /N
Were N= number of respondents n= coefficient
t= total mark d= degree of the option
f=frequency
3.12. Ethical Considerations

As this study will be participated individuals in assessment of challenges of cost planning and
it impact of building construction during construction phase certain issues will be addressed.
The consideration of this issue is necessary for the purpose of ensuring privacy as well as the
security of the participants. These issues will be identified in advance and so as to prevent
problems that will arise during the research process. Among the significant issues that must
be considered includes confidentiality and data protection.
20
CHAPTER FOUR
4. RESULT AND DISCUSSION
4.1. Work Plan
May 23- Jun

Mar 23-Apr 22 Apr 23 – May 22
N Durat 28
Activity
o ion
Week Week Week
1 2 3 4 1 2 3 4 1 2 3 4
1 Title selection 1
week
2 Literature 1
review week
3 Proposal
preparation, 2
submission and week
presentation
4 Preparation of
interview
question and 1week
questionnaires
5 Distributing 2
questionnaires week
6 Conducting 1
interviews week
7 Collecting 1
questionnaires week
8 Result and 1
discussion week
9 Writing draft 2
weeks
21
10 Final report 2
preparation weeks
11 Meeting
1 day
Advisors
12 Final report
1 day
submission
Table 1: Work Plan
22
References
1. Abdel Hadi, Mohammed (2013) According to Journal of Construction in
Developing Countries.
2. Abeselom, A. (2008, March). Improving Cost Management Practices of
National Contractors Focused On Building Construction Projects. Thesis.
Addis Ababa, Ethiopia: Addis Ababa University.
3. Abubeker, J. (2005, August). Factors Afecting Time and cost overrrun in
road Construction project In Addis Ababa. MSc Thesis. Adiss Ababa,
Ethiopia: Adis Ababa University.
4. Abu Shaban S.S., (2019), Factors Affecting the Performance of
Construction Projects in the Gaza Strip. The Islamic University of Gaza,
Palestine
5. Aftab, H. M., Ismail, A. R., & Ade, A. (March 2012). Time and Cost
Performnace in construction Projects in Southern and Central Regions of
Penisular Malaysia. Interantional Journal of Advances in Applied
Sciences (IJAAS), Vol.1, No.1, March 2012, pp.45-52, ISSN: 2252-8814,
45-52.
6. Chitkara K.K (2001), Construction Project Management, Planning,
Scheduling and Controlling, Tata McGraw-Hill publishing company, Ltd.
7. Chitrakar, P. (2004). Micro Hydropower Design Aids Manual. (Keith
Potts, 2008). Construction Cost management, First Edition, Taylor and
Francis Group, New York, 2008
Dinku & Kahssay, 2003). Operational and maintenance cost of facilities.
8. Dysert (2003). www.acadamia.edu.com
9. Fetene (2008), 8 (causes and effects of cost overrun on public building

construction projects in Ethiopia) MSc Thesis Addis Ababa university,
Faculty of Technogly
10. Gomez, S. (2012). Avoding cost overruns in construction projects in the
United Kingdom.
11. Hameed, e. (2013). Controlling Cost Overrun Factors in Construction
Projects in Malaysia. Research Journal of Applied Sciences,Engineering
and Technology, 5(8), 2621-2629.
23
(Africon, 2., 2008. Unit costs of Infrastructure Projects in Sub Saharan countries.
s.l.:AFRICA INFRASTRUCTURE COUNTRY DIAGNOSTIC.
K.KChitkara, 2004. Construction Project Management. s.l.: Institute construction project
management, Gurgaon, Haryana, India.
24

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Assessment Of Challenges Of Cost Planning And It Impact Of Building Project In Mattu Town

1. Aklilu mulatu …………………………………….. Ru 4699/12

A RESEARCH SUBMITTED TO DEPARTMENT OF CONSTRUCTION TECHNOLOGY

A RESEARCH SUBMITTED TO DEPARTMENT OF CONSTRUCTION TECHNOLOGY

Prepared by Signature Date

1. Aklilu mulatu ………….. ………..

Name of advisor signature Date

1. Kebede chaka ……………….... ……………

2. Firaol Bekuma ……………………. ……………….

3. Geremu Assefa …………………… ………………..

4. Dechasa Dasalo ……………………. …………………..

3.5 Research Approach........................................................................................................26

 Increasing the real cost of project:

1.2 Statement of the problem

1.3 Research question

1.4.2 SPECIFIC OBJECTIVES

1.6 Scope of the study

2.1.2 Construction project

2.1.3 Stakeholders in construction project

Consultant: - are professional bodies who design the project.

2.2 Project planning

2.2.1 Types of construction project plan

2.2.1.1 Time plan

2.2.1.2 Resource plan

2.2.1.2.1. Cost plan

2.3 Project Cost and Cost Estimation

2.4 Tools and Techniques used in project cost estimation:

Reserve Analysis: determination of contingency reserves to account for cost uncertainty.

1. Single rate approximate method

Single rate-Approximate Estimating

A) Unit of Accommodation Method

B) Floor area method

C) Building volume method

Multiple-rate approximate estimating

Elemental cost plans

Analytical estimating is a method for determining unit rates by examining individual

4. Summarize resources and prepare reports for management.

2.5 Factors affecting accuracy of cost estimate

b) Borders closure and blockade

c) Project team's experience in the type of construction

d) Experience and skill level of the consultant

e) Having clear and detailed drawings and specifications

f) Quality of information flow

g) Completeness of cost information

2.6 Project scope

2.6.1 Causes for Scope Change

 Poorly Defined Scope of work (Requirements)

A. Change in stakeholder requirements:

 Lack of contractor’s involvement in design.

Figure 1 Map of Mattu town

3.3. Study Period

3.4. Research Design / study design

3.8.2. Independent Variable

3.10 Instruments of Data Collection

3.12. Ethical Considerations

May 23- Jun

9. Fetene (2008), 8 (causes and effects of cost overrun on public building

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