Exploring the Challenges to Usage of Building and Construction Cost Indices in Ghana
Price fluctuation contract is imperative and of paramount essence in the construction industry as it provides adequate relief and cushioning for changes in the prices of input resources during construction. As a result, several methods have been devised to better help in arriving at fair recompense in the event of price changes. However, stakeholders often appear not to be satisfied with the existing methods of fluctuation evaluation, ostensibly because of the challenges associated with them. The aim of this study was to identify the challenges to usage of building construction cost indices in Ghana. Data were gathered from contractors and quantity surveying firms. The study utilized survey questionnaire approach to elicit responses from the contractors and the consultants. Data gathered were analyzed scientifically, using the Relative Importance Index (RII) to rank the problems associated with the existing methods. The findings revealed the following among others: late release of data; inadequate recovery of costs; and work items of interest not included in the published indices as the main challenges of the existing methods. Findings provided useful lessons for policy makers and practitioners in decision making towards the usage and improvement of available indices.
[1] Adobor, C. D., (2014). Framework for development of construction cost indices using Unit Rate (Doctoral dissertation).
[2] Ameyaw, C. (2009). Comparative performance evaluation of the traditional design-bid-build (DBB) and design-build (DB) procurement methods in Ghana, Unpublished thesis (MSc), Kwame Nkrumah University of Science and Technology, Kumasi.
[3] Amoa-Mensah, K. (1996). Building Estimating Manual for West African Construction Practice, 2ed, Kumasi: Parcom Ghana Limited.
[4] Babalola, O. and Abiodun Adesanya, D., (2008). An appraisal of the factors affecting production of cost estimate for electrical services in Nigeria. Journal of Financial Management of Property and Construction, 13(3), pp.200-208.
[5] Badu, E., Owusu-Manu, D. G., Edwards, D. J., Adesi, M. and Lichtenstein, S., (2013). Rural infrastructure development in the Volta region of Ghana: barriers and interventions. Journal of financial management of Property and Construction, 18(2), pp.142-159.
[6] Enshassi, A., Al-Najjar, J. and Kumaraswamy, M., (2009). Delays and cost overruns in the construction projects in the Gaza Strip. Journal of Financial Management of Property and Construction, 14(2), pp.126-151.
[7] Eyiah, A. K. and Cook, P. (2003). Financing Small and Medium-scale Contractors in Developing Countries: A Ghana case study, Journal of Construction Management and Economics, Vol. 21, pp. 357-367.
[8] Ghana Statistical Service (2011). Prime Building Costs Index, April 20, 2011.
[9] Gichunge, H., Masu, S. and K’Akunmu, O. A. (2010). Factor Cost Indices Practices in the Building Industry for Nairobi, Kenya, Journal of Financial Management of Property Construction, Vol. 15, No. 1, pp. 61-70.
[10] Giovannini, E., (2008). Understanding economic statistics: an OECD perspective. Organisation of Economic Cooperation and Development (OECD).
[11] Hassanein, A. G. and Khalil, N. L. (2006). Building Egypt 1: A General Indicator Cost Index for the Egyptian Construction Industry, Journal of Engineering, Construction and Architectural Management, Vol. 13, Issue 5.
[12] Joint Contracts Tribunal Limited (JCT) (2011) Deciding on the Appropriate JCT Contract.
[13] Kissi, E., Asamoah-Duodu, A. and Somiah, M. K., (2016). Factors influencing venture capital financing of real estate development in Ghana. African Journal of Economic and Sustainable Development, 5(4), pp.355-364.
[14] Laryea, S. and Mensah, S. (2010). The Evaluation of Indigenous contractors in Ghana, West Africa Built Environment Researchers Conference, Accra, Ghana.
[15] Mrema, G. C., Gumbe, L. O., Chepete, H. J. and Agullo, J. O., (2012). Rural structures in the tropics: design and development. Food and Agriculture Organization of the United Nations.
[16] Ndihokubwayo, R., (2008). An analysis of the impact of variation orders on project performance (Doctoral dissertation, Cape Peninsula University of Technology).
[17] Ndihokubwayo, R., (2009). Theories and concepts for an increased cost adjustment (ICA) formula for optimum cost escalation recovery.
[18] Nico-Annan J. (2006). Partnering in Construction, The Quantity Surveyor, Issue 1 – 2006, pp. 16.
[19] Obeng-Ayirebi K. (2002). Management Contracts as practiced in Ghana, Unpublished thesis (MSc), Kwame Nkrumah University of Science and Technology, Kumasi.
[20] Office of National Statistics (2014). Consumer Price Indices Technical Manual. Available online via http://doc.ukdataservice.ac.uk/doc/7022/mrdoc/pdf/7222technical_manual_2014.pdf (Accessed 25th June, 2019].
[21] Osei-Tutu, E., & Adjei-Kumi, T. (2008). An Evaluation of Housing Cost Trends in Ghana for the Period 1991-2008. (pp. 166-182). Kumasi: CSIR-BRRI.
[22] Ssegawa, J. K., (2004). A strategic planning in small and medium construction firms. Globalisation and Construction, p.307. Tribunal, J.C., (2011). Deciding on the Appropriate JCT Contract 2011.
[23] Statistics South Africa (2017). Consumer Price Index: The South African CPI Sources and Methods Manual. Available online via. http://www.statssa.gov.za/cpi/documents/The_South_African_ CPI_sources_and_methods_26Feb13.pdf [Accessed 25th June, 2019].
[24] Tobin, J., (2005). Irving Fisher (1867–1947). American Journal of Economics and Sociology, 64(1), pp.19-42.
[25] Ugochukwu, S.C. and Onyekwena, T., (2014). Participation of indigenous contractors in Nigerian public sector construction projects and their challenges in managing working capital. International Journal of Civil Engineering, Construction and Estate Management, 1(1), pp.1-21.
[26] Van Mulligen, P. H., (2003). Quality aspects in price indices and international comparisons: Applications of the hedonic method. University of Groningen.
[27] von der Lippe, P. M., 2001. Chain indices: A study in price index theory (Vol. 16). Metzler-Poeschel.
[28] Walsh, D. K., Sawhney, A. and Vachris, A. M. (2006). Improving inter-spatial comparison of construction costs, Engineering, Construction and Architectural Management, Vol. 13 No. 2, pp. 123-135.
[29] Yu, K. W., and Ive, G. (2008). The compilation methods of building price indices in Britain: critical review. Construction Management and Economics, 26(7), 693-705.
[1] Adobor, C. D., (2014). Framework for development of construction cost indices using Unit Rate (Doctoral dissertation).
[2] Ameyaw, C. (2009). Comparative performance evaluation of the traditional design-bid-build (DBB) and design-build (DB) procurement methods in Ghana, Unpublished thesis (MSc), Kwame Nkrumah University of Science and Technology, Kumasi.
[3] Amoa-Mensah, K. (1996). Building Estimating Manual for West African Construction Practice, 2ed, Kumasi: Parcom Ghana Limited.
[4] Babalola, O. and Abiodun Adesanya, D., (2008). An appraisal of the factors affecting production of cost estimate for electrical services in Nigeria. Journal of Financial Management of Property and Construction, 13(3), pp.200-208.
[5] Badu, E., Owusu-Manu, D. G., Edwards, D. J., Adesi, M. and Lichtenstein, S., (2013). Rural infrastructure development in the Volta region of Ghana: barriers and interventions. Journal of financial management of Property and Construction, 18(2), pp.142-159.
[6] Enshassi, A., Al-Najjar, J. and Kumaraswamy, M., (2009). Delays and cost overruns in the construction projects in the Gaza Strip. Journal of Financial Management of Property and Construction, 14(2), pp.126-151.
[7] Eyiah, A. K. and Cook, P. (2003). Financing Small and Medium-scale Contractors in Developing Countries: A Ghana case study, Journal of Construction Management and Economics, Vol. 21, pp. 357-367.
[8] Ghana Statistical Service (2011). Prime Building Costs Index, April 20, 2011.
[9] Gichunge, H., Masu, S. and K’Akunmu, O. A. (2010). Factor Cost Indices Practices in the Building Industry for Nairobi, Kenya, Journal of Financial Management of Property Construction, Vol. 15, No. 1, pp. 61-70.
[10] Giovannini, E., (2008). Understanding economic statistics: an OECD perspective. Organisation of Economic Cooperation and Development (OECD).
[11] Hassanein, A. G. and Khalil, N. L. (2006). Building Egypt 1: A General Indicator Cost Index for the Egyptian Construction Industry, Journal of Engineering, Construction and Architectural Management, Vol. 13, Issue 5.
[12] Joint Contracts Tribunal Limited (JCT) (2011) Deciding on the Appropriate JCT Contract.
[13] Kissi, E., Asamoah-Duodu, A. and Somiah, M. K., (2016). Factors influencing venture capital financing of real estate development in Ghana. African Journal of Economic and Sustainable Development, 5(4), pp.355-364.
[14] Laryea, S. and Mensah, S. (2010). The Evaluation of Indigenous contractors in Ghana, West Africa Built Environment Researchers Conference, Accra, Ghana.
[15] Mrema, G. C., Gumbe, L. O., Chepete, H. J. and Agullo, J. O., (2012). Rural structures in the tropics: design and development. Food and Agriculture Organization of the United Nations.
[16] Ndihokubwayo, R., (2008). An analysis of the impact of variation orders on project performance (Doctoral dissertation, Cape Peninsula University of Technology).
[17] Ndihokubwayo, R., (2009). Theories and concepts for an increased cost adjustment (ICA) formula for optimum cost escalation recovery.
[18] Nico-Annan J. (2006). Partnering in Construction, The Quantity Surveyor, Issue 1 – 2006, pp. 16.
[19] Obeng-Ayirebi K. (2002). Management Contracts as practiced in Ghana, Unpublished thesis (MSc), Kwame Nkrumah University of Science and Technology, Kumasi.
[20] Office of National Statistics (2014). Consumer Price Indices Technical Manual. Available online via http://doc.ukdataservice.ac.uk/doc/7022/mrdoc/pdf/7222technical_manual_2014.pdf (Accessed 25th June, 2019].
[21] Osei-Tutu, E., & Adjei-Kumi, T. (2008). An Evaluation of Housing Cost Trends in Ghana for the Period 1991-2008. (pp. 166-182). Kumasi: CSIR-BRRI.
[22] Ssegawa, J. K., (2004). A strategic planning in small and medium construction firms. Globalisation and Construction, p.307. Tribunal, J.C., (2011). Deciding on the Appropriate JCT Contract 2011.
[23] Statistics South Africa (2017). Consumer Price Index: The South African CPI Sources and Methods Manual. Available online via. http://www.statssa.gov.za/cpi/documents/The_South_African_ CPI_sources_and_methods_26Feb13.pdf [Accessed 25th June, 2019].
[24] Tobin, J., (2005). Irving Fisher (1867–1947). American Journal of Economics and Sociology, 64(1), pp.19-42.
[25] Ugochukwu, S.C. and Onyekwena, T., (2014). Participation of indigenous contractors in Nigerian public sector construction projects and their challenges in managing working capital. International Journal of Civil Engineering, Construction and Estate Management, 1(1), pp.1-21.
[26] Van Mulligen, P. H., (2003). Quality aspects in price indices and international comparisons: Applications of the hedonic method. University of Groningen.
[27] von der Lippe, P. M., 2001. Chain indices: A study in price index theory (Vol. 16). Metzler-Poeschel.
[28] Walsh, D. K., Sawhney, A. and Vachris, A. M. (2006). Improving inter-spatial comparison of construction costs, Engineering, Construction and Architectural Management, Vol. 13 No. 2, pp. 123-135.
[29] Yu, K. W., and Ive, G. (2008). The compilation methods of building price indices in Britain: critical review. Construction Management and Economics, 26(7), 693-705.
@article{"International Journal of Business, Human and Social Sciences:80700", author = "J. J. Gyimah and E. Kissi and S. Osei-Tutu and C. D. Adobor and T. Adjei-Kumi and E. Osei-Tutu", title = "Exploring the Challenges to Usage of Building and Construction Cost Indices in Ghana", abstract = "Price fluctuation contract is imperative and of paramount essence in the construction industry as it provides adequate relief and cushioning for changes in the prices of input resources during construction. As a result, several methods have been devised to better help in arriving at fair recompense in the event of price changes. However, stakeholders often appear not to be satisfied with the existing methods of fluctuation evaluation, ostensibly because of the challenges associated with them. The aim of this study was to identify the challenges to usage of building construction cost indices in Ghana. Data were gathered from contractors and quantity surveying firms. The study utilized survey questionnaire approach to elicit responses from the contractors and the consultants. Data gathered were analyzed scientifically, using the Relative Importance Index (RII) to rank the problems associated with the existing methods. The findings revealed the following among others: late release of data; inadequate recovery of costs; and work items of interest not included in the published indices as the main challenges of the existing methods. Findings provided useful lessons for policy makers and practitioners in decision making towards the usage and improvement of available indices. ", keywords = "Building construction cost indices, challenges, usage, Ghana.", volume = "16", number = "3", pages = "77-5", }
