PREDICTIVE MODEL DEVELOPMENT FOR OPTIMAL MANAGEMENT OF MATERIALS AND COST OF BUILDING CONSTRUCTION

Abstract

The high rate of construction project cost overruns in Nigeria had led to researches into developing methods and means of mitigating against construction project cost overruns. The study area selected for this research in Nigeria is Lagos State. This choice was based on the fact that the state holds a proportionate large volume of construction activities in the country and its economic viability. This research developed a model for predicting the occurrence of building construction project cost overrun based on material management system applied during the construction of the project. To develop this model, questionnaire survey was carried out among five hundred (500) respondents which are various stakeholders in the building construction industry to gather information about the material management system used in building construction processes and their effectiveness in preventing project cost overrun. Four hundred and twenty (420) valid responses were gathered and analysed. Five (5) material management systems which are Systems 1-5 were identified from the results. The material management processes were divided into four (4) major phases which are the Material Identification (MI), the vendor selection (VS), the procurement (PRO) and the construction (CON). The analysis result showed that the highest correlation occur between Material Identification and Procurement with coefficient of 0.588(58.8%). With the use of SPSS, a multiple linear regression model was developed to show how each of the material management system phase influences construction project cost overrun. The result showed the Procurement phase and the vendor selection phase of the management system to have the highest influence on causing project cost overruns with high probability predictions of 71% and 62% respectively. Material Identification however showed the least influence with probability prediction of 38%. The model was validated using the material management systems identified from the questionnaire analysis on a medium sized construction project. The model predicted a 28% probability of cost overrun for the medium sized project which eventually experienced low cost overrun. With all material management phase dully followed, the chances of project experiencing cost overrun was predicted to be 14% which is very low. This research showed that with an appreciable amount of resources being given to the procurement and vendor selection phase of the material management system, there would be lower occurrence of project cost overruns in the building construction industry