College of EngineeringEngineering Management Master ProgramEstimating & Financial Analysis for Construction – EMP 352Project Title:Impact of Information Technology in Construction Cost EstimationSubmitted to:Dr. Murat GunduzPrepared by (Group#4):Group Member QU ID Roles Leaded By SignaturesFatima Mohammad Abulhussain200751854 Hanan Abdulla Al-Yafei201001400 Munera Hamad Al-Nuaimi 200250410 Shaima Abdulla Al-Yafei201103353 Date:27th November, 2018Executive Summary Construction as any other industry requires financial analysis and cost estimation processes to study the economic feasibility of the project. Over the years, various tools and techniques are used to estimate the cost of any type of construction. More accurate the tool is used, the better estimate can be reached.
In the past, they used to use manual techniques to estimate and analyze costs, but nowadays with the growth and expansion of technology the estimation process become more accurate and convenient using modern automated tools. Although technology is not a new tool, it has been improved magnificently over the time and passed through different stages and levels and is continuously improving. This paper will study and compare the impact that technology made over the time on the cost estimating methods adopted in construction projects and shed light on some of cost estimation software that are used globally and locally in Qatar.Table of Contents TOC o “1-3” h z u 1 Research/Problem statement PAGEREF _Toc530494121 h 42 Project objectives PAGEREF _Toc530494122 h 43 Data and sources PAGEREF _Toc530494123 h 54 Research/Problem analysis PAGEREF _Toc530494124 h 64.1 History of construction cost-estimation Process PAGEREF _Toc530494125 h 64.
- Thesis Statement
- Structure and Outline
- Voice and Grammar
2 Advantages and benefits of IT in construction cost estimation PAGEREF _Toc530494126 h 64.3 Disadvantage and Challenges of IT in construction cost estimation PAGEREF _Toc530494127 h 84.4 Software solution used world-wide in construction cost estimation PAGEREF _Toc530494128 h 94.5 Software solution used locally in Qatar in construction cost estimation PAGEREF _Toc530494129 h 105 Conclusions and Recommendations PAGEREF _Toc530494131 h 126 Reference list PAGEREF _Toc530494132 h 131 Research statement Cost estimation process is a major task in any construction project. From different perspectives, as project owner or contractor, it is essential to have a clear and accurate estimation of how much could the project cost in terms of money and time before starting the investment. Overestimating cause contractors to submit high process tenders which are not accepted by the project owner and underestimating might cause loses to them.
So, it is worth to devote enough time and effort to calculate cost and time of the project to decide whether to go or not-to go with it. Reaching acceptable level of cost estimating that helps in taking the correct decisions requires high quality techniques. This research attempts to study the impact of technology in facilitating cost estimation methods and techniques and how new technologies helped in getting more accurate estimations in shorter time.2 Project objectives Over the years different factors have affected and impacted the improvement of cost estimating process in construction industry. In this report the impact of information technology is studied and discussed.The main objectives are:Going through the history of Information Technology in construction estimation. Presenting the advantages and disadvantages of information technology in construction cost estimation.Studying and comparing some popular software that are used world-wide and locally in Qatar.
4 Research analysis 4.1 History of construction cost-estimation ProcessIn the past, construction companies used to save all their data and records in paper documents and use old-fashioned manual processes to estimate projects’ costs by drawing two-dimensional maps using pencil, paper, architectural scales and spreadsheets (Degenaar, 2013). This process used to take months to be completed as it was depending on human skills and effort only.Automating the cost estimating process and digitizing historical records helps in increasing the efficiency and accuracy of data. Technology made a big difference in the field of construction cost estimation by making it easier and faster to the estimators to access all required data of latest materials, equipment, and labor costs to generate estimates. Nowadays, there are different software and applications developed to collect, study and analyze data. Use of technology assists in benefiting from stored historical data for cost and budget estimating.
Development and improvements in software are rapidly continuing either by upgrading existed software or by new software and technologies emerge in the market. When first software was used4.2 Advantages / benefits of IT in construction cost estimationEven though best advanced technology is not a replacement for good estimator judgment, smart technology systems generate cost and budget estimating automatically in minutes or hours instead of weeks or months. Using information technology beside professional estimating engineers have many advantages like the following:AccuracyDue to the competitiveness of the market today, it has become important for (businesses) construction companies to keep tracking of stored materials, and labor needs.
Being a difficult task for manual operations, the software has made it possible to provide almost perfect results for data such as labor costs and the volume and number of equipment needed.ConsistencyWhen using software, it is possible to create a set of formulas to be used in various projects. It is also easy to maintain a database with information such as costs, which can be updated appropriately when the numbers change.
This makes sure that there is consistency in the data provided in every project, therefore increasing reliability.ConvenienceBy using the suitable software, it is possible to make a couple of operations that would be rather difficult to undertake in manual cost estimation. For instance, changes in cost and other adjustments can be done easily. It is also possible to access data on demand.ProcurementDue to the accuracy of the software, it is possible to effectively measure the delivery of materials and labor management becomes easy. The acute outlining of the materials, other equipment, and labor aids in prevention of resource wastage and utilization of resources. (It is, therefore,) Therefore, it is more appealing to the clients using IT in cost estimation.EfficiencyThe Speed, accuracy, and general (presentability) of software-based (projects) make the use of IT in construction cost management estimation is more efficient than traditional methods.
The efficiency in this process also translates to the dedication of precious time and resources to other aspects of the projects (ProEst 2018).4.3 Disadvantage/ Challenges of IT in construction cost estimationTechnology is just a tool used to assist in estimating construction costs and it cannot replace the professional cost engineering knowledge or judgment.
The cost engineers should know the capabilities and limitations of software in relation to a project. They must be aware of how to use technology models in adapting existing estimates to new projects. Final data and results should be reviewed for reasonableness and assumptions and methodology should be verified and documented. Although using Information Technology in cost estimation in construction industry has positive impact, there are some drawbacks and they are the following:Implementation expensesInvesting in IT solutions for cost estimating is not cheap. Cost estimation software are expensive and not all construction companies can afford it. The construction company will need the budget for purchasing software licenses, software training, maintenance and support. Security BreachesAlthough, the storage of historical cost data on remote cloud servers is one of the powerful feature of software, some construction companies store their cost estimation data which are vulnerable for hackers or viruses’ attacks.
(Thus) Accordingly, those attacks may lead to lose or manipulate company’s data.Needs timeCost estimators need time to learn how to use IT solution and adopt the new skill. Construction companies might face some resistance when shifting from using traditional methods to software solutions for cost estimation. Therefore, pilot run and training on new software should be planned properly.Out of Date and limitations of IT solution Nowadays, Technology moves fast in every industry and construction industry is not an exception. The construction companies will need to get regular updates to their software or looking for new IT solutions with more or advanced features. They have to be aware (of) and study new trends in market for IT solutions in construction cost estimation.
SubjectivityThe cost estimation process is slightly subjective. Even with algorithmic methods and IT software, it usually up to cost estimators to calculate certain cost estimate and use their judgements to assign and assess cost values. Selecting the right IT solutionThere are many software in the market and a construction company needs to select from options in the market the software that fulfills their requirements of cost estimation and supports its business. Therefore, it is critical to choose the suitable software before investing money on it.4.4 Software solution used world-wide in construction cost estimationToday, software technologies have been integrated into construction cost estimation as they have been found to improve efficiency and reliability of the process. ComputerEase (1983), FOUNDATION (1985), Planswift (2009), Buiterra (2016) software, will be evaluated to understand the benefits of using software programs in cost estimation and compared to understand the development through time.
-613739298 1983 1985 2009 201600 1983 1985 2009 2016ComputerEase, established in 1983, is one of the earliest companies to integrate technology into construction accounting. The company has continued to provide cutting edge solutions that facilitate decision-making for engineers and project owners. The job costing capacities of ComputerEase are built to ensure that construction projects do not rag behind because of issues relating to the budget. By investing in the software, the users are assured that they can easily track their job costs through different approaches such as work-in-progress reporting, analysis of labor, cost projections and unit production. The software prides of having unique cash flow management that helps contractors increase their profit margin and boost production. This is done through the projection of costs, identification of potential problems, performing labor analysis, and gradually assessing productivity. FOUNDATION, established in 1985, focuses mostly on job costing reports and formats and enables users to create custom reports.
FOUNDATION has been built for different users including governments, industrial contractors, and commercial users. The software offers automatic job costing by calculating and tracking different jobs, rates of pay, location, and employee unions (FOUNDATION, 2018). PlansSwift, established in 2009, is an on-screen digitization platform that is primarily used by commercial and residential contractors and subcontractors in different sectors including plumbing, electrical, and home building. The software provides a platform for users to calculate values for labor and materials through simple clicking on various objects on the digital plan.Builterra, established in 2016, has become one of the most used software in construction cost estimation around the world.
The growing popularity of the software can be associated with the fact that is has a comprehensive service offering through its mobile app and website. Using its cloud-based resources, Builterra has facilitated the development of real-time cost estimations for clients using its other services as well as those utilizing other competing solutions. The primary benefit that users enjoy from the use of Builterra is that it facilitates the development of accurate and timely estimates from other data that has already been uploaded about a particular project. Its solutions “bridge the divide between CAD (computer-aided design) and the bid process” (Builterra, 2018). Builterra provides a quantity extraction approach that connects the design date in CAD to the current tender. The user can simply upload CAD to develop a build pay table section on the standardized templates, which can be used to create cost estimates. The user is also saved from perusing through previous documents and bids to find the pricing of items in the design.
There is also the option of conducting ad hoc estimates on a particular item, which makes it the first software to connect the design and actual data on cost. Software Name Year Primary Features of Software Construction Companies Using SoftwareComputerEase1983 integrated into the software include construction accounting, project management, job costing, payroll administration, purchasing management, inventory management, contractor management, customer relationship management, and service management. FOUNDATION 1985 focuses mostly on job costing reports and formats and enables users to create custom reports. PlansSwift2009 the software has a browsing feature that allows users to find and create jobs for other in their locality besides being able to collaborate with others.
provides a platform for users to calculate values for labor and materials through simple clicking on various objects on the digital plan Builterra2016 Builterra has facilitated the development of real-time cost estimations for clients using its other services as well as those utilizing other competing solutionscomprehensive service offering through its mobile app and website Software solution used locally in Qatar in construction cost estimationIn this section, Asghal was taken as example of local organization that uses construction cost solution. Ashghal, public works authority of Qatar, is responsible for the managing construction of all infrastructure projects and public buildings in Qatar including roads, drainage, schools and hospitals. Ashgal used to use Microsoft Access as database to store rates for cost estimation purposes.
Currently, Ashgal has shifted to use more specialized software in cost estimation in construction. From 2014, the authority started using Causeway’s Cost and Programme Management software (CATO) up to now. This software allows to store, monitor and track a comprehensive rates database based on historical data provided by consultants and contractors of previously completed projects. Also, it supports functions to check estimates for CAD drawings and BIM for future projects. In short, the solution provides different functions such as: feasibility estimate, cost planning, bill of quantities, embedded spreadsheet, whole life costing, cash flow forecasting and earthworks. The software is powerful in extracting data in excel sheets. However, there are some limitations in the software. Each time, there is a change in stored cost values, It requires to update libraries in software in order in order to reflect new values of cost in new projects.
Also, search engine in software has some limitation.Figure 1: CATO Software Home Page for AsghalFigure 2: Estimate using CAD Measure 5 Conclusions and RecommendationsInformation Technology has transformed the different industries including construction. Although, the construction industry has been slow to jump into information technology, it has plays a crucial role in cost estimation of the projects especially when it comes to time and effort saving and data accuracy. Today, cost estimating in construction is done using different information technology solutions that range in complexity, functions and prices and solutions have their limitations but they are getting better with time. Such options give contractors the ability to select the software solution that work best for them. In the end, the cost estimators still play a major role in cost estimation of construction works and they can take advantage of new capabilities provided by Information Technology to deliver projects more efficiently, for less cost, and with higher profit margins. 6 Reference list AEC Solutions. (2018).
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