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Tender Phase.
13
I. INTRODUCTION
Worldwide, the construction industry in most
countries is one of most extreme competitiveness with
high risks and low margins of profit. Offering customized,
high quality products at the lowest price possible is the
ultimate target. In order to set the price as competitive as
possible, the cost needs to be known. The accuracy of cost
estimating was increased by using computer programs,
system management and experts to evaluate the items of
any project [1].The construction industry sector has a direct
impact on the Egyptian economy. It is therefore considerable
to sustain successful construction projects in Egypt.
Spending on residential construction is expected to cause an
increase from US$443 million in 2005 to US$606 million in
2015 at a CAGR of 3.2%. This is owing to factors such as
increased disposable income, development of new residential
regions, such as villages, and formulation of government
policies to develop the housing finance system during 200515 [2].
Construction cost estimation, control and analysis
are the main tools in construction project management.
Construction cost estimating influences the final project
effectiveness [3]. Since construction processes are
especially prone to risks, which affect project performance,
selecting a capable contractor is one of the most important
tasks a construction client has to face to achieve a
satisfactory project outcome. An inappropriate contractor
(1)
NWI =
wj
Where
(2)
, j = 1,..........,n
(7)
= 1 , i = 1..........n
Linguistic variables
Triangular
fuzzy numbers
Extreme Favors
Very strongly Favors
Strongly Favors
Slightly Favors
Equal
(9, 9 , 9)
(6, 7, 8 )
(4, 5, 6 )
(2, 3, 4 )
(1, 1, 1 )
Reciprocal
triangular
fuzzy Numbers
(1/9, 1/9, 1/9)
(1/8, 1/7, 1/6)
(1/6, 1/5, 1/4)
(1/4, 1/3, 1/2)
(1, 1, 1 )
(3)
where denotes the extended multiplication of two fuzzy
numbers. These fuzzy triangular numbers are known as
the relative weights for each alternative under a given
criterion, and are also used to represent the weight of each
criterion with respect to the total objective. A weighted
summation is then used to obtain the overall performance
of each alternative.
(4)
1.
j)
(5)
Where i= ( li, mi, ui) and j = ( lj, mj, uj) [22, 23]
2. Estimate the priority vector W = (w1,.....,wn)T of the
fuzzy comparison matrix as follows: (24)
li + ui+ mi
(6)
,i= 1..........n
3
In order to rank the criteria the TFN should be
defuzzified, so we used a simple centroid method.
W1 =
1
0
2
0
3
2.62
4
4.74
5
6.18
6
7.2
7
7.9
8
9.62
9
11.28
IV. RESULTS
This arrangement describes the most important factors
affecting cost estimation according to the response
received from the questionnaires. It was found that the
most important factors were the first two which present
(61.13%) of all the total weight factors and they are:
financial stability (33.14%) and past performance
(27.99%).On the other hand, the other four factors which
present (38.87%) are as follow: management and
technical ability (18.4%), resources (13.08 %), experience
(5.25%), and health and safety (2.13%). The value of
lambda max was (7.75), and consistency ratio was less
than 1 (0.048), this denotes credibility of the results which
is presented in table (3) and figure (6)
TABLE 3
RANKING OF MAIN FACTORS AFFECTING COST ESTIMATION
Management
Financial
Past
and
Resources
Stability Performance Technical
Ability
Experience
Financial Stability
1.00
3.00
5.00
5.00
7.00
9.00
0.34
0.33
Past Performance
0.33
1.00
3.00
5.00
7.00
9.00
0.29
0.28
0.20
0.33
1.00
3.00
5.00
7.00
0.19
0.18
Resources
0.20
0.20
0.33
1.00
5.00
5.00
0.13
0.13
Experience
0.14
0.14
0.20
0.20
1.00
3.00
0.05
0.05
0.11
0.11
0.14
0.20
0.33
1.00
0.02
0.02
Sum
1.99
4.79
9.68
14.40
25.33
34.00
Lambda Ma
7.750
Rank
CI
RI
0.350
CR
7.200
0.048
%GE
0.00%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
12.11%
11.77%
11.25%
8.77%
7.94%
6.22%
5.98%
5.94%
4.65%
3.76%
3.07%
2.42%
1.98%
1.66%
1.61%
1.49%
1.28%
1.11%
0.99%
0.98%
0.89%
0.86%
0.63%
0.58%
0.37%
0.34%
0.29%
0.29%
0.22%
0.18%
0.14%
0.11%
0.07%
0.03%
2.00%
4.00%
6.00%
8.00%
10.00%
11.25%
8.77%
7.94%
6.22%
5.98%
5.94%
4.65%
10
3.76%
11
3.07%
12
2.42%
13
1.98%
14
1.66%
15
1.61%
16
1.49%
17
19
1.28%
1.11%
0.99%
20
0.98%
21
0.89%
22
0.86%
23
0.63%
24
0.58%
25
0.37%
26
0.34%
27
0.29%
28
0.29%
29
0.22%
30
0.18%
31
0.14%
32
0.11%
33
0.07%
34
0.03%
Fig 6.The final rank for the 34 factors affecting cost estimation
4. Case Study
The system developed works for tender decision and
selecting the best prequalified contractors through a list of
factors affecting cost estimation during tender decision,
the project selected started in January 2008 until this date.
It is 6.25 million Square, the Project value :
23,720,000,000 EGP
Fig 5. Hierarchy of factors affecting cost estimation and contractors
selection in Egypt
14.00%
11.77%
18
12.00%
12.11%
%GE of
relative
importance
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
8.76%
3.46%
8.14%
6.58%
4.56%
4.28%
1.76%
1.22%
0.86%
2.27%
2.30%
1.52%
1.20%
0.12%
0.60%
1.03%
0.89%
0.38%
0.37%
0.34%
0.54%
0.25%
0.18%
0.04%
0.04%
0.20%
0.20%
0.10%
0.04%
2.49%
7.10%
2.31%
1.62%
2.94%
1.46%
0.62%
4.30%
0.30%
1.10%
0.57%
0.75%
0.58%
0.56%
0.93%
0.34%
0.29%
0.66%
0.51%
0.58%
0.26%
0.52%
0.06%
0.20%
0.11%
0.03%
0.07%
0.17%
0.04%
0.86%
1.22%
0.80%
0.57%
0.44%
0.48%
3.61%
0.42%
3.49%
0.39%
0.20%
0.15%
0.20%
0.98%
0.09%
0.12%
0.10%
0.08%
0.11%
0.07%
0.09%
0.09%
0.38%
0.34%
0.22%
0.10%
0.02%
0.02%
0.15%
0.02%
0.05%
0.11%
0.10%
0.01%
0.01%
0.02%
0.03%
0.04%
0.04%
0.01%
0.01%
0.06%
0.02%
0.00%
V. DISCUSSION
The most important factor according to the
respondents was financial stability. The financing of a
project involves the arrangement of adequate funds to pay
for the development and operation of a clearly defined
project.
This is not surprising, as the contractors have to be
careful when they apply for new tenders if they have
financial difficulties. Likewise, they try to increase their
estimate by taking into consideration the interest
percentage of loans to overcome their financial weakness.
Taking into consideration, that in the tense aftermath of
the January 25 Revolution and amid the ongoing violence
of the Arab Spring, the economic situation in Egypt is in
unrest. These results were in accordance with a study
performed in Gaza which shows the important role played
by the reliability in client financial status in cost
estimating practice in Gaza Strip [28, 29].
Any shortage of cash for the contractors will cause
many problems such as slow progress and decline in
productivity. Also, the contractors will not be able to
purchase the needed equipment for work. Moreover, cashflow problems also expanded to traders and suppliers,
which in turn slows work further. This result coincides
with the results of other researchers [30-32]. The suitable
description for this agreement is that cash is very
necessary for contractors regardless of the location of
research, economic level, or the culture of organization
[33]
.
But the contractors in a study performed in Thailand,
did not consider cash as an important factor causing
delays. The ability and experience of contractor in
Thailand may perhaps explain this result [33].
The difficult economic situation in Egypt, and
fluctuation of the local currency rates and the high rates of
inflation are also considered major factors that affect
construction process.
Contingencies concerned with inflation and
fluctuation in currency exchange rates should be based on
actual degree of uncertainty at the time of estimating the
project from item to item. On the other hand, escalation or
inflation affects all items, more or less uniformly, if the
project proceeds during the time period foreseen in the
budget. Contingency funds must not be used to cover
extra costs due to escalation or inflation. However, if
items are purchased due to works completed earlier than
they were planned and at lower costs, the amount saved
[due to potential inflation] should be treated as indicated
budget overrun rather than increase in contingency
fund [34].
VI. CONCLUSION AND RECOMMENDATION
As stated in the introductory section of this paper, the
problem of contractor selection for construction projects
in Egypt exists. Improper application of cost management
in the form of cost estimation causes a number of
subsequent problems that could be avoided if better
5.
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