Premise-based construction cost estimation in residential production in St. Petersburg, Russia
Insinööritieteiden korkeakoulu | Master's thesis
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Real Estate Investment and Finance
AbstractEstimation of construction costs is a common practice among players in the construction industry. Construction project is a complex process that requires financial and resource planning. Regardless of the cost estimation’s importance, the research material on the subject is relatively limited. The purpose of this study is to elaborate on current methodologies used in the project cost estimation in the construction industry, to analyze the current construction cost estimation model used by the case company, and to research for the ways to adapt the existing model for estimation of residential production in St. Petersburg, Russia. This leads to the following research questions: -According to the existing studies, what are the main cost estimation methodologies applied by practitioners? -Can the existing estimation model used by the case company be implemented in St. Petersburg, Russia? -Is the estimated model reliable for St. Petersburg, Russia? The findings of the literature review indicate the important of the cost estimation at the early phase of the construction project, e.g. before the design planning stage. The study describes the role of the cost estimation and its optimal utilization in the design management process of the case company. Also, the study analyses how target costing methodology has been applied in company’s solution for optimization of construction cost estimation process. This research uses case study methodology to research for possibilities of adaptation the existing estimation model in company’s residential production in St. Petersburg, Russia. The case study analyzes the adjustment process of technical parameters and units’ price. The key finding of the case study is that existing cost estimation model used in the company is suitable for estimation in St. Petersburg, Russia, but requires essential setup in the price adjustment. This leads to the fact that market prices used in this case cannot be adjusted for a cross-border usage only via indexing of materials and labor units. For the model to be reliable, the material and labor prices database has to be based on the local price market information. Evidence for the need of the optimized solution for construction cost estimation has been found in answers provided by interviewees. The interview answers also provide the importance of the model consistency used in cost estimation process.
Thesis advisorEskola, Pekka
construction cost estimation, residential production, estimation model, St. Petersburg