COST INFORMATION SYSTEMS IN THE CONSTRUCTION INDUSTRY

- A common definition of information is to describe it as one or more statements or

facts that are received by a human and that have some form of worth to the
recipient. (Robert M. Losee, 1998)
- Worth can also be defined as value and the value of information can be measured
using the following characteristics.
1. Timeliness.
Is it there soon enough to be meaningful?
2. Sufficiency/Completeness.
Is there adequate information for the purpose intended? Which is a factor of sample
size and time horizon?
3. Level of Detail or Aggregation.
Are the data broken down into meaningful units?
4. Redundancy.
This can be a problem if there is too much redundancy or too little redundancy.
5. Understandability.
- Is the information real i.e. can it have some practical use?
- Is it simple to understand?
- Is it expressed in a form that minimizes perceptual errors?
- Does it lend itself to ease of encoding?
6. Freedom from bias.
Is it free from prejudice?
7. Reliability.
- Is the information correct?
- Is the information verifiable?
8. Decision-Relevance.
- Does the information have predictive power?
- Is the information significant?9. Cost-Efficiency/Cost-Effectiveness.
- This is the need to consider the change in the decision behavior after obtaining the
information minus the cost of obtaining it.
10. Comparability.
This takes into consideration:
- Consistency of format.
- Consistency of aggregation.
- Consistency of fields.
11. Quantifiability.
Is it amenable to quantitative manipulation.
12. Appropriateness of format.
This looks at:
- The medium of display e.g.:
• Ordering of the information
• Graphical vs Tabular display
13. Quantity
More is not necessarily better!
In the construction industry, time wastage and cost overruns in projects can be traced back to
poor coordination caused by inadequate, insufficient, inappropriate, inaccurate, inconsistent,
late or a combination of all these factors regarding information.
Contributing to the problem of information management in the construction industry is:
1. The growing size and complexity of projects
2. The sheer number of participants that are involved in any one given project that have
different interests, sometimes contradicting each other.
3. The nature of construction where participants come together for a short period of the
project and disband after it is completed.
4. The separation of design and production.
5. The geographical dispersion of projects in relation to participants business premises
location.
6. The increasing level of awareness and sophistication of clients as to their specific rights.
7. The adversarial and hostile relationships between firms, that lead to unwillingness to
share information.
8. Etc. Etc.- Consequently, the worth of cost information/data used in estimating cost of
buildings must be evaluated in the light of these factors.
- These problems lead us, to therefore, query the accuracy of the cost of buildings
procured under this system, as to their scientific truth and accuracy and as to
whether the building owners and the general economy is not being hoodwinked as
to the true worth of their investments.
To answer this question, we need to look at the uses of cost information in the industry and the
reliability of their sources.
THE USES OF COST DATA
Cost information in Quantity Surveying offices are normally used for six main purposes:
1. To control and monitor contracts, for which the contractor has already been selected.
This is done through the cost management procedures of interim and final accounts
payments.
2. The estimation of the future cost of a project and the control of cots during design to
ensure that the projected budget is close to the selected tender sum.
3. The “balancing” of costs in the cost plan elements to ensure that money has been spent
in accordance with the client’s objectives and priorities.
4. To facilitate negotiating unit rates of items of work with a contractor so as to ensure
speedy commencement of work without going through the bill preparations and other
lengthy tendering processes where special circumstances of a project demands.
5. Analysis of cost trends for deeper understanding of external politics and economics
trends in the construction industry. (research)
6. To understand the relationship between design decisions and the degree to which they
affect costs