Building Construction Projects Cost Estimation Using

Artificial Neural Network

Elias G/Hiwot

Advisor
A Thesis submitted to the school of Construction Technology Management in
Partial fulfillment for the requirements for the award of Masters of
Construction Technology Management

April, 2024GC.
Addis Ababa, Ethiopia.
 Declaration
This is to certify that the thesis proposal prepared by Elias G/Hiwot entitled Building

Construction Projects Cost Estimation Using Artificial Neural Network

submitted in partial fulfillment of the requirements for the Masters of Science Degree in
Construction Technology Management. It complies with the regulations of the
University and meets the accepted standards concerning originality and quality.

Student

Elias G/Hiwot __________________ __________________

Name Signature Date

Advisor

__________________ __________________
Name Signature Date
Contents
CHAPTER ONE.................................................................................................................6

INTRODUCTION..............................................................................................................6

1.1 Background of the Study..........................................................................................6

1.2 Statement of Problem................................................................................................7

1.3 Research Objective...................................................................................................8

1.3.1 General objective...............................................................................................8

1.3.2 Specific objectives.............................................................................................8

1.4 Research Questions...................................................................................................8

1.5 Scope.........................................................................................................................8

1.6 Significance..............................................................................................................8

1.7 Structure of the Paper...............................................................................................9

CHAPTER TWO..............................................................................................................10

LITERATURE REVIEW..................................................................................................10

2.1 Estimating Methods................................................................................................10

2.1.1 Detailed Estimate.............................................................................................10

2.1.2 Assembly Estimating........................................................................................11

2.1.3 Square-Foot Estimates.....................................................................................11

2.1.4 Parametric Estimates........................................................................................12

2.1.5 Model Estimating.............................................................................................12

2.1.6 Project Comparison Estimates.........................................................................12

2.2 Factors Determining the construction cost estimates..............................................13

2.2.1 Type of Used Foundation in the Building........................................................14

2.2.2 The type of structure material..........................................................................14

2.2.3 Area of Typical Floor.......................................................................................14

2.2.4 Number of Floors.............................................................................................15

2.2.5 The type of slab................................................................................................15

2.2.6 Number of Staircases in the Building..............................................................15

 2.2.7 Type of Contract (Lump Sum, Remeasured, Etc)............................................15

2.2.8 Length of Spans Between Columns.................................................................15

2.2.11 Usage of Building..........................................................................................16

2.2.12 Earthquake Zone............................................................................................16

2.2.13 Soil Type........................................................................................................16

2.2.14 Complexity of the Project..............................................................................16

2.2.15 Usage of Building Information Modelling (BIM).........................................17

2.2.16 Weather Conditions (Severe Fog, Sandstorm, Rainfall)................................17

2.3 The Artificial Neural Network Model.....................................................................18

2.3.1 Perceptron........................................................................................................19

2.3.2 Activation function..........................................................................................20

2.3.3 Gradient Descent..............................................................................................22

2.3.4 Loss Function...................................................................................................22

2.3.5 Backpropagation..............................................................................................22

2.3.6 Training Data set using Artificial neural network............................................23

2.2 Empirical Review...................................................................................................25

CHAPTER 3.....................................................................................................................27

METHODOLOGY...........................................................................................................27

3.1 Research Area.........................................................................................................27

3. 2 Research Design....................................................................................................28

3.3 Research Approach.................................................................................................28

3.4 Data Collection Techniques....................................................................................28

3.4.1 Primary Data....................................................................................................28

3.2.2 Secondary data.................................................................................................29

3.5 Sampling Technique................................................................................................29

3.6 Analysis Techniques................................................................................................30

3.7 Selection and Justification of Modeling Tools........................................................31

3.8 Validity and reliability.............................................................................................31

 3.8.1 Validity.............................................................................................................31

3.8.2 Reliability.........................................................................................................31

3.9 Ethical Consideration..............................................................................................32

Schedule............................................................................................................................32

REFERENCES.................................................................................................................33
 ABSTRACT
The construction sector has seen notable progress in economic development, local output,
employment, and meeting societal needs, however it still faces challenges hindering its
full potential in the economy. Developing an effective cost estimation model and system
from the design to construction stages is also essential for successful project outcomes.
Current cost estimation techniques (e.g., traditional and probabilistic methods) cannot
satisfy the requirement of the construction industry due to the need for a more accurate
result, more and more scholars gradually focus on the usage of machine learning
techniques to develop innovative cost estimation models. In order to overcome this
problem, a modern preliminary estimate (modern technique) to shall to be studied to
prove its efficiency over the traditional methods. Therefore, the author aims to investigate
on how can estimate building construction cost using Artificial neural network and come
up with digital platform. The researcher will identify top ranked factors determining
construction cost estimation, identify data set required and demonstrate construction cost
estimation using Artificial neural network. The collected data will analyze using
quantitative data analysis technique and presented using tables, and graphs and discuss
the results. After that author conducted analysis using a software SPSS (Statistical
Package for the Social Sciences) to identify top ranked factors that determines
construction cost estimation, the artificial neural network modeling will proceed based on
findings using NeuroSolution 6 platform.

Keywords: Artificial Neural network, construction cost estimation, factors, preliminary

estimate, machine learning
 CHAPTER ONE

INTRODUCTION
1.1 Background of the Study
The construction and housing industry are key players in Ethiopia's economy,
providing housing, amenities, and infrastructure for both the public and commercial
sectors (Assefa, 2023). According to Assefa, While the sector has seen notable progress
in economic development, local output, employment, and meeting societal needs, it still
faces challenges hindering its full potential in the economy.

Sae-Hyun and colleagues (2019) described cost estimation as the evaluation and
projection of the overall expenses associated with completing specific tasks within a set
timeframe, utilizing all pertinent project data and resources. Hafez et al (2023) stated that
accurate cost estimation during the design phase is crucial for project success, especially
as projects become larger and more complex, leading to increased uncertainties and
costs. Developing an effective cost estimation model and system from the design to
construction stages is also essential for successful project outcomes. According to Hafez
et al construction cost factors are large in number and diversified nature. This makes
difficult for users who directly perform the cost estimation. Therefore, construction Cost
models require to have the accuracy of prediction, efficiency, and sustainability that can
accommodate cost variance factors. Since inaccurate estimation of project uncertainties
is the underlying cause of project cost overruns in construction.

There are construction cost estimation methods and these methods can be conduct
at different stage of the project. Pre-tender estimates are susceptible to inaccuracies
(biases) because they are often prepared within a limited timeframe, and with limited
information about project scope. The trained ANN model can be used as a decision-
making tool when forecasting building cost at the pretender stage (Ajibade & Dharma,
2011). The model can be queried with the characteristics of a new project in order to
quickly predict the error in the estimate of the new project. According to Ajibade &
Dharma the predicted error represents the additional contingency reserve that must be set
aside for the project in order to cater for possible cost overruns. The model can also be
extended to forecast the likely cost of a project

In Ethiopia even though the government and the people are deeply involved and
have started reconstructing the country. The Ethiopian construction industry, like that in
most developing countries, faces challenges that impede its development”.in addition to
that (Laedre & Hansen, 2017) also stated “The architectural, engineering, and
construction industry is facing challenges related to increased productivity and improved
quality. Most of these challenges need to be dealt with early in the design phase of the
projects. This requires an effective design process, increases the need for effective
building design management and documentation. One of key factor for building
construction is the accuracy of construction cost estimation. Therefore, the author aims to
study building construction cost estimation using Artificial neural network.

1.2 Statement of Problem

The estimation of project cost plays a key role in the success of a construction
project. The process of cost estimating is crucial as it enables construction companies to
determine what their direct costs will be and to provide a “bottom line” cost, below
which it would not be economical for the work to be carried out. According to Sae-Hyun
et.al (2019) Estimates are firstly developed at the order-of-magnitude level with an
accuracy of −30 to +50%. They are later refined to the budget and conceptual level with
an accuracy of −15 to +30% and the definitive level with an accuracy of −5 to +15%.
The purpose of cost estimation is to provide appropriate information for decision-making
however overestimated or underestimated cost has the potential to cause lost strategic
opportunities to a construction contractor. But construction contractors continue to use
conventional or traditional techniques for cost estimation, such as estimating standard
procedures or comparison with similar projects based on documented facts and personal
experience.

Faten and colleagues (2022) identified that the causes of cost estimation
inaccuracy. These are insufficient time, poor tender documentation, and insufficient
tender document analysis. According to Waled & Hamid (2006) Engineers estimate their
projects in the preliminary stage using traditional methods, i.e. unit price of square meter
and analogous methods, which often leads to inaccurate estimates. Waled & Hamid
stated that the traditional 10% rule of thumb for estimating contingency is subjective -
based on experience and expert judgment, and are often inadequate. Current cost
estimation techniques (e.g., traditional and probabilistic methods) cannot satisfy the
requirement of the construction industry due to the need for a more accurate result, more
and more scholars gradually focus on the usage of machine learning techniques to
develop innovative cost estimation models. In order to overcome this problem, a modern
preliminary estimate (modern technique) to shall to be studied to prove its efficiency
over the traditional methods.

1.3 Research Objective

1.3.1 General objective
The General objective of this study is to investigate on how can estimate building
construction cost using Artificial neural network and come up with digital platform.

1.3.2 Specific objectives

1. To assess factors determining the construction cost estimation process in Addis Ababa.

2. To identify data set required to estimate the construction cost estimation using
Artificial neural network.

3.To demonstrate the process to estimate construction cost using Artificial neural
network.

1.4 Research Questions

1. What are factors determining the construction cost estimation process in Addis Ababa?

2. What are the data set required to estimate the construction cost estimation using
Artificial neural network?

3.How can estimate construction cost using Artificial neural network?

1.5 Scope
It focuses on buildings sector of construction projects in Addis Ababa Ethiopia
specifically on pretender stage of construction projects. Due to time constraint, this
research is limited to pretender/ early stage of building construction project, consultants
and contractors registered for architectural and engineering service in Addis Ababa.
The study population is limited only to principal architects and engineers registered for
architectural and engineering service in Addis Ababa.

1.6 Significance
This research holds significant important to understand the factors that influence
the construction cost estimation, accuracy and transparency of cost estimation and bring
modern solutions. Through cost and time overruns government building projects often
suffer from cost overruns and delays, leading to budgetary constraints and negative
impacts on the overall economy. This study will enable policymakers and project
managers to take necessary measures to adopt accurate construction cost estimation
technique in future government projects. The research findings have the potential to
positively impact the construction industry, public service delivery, and the overall
development of Ethiopian’s construction. The findings have practical implications for
stakeholders in the construction engineering and management field, providing insights
for decision-making.

1.7 Structure of the Paper

The research proposal has the structure of three bodies: the preface, main body, and
appendixes/annexes. The main body of research work consists of three main
parts/sections. It is arranged in a logical order: introduction under chapter one, then
literature review in chapter two, research methodology in chapter three with schedule
and References.

In Chapter I (introduction) of this main body, there is a general introduction which is

about the background of the study and study area, problem statement, research questions,
the objective of the study, scope, and significance of the study as well as the structure of
the paper.

Chapter II is about the review of related literature. The major and central themes
addressed in this chapter are based on specific objectives.

In chapter III this chapter author presented the research methodology: research method,
technique (sampling, data collection, and analysis techniques), and approach as well as
data collection tools are presented.
 CHAPTER TWO

LITERATURE REVIEW
Yasamin et al (2022) stated that the purpose of engineering construction is to
build structures in the most efficient, safe, sustainable, and low actual cost. Cost as
defined by (Stewart, 1991), as the total amount of all the resources required to perform
the activity. However, the price is the total amount paid for that activity. Mathematically,
price equals the cost plus the desired profit. The cost estimation provides the basis for
project management, business planning, budget preparation and cost and schedule
control (Marjuki, 2006). The sum of all costs, direct and indirect, inherent in converting a
design plan for material and equipment into a project ready for start-up, but not
necessarily in production operation; the sum of field labor, supervision, administration,
tools, field office expense, materials, equipment, taxes, and subcontracts (AACE
International, 2007). This cost needs to be counted in accurate forms so that the owner of
the project can make sure that there is value in return for money spent on the projected
cost which can be divided based on the type of project construction. It is essential to
calculate the costs on a basis of per unit, utilizing comparable projects as a guide, with
assumptions for different sorts of locations and unusual things.

2.1 Estimating Methods

Steven and Frank (2015) stated that the type of estimate is a classification that is
used to describe one of several estimate functions. These estimates vary according to
several factors including the purpose of estimates, available quantity and quality of
information, range of accuracy desired in the estimate, calculation techniques used to
prepare the estimate, time allotted to produce the estimate, phase of project, and
perspective of estimate preparer (Humphreys, 2004; Westney, 1997). Steven and Frank
argue that the required level of accuracy coupled with the amount of information about
the project that is available will dictate the type of estimate that can be prepared. These
estimating methods require different amounts of time to complete and produce different
levels of accuracy for the estimate. The different estimating methods are discussed
below.

2.1.1 Detailed Estimate

The detailed estimate includes determination of the quantities and costs of
everything that is required to complete the project (Steven and Frank, 2015). This
includes materials, labor, equipment, insurance, bonds, and overhead, as well as an
estimate of the profit. To perform this type of estimate, the contractor must have a
complete set of contract documents. Each item of the project should be broken down into
its parts and estimated (Steven and Frank, 2015). Each piece of work that is to be
performed by the contractor has a distinct labor requirement that must be estimated. The
items that are to be installed by others need to be defined and priced. The detailed
estimate must establish the estimated quantities and costs of the materials, the time
required for and costs of labor, the equipment required and its cost, the items required for
overhead and the cost of each item, and the percentage of profit desired, considering the
investment, the time to complete, and the complexity of the project (Steven and Frank,
2015).

2.1.2 Assembly Estimating

In assembly estimating, rather than bidding each of the individual components of
the project, the estimator bids the components in groups known as assemblies. The
components of an assembly may be limited to a single trade or may be installed by many
different trades. An example of a simple assembly would be a residential light switch,
which includes a single-gang box, a single-pole switch, cover plate, two wire nuts, and
an allowance of 20 feet of NM-B 12-gage wire. An example of a complex assembly
would be a metal-stud, gypsum-board partition wall, which would include bottom track,
metal studs, top track, drywall, screws, tape, joint compound, insulation, primer, paint,
and other miscellaneous items needed to construct the wall. This assembly would be
installed by multiple trades (Steven and Frank, 2015).

2.1.3 Square-Foot Estimates

Square-foot estimates are prepared by multiplying the square footage of a
building by a cost per square foot and then adjusting the price to compensate for
differences in the building heights, length of the building perimeter, and other building
components. In some cases, a unit other than square footage is used to measure the size
of the building. For example, the size of a parking garage may be measured by the
number of parking stalls in the garage. The information required to produce a square-foot
estimate is much less than is needed to prepare a detailed estimate. For example, a
preliminary set of design drawings (a single-line floor plan and key elevations) would
have the dimensions that are necessary to prepare a square-foot estimate (Steven and
Frank, 2015).
2.1.4 Parametric Estimates
Parametric estimates use equations that express the statistical relationship
between building parameters and the cost of the building. The building parameters used
in the equation may include the gross square footage, number of floors, length of
perimeter, percentage of the building that is common space, and so forth. For an equation
to be usable, the parameters used in the equation must be parameters that can be
determined early in the design process; otherwise, the equation is useless. Parametric
estimates are similar to square-foot estimates; however, the equations used in parametric
estimates are more complex and may use log functions, ratios of parameters, and
multiplication of parameters. Parametric estimating is useful for preparing conceptual
estimates based on assumptions of key building parameters or estimates based upon early
designs (Steven and Frank, 2015).

2.1.5 Model Estimating

Model estimating uses computer models to prepare an estimate based on a
number of questions answered by the estimator. Model estimating is similar to assembly
estimating, but it requires less input from the estimator. Estimate may be prepared for
questions such as What is the length of the building, how many bays are along the length
of the building, what is the width of the building, how many bays are along the width of
the building, what is the wall height above the grade, what is the depth (from the grade)
to the top of the footing, and What is the floor thickness. On the basis of the answers to
these questions, the model prepares a preliminary estimate for the project. Logic is built
into the model, such that the model selects the necessary components for the estimate
based upon the answers to the questions. For example, the size of the spot footings in the
center of the building that support the roof and their costs are selected based on the area
of the roof the footings support, which is equal to the width of a bay multiplied by the
length of a bay. The length and width of the bays are calculated from the first four
questions (Steven and Frank, 2015).

2.1.6 Project Comparison Estimates

Project comparison estimates are prepared by comparing the cost of a proposed project to
a completed project. When preparing an estimate using this method, the estimator starts
with the costs of a comparable project and then makes adjustments for differences in the
project (Steven and Frank, 2015).
2.2 Factors Determining the construction cost estimates
Factors in building cost estimation refer to the specific characteristics or
attributes that are considered in the estimation process to determine the cost of
constructing a building or structure (Elhag & Boussabaine, 1998; Elmousalami, 2020).
These attributes provide a basis for quantifying and evaluating the various elements that
contribute to the overall cost. In the context of building a cost estimation model, factors
refer to the variables or features used as input to the model to predict or estimate costs
(Elmousalami, 2020). These attributes capture relevant information about the projects,
activities, or resources that influence the cost. The quality and relevance of the attributes
significantly impact the accuracy and effectiveness of the cost estimation model (Pike &
Grosse, 2018).

According to Pawar (2007), cost estimates can be classified according to the

function of the estimate at various stages of the project. The preliminary estimate helps
the estimators to satisfy client requirements to determine the budget of their project.
Early cost advice is also valuable in drawing up the project information. It will affect
cost implications of design decisions and answer the first question that is asked by client,
namely, “How much will the project cost me”, which in its turn helps in decision-
making. Consequently, the cost estimation mission becomes desirable and crucial,
especially during the preliminary (conceptual) stage, in which the project scope is not
finalized and there is very limited information (Kirkham, Brandon, & Ferry, 2015;
Sonmez, 2004). In addition, Shehatto (2013) discussed the need of estimation to ensure
high degree of accuracy without detailed information or drawings to satisfy the parties of
the project (Clients, Donors, Consultant and Contractors). The ANN model, which was
used as a new approach in cost estimation, was utilized to identify significant parameters
for building project costs.

The ANN model considers eleven significant parameters as independent input

variables that affect one dependent output variable – “project cost”. These variables
ranged according to the degree of their significance are as follows: area of a typical floor,
number of story’s, building use, type of foundation, number of elevators, slab type (solid,
ribbed, etc.), type of external finishing, presence of HVAC and false ceiling, type of tiles,
type of electricity works, and type of mechanical works.

Kim, et al (2013) stated that cost estimation in the preliminary stage is not accurate due
to incomplete drawings. Consequently, ten variables were adopted to be examined for
school projects in the UK in order to estimate the costs in the preliminary stage. Those
variables are year, budget, school levels, land acquisition, class number, building area,
gross floor area, story, basement floor, and floor height. Three different techniques have
been applied and compared in terms of the accuracy of three estimating techniques
(regression analysis (RA), neural network (NN), and support vector machine techniques
(SVM)) by performing estimations of construction costs. Using historical data, the NN
model shows more accurate estimation results than the RA and SVM models. At the
same time, Cheng, Tsai, and Hsieh (2009) used the neural network model to estimate the
house projects relying on ten quantitative and qualitative variables for their model, which
are floors underground, total floor area, floors aboveground, site area, number of
households, households in adjacent buildings (quantitative factors), soil condition,
seismic zone, interior decoration, and electromechanical infrastructure (qualitative
factors).

2.2.1 Type of Used Foundation in the Building.

The type of foundation is a major package to be considered in project estimation in terms
of risk, material quantity, labor required and special equipment to be procured. The
package can be assigned to a subcontractor that will have a risk shifting and decrease the
risk on the contractor, but at the same time, this will lead to a higher tender price and in a
highly competitive market, it may impact the final benefit.

2.2.2 The type of structure material

The type of structure material for the construction of the project has a major impact on
project planning, type of equipment, skilled team and labors and risk. For example,
concrete reinforced projects will have longer project span, but it is a proven science with
low risks and low requirement for skilled professionals and special equipment. Steel
structure have relatively shorter time frame but require skilled labor which will change
the cost estimations. Precast projects are fast executing and have low risk and overruns
because of their factory environment, but they have a higher cost and require higher
logistics and special equipment.

2.2.3 Area of Typical Floor

The area of the projects’ ground impact on cost estimation is rated almost equally from
low to high as it depends on the company scale. Small companies will consider its
impact higher as they will require to procure material and equipment, recruit new people,
and engage sometimes in jobs they have never executed before. Bigger companies have
different type of consideration as bigger scale project decrease the overhead and indirect
cost per square meter (better ratio of people to area of project leads to less cost of staff,
as for example, a 1000-metersquare will require one engineer while a 100-meter square
will also still require an engineer, but overhead will increase in the latter).

2.2.4 Number of Floors

The number of floors has a different perspective if it can be considered a major factor or
not. If the number of floors is small, then, the impact difference between Ground and five
levels (G+5) or a G+10 is low, other than the quantities that are considered. When the
project becomes a high-rise, the overhead and indirect cost will rise, and the factor
becomes high rated because manlifts will be added, customized special cranes and
concrete might be considered, plumbing and sewer systems needs to be created at certain
levels for crew needs, risks are higher and will require more expensive insurances, higher
safety requirements, crew training, etc.…

2.2.5 The type of slab

The impact will vary on size of organization and availability of material and equipment,
usage of subcontractor and many other factors.

2.2.6 Number of Staircases in the Building

The factor impact consists of material availability, risk of execution (risk of formwork
opening) and time frame for execution.

2.2.7 Type of Contract (Lump Sum, Remeasured, Etc)

One main point in contracts is whether the conditions are fair and balanced or fixed with
no possibility for variations and changes. The Lumpsum contract will have a higher price
for the same project classified under unit-price contract (called remeasured in U.A.E)
because of the risk shifting from client to contractor. Another influence that has a direct
relation with type of contract is the method of delivery of the project as it defines the risk
for which party and this what basically defines the estimation.

2.2.8 Length of Spans Between Columns

Distance of spans have a direct effect on operations, and because most of the population
background was operation.

2.2.9 Area of Shear Walls in Project

Area of shear wall depend on three factors mainly: availability of formwork and labor,
risk of formwork opening, and time frame for execution.
2.2.10 Location of Project (Country, City)

The location of the project can be classified in the top five in terms of impact on the cost
estimation. It is linked to most of the other important factors and its impact will consist
of the below points to be able to provide a decent cost estimate. Either the project
location in an urban, suburb or in the city, isolated area or near material sources,
previously recognized or new to the company, the political situation and customs and
regulations if foreign country. These factors will contribute to a noticeable rise in cost
because of unknown risk and in procurement of insurances to mitigate risks. It can
include overhead and indirect costs such as staff housing if isolated area, challenges in
transportation, might require building of temporary roads and service networks, raw
materials (gravel, cement, sand, and others) might need higher time to deliver or need to
look other suppliers with higher prices, area labor might be scarcer, etc.

2.2.11 Usage of Building

The usage of building factor can be classified into two main categories: governmental
(public) or private project. Governmental projects will have a higher standard,
regulations, and Leed requirements, opposed to private where the budget will determine
the rest. Subcategories such as commercial, schools, residential or facility can further
impact the estimation, but the main impact will always whether governmental or private.

2.2.12 Earthquake Zone

Earthquake factors are rarely applied in the region because there are no seismic zones.
In general, seismic zones project will have a higher specification, more rigid structure
system, more complex building system, and detailed method statements more than that
of normal projects. Also, it will require special insurance in case an earthquake hits while
the project is in construction and will require more safety regulations.

2.2.13 Soil Type

Soil type is a major factor; it is the base of design, type of foundation, and many other
factors. Soil type is a risky factor in the case of a design and build (D- B), if the contract
is lumpsum, if the contract conditions are imbalanced.

2.2.14 Complexity of the Project

Complexity of project was rated highest impact on cost estimation. The main reason for
this high percentage of inaccurate estimation analyzed from the study led from
complexity of drawings and because of the low experience of some of the estimation
team, quantities may be estimated wrong or even drawings may not be understood.
Complex projects may also require new execution methods that are hard to predict cost,
higher non-mitigable risks, etc.

2.2.15 Usage of Building Information Modelling (BIM)

The usage of advanced techniques such as Bim has improved the quality of cost
estimation process by providing accurate automatic quantity survey for different material
and enhance the understanding of complex projects. It also improved the coordination
between different trades, enabling to detect clashes before happening which decreased
abortive work.

2.2.16 Weather Conditions (Severe Fog, Sandstorm, Rainfall)

The impact of weather conditions on cost estimation varies on the case presented. Some
cases can be extreme and unknown, and others can be mitigated and known no matter
how extreme the case is.

2.2.17 Management Conditions.

A good Management is an important factor for project execution but not as important to
cost estimation process. A well-established management will have better contingency
plans, better project execution methods, less risks and abortive works.

2.2.18 Availability of Skilled Labor

Availability of skilled labor is a critical factor in cost estimation. Locations with scarce
labor may delay project execution and might even reach to stop the works. Recruitment
in such zones will be more expensive and might require the organization to outsource
labors from abroad, which in turn costs housing, meals, transportation, and higher
salaries because of expatriation.

2.2.19 Trend and Value of Market Indices (Stock Market Index, Construction
Index, Inflation)

The trend of market and inflation can have a big impact on cost estimation. For example,
the economic boom of projects causes a big impact on prices of steel, aluminum,
bitumen, and many other materials. Moreover, it led to a market shortage in skilled labor
and engineers, increasing prices which affects the cost estimation especially for fixed
cost projects.
2.2.20 External Social Conditions (I.E. Diseases, Wars and Conflicts).

A factor that is sometimes counted on force majeure and its impact will highly depend on
the contract type is external social conditions such as conflicts and wars and the impact
on the price of raw materials.

2.2.21 Sustainability in Design and Construction (I.E Leed Building).

Project sustainability plays an important role in determining cost estimation. It has a

strong impact on cost as it will require a more sophisticated design, greener materials
(more expensive), require waste management and recycling process.

2.3 The Artificial Neural Network Model

ANN represent as a weighted directed graph that includes several nodes (artificial
neurons) and edges (directed edges with weights). The neurons take the input as a vector
that is analogous to a specific pattern or image. The neuron’s output utilizes as the input
for other neurons, and the weights are modified during the ANN training for addressing
the issues of classification. Typically, the architecture of ANN includes an input layer, an
output layer, and multiple hidden layers that are completely or partially linked, each of
which comprises neurons. The hidden layers work as an intermediary between the input
layer and output layer and adjust the input in a specific manner for utilizing the output
layer.

ANN’s are biologically inspired; that is viewing at the organization of the brain
considering network configurations and algorithms. The human nerve system, built of
cells called neurons is of staggering complexity. It contains approximately ten thousand
million (1011) basic neurons. Each of these neurons is connected to about ten thousand
(10) others. The connection of each neuron with other neurons forms a densely network
called a neural network. These massive interconnections provide an exceptionally large
computing power and memory. The neuron accepts many inputs, which are all added up
in some fashion. If enough active inputs are received at once, then the neuron will be
activated at once, then the neuron will be activated and “fire”; if not, then the neuron will
remain in its inactive, quit state.
Fig.1 Model representation of a biological neuron versus artificial neuron network model
2.3.1 Perceptron
K.-L. Du (2016) stated that perceptronas a McCulloch-Pitts neuron or linear threshold gate,
is the earliest and simplest neural network model.

Fig 2: single layer Perceptron

In the above figure, for one single observation, x0, x1, x2, x3...x (n) represents various
inputs (independent variables) to the network. Each of these inputs is multiplied by a
connection weight or synapse. The weights are represented as w0, w1, w2, w3….
w(n). Weight shows the strength of a particular node. b is a bias value. A bias value
allows you to shift the activation function up or down.
In the simplest case, these products are summed, fed to a transfer function (activation
function) to generate a result, and this result is sent as output.

Mathematically, x1. w1 + x2. w2 + x3. w3 ...... xn. wn = ∑ xi.wi

Now activation function is applied on (∑ xi.wi).
Fig 3: multiple layer Perceptron

Multilayer Perceptron’s are essentially feed-forward neural networks with three types of
layers: input, output, and hidden. The input layer receives the input signal for
processing. The output layer performs tasks such as classification and prediction.
Multilayer Perceptron’s' accurate computational engine consists of an arbitrary number
of hidden layers between input and output layers. Similarly, the data flow from the
input layer to the output layer in a Multilayer Perceptron. The neurons in the Multilayer
Perceptron’s are trained using the backpropagation learning algorithm. Multilayer
Perceptron’s are designed to approximate any continuous function and can solve
problems that are not linearly separable.
2.3.2 Activation function
Ravish (n.d) defined Activation function decides whether a neuron should be activated or
not by calculating the weighted sum and further adding bias to it. The motive is to
introduce non-linearity into the output of a neuron. If activation function did not apply
then the output signal would be simply linear function (one-degree polynomial). Now, a
linear function is easy to solve but they are limited in their complexity, have less power.
Without activation function, model cannot learn and model complicated data such as
images, videos, audio, speech, etc.
Types of Activation Functions:
Threshold Activation Function also called Binary step function
A Binary step function is a threshold-based activation function. If the input value is
above or below a certain threshold, the neuron is activated and sends exactly the same
signal to the next layer.

Fig 4: A Binary step functions

Activation function A = “activated” if Y > threshold else not or A=1 if y>threshold 0

otherwise.
Sigmoid Activation Function also called Logistic function
A Sigmoid function is a mathematical function having a characteristic “S”-shaped curve
or sigmoid curve which ranges between 0 and 1; therefore, it is used for models where
we need to predict the probability as an output.

Fig 5: Sigmoid curve (logsig)

The Sigmoid function is differentiable, means we can find the slope of the curve at any 2
points. The drawback of the sigmoid activation function is that it can cause the neural
network to get stuck at training time if strong negative input is provided.

2.3.3 Backpropagation
Back propagation is one of the best-known ANNs. The typical back-propagation ANN
always has at least one hidden layer. There is no theoretical limit on the number of
hidden layers, but typically there are no more than two. During the learning process, the
error information is propagated back from the output layer through the network to the
first hidden layer.

Fig 8: Backpropagation
2.3.4 Training Data set using Artificial neural network
NeuroSolution 6 for Excel use to build the ANN model is easier and more
flexible in use for both training and testing. After the data were prepared, the sequential
steps were to create the initial network by choosing the multilayer perceptron (MLP),
which consisted of inputs (independent variables), one hidden layer, and output
(dependent variable). To perform the analysis, the data should be set into three sets,
namely, training set – 70 %; cross-validation set – 15 %, and test set – 15 % (Dowler,
2008).

The training set and cross-validation set were used to train the model through
learning to modify the network weights in order to minimize the network error through
monitoring with cross validation dataset. The “Back Propagation” algorithm, which was
used to train the network, belongs to the realm of supervised learning. Consequently, it
was adopted in this study to train the multilayer network, which is concerned with feed
forward the network structure (Ashwood, 2013). The error of training can be expressed
by the mean squared error (Willumsen, Oehmen, Stingl, & Geraldi). To conduct the
training phase, the normalization of the training data was recognized to improve the
training performance of the network by Neuro Solution software. Moreover, separately,
the test dataset was used to measure the generalization of the network as well as the
network’s performance. Furthermore, the testing set was used to confirm that the
network had learned (Shehatto, 2013). To determine the accuracy of the estimate in the
testing phase, many tests should perform: - Mean Absolute Error (MAE); - Mean
Absolute Percentage Error; - Mean Squared Error; - Root Mean Squared Error (RMSE);
- Correlation Coefficient (R). After the best model was determined, the sensitivity
analysis was done in order to evaluate the effect of each input on the output (Günaydin &
Doğan, 2004; Principe et al., 2010).

Chandanshive & Kambekar (2019) studied a dataset of 78 building projects

located in regional area of Mumbai, India. The dataset was taken from the same regional
area to reduce different parameters. The objective of the study is to increase the accuracy
of cost estimation. The authors chose to focus on structural cost as they considered it the
most influential design parameter. The structural cost of building was assigned as an
input and the total structural skeleton cost was the ANN model output. The authors used
training and testing models to improve the accuracy of the model and the study and avoid
overfitting. The authors used multiple training sets and performance measures and
succeeded in reaching a correlation coefficient (R) of almost 1 which indicates the
perfect fit. They concluded that a trained neural network can successfully predict early-
stage project costs. Günaydin & Doǧan (2004) employed an ANN model to forecast the
cost of the structural system per square meter during the initial phases of building design.
The ANN model they developed consisted of an input layer incorporating eight
parameters that were accessible during the early design stage. The findings demonstrated
that the trained ANN model accurately estimated the cost of the buildings, achieving a
minimum accuracy of 93% in predicting the cost per square meter.

Table 1 Dependent and independent variable

Dependent variable Independent variables

Complexity
Project type
Area of floors
Number of stores
Type of foundation
Number of elevators
Slab type
Type of external finishing
interior decoration
Preliminary cost estimate Type of HVAC system
Type of tiles
Type of electricity works
 Type of mechanical works
Basement floor
Floor height
Site area
Project location

2.2 Empirical Review

Wang et al. (2022) conducted their study on adopting the data on 98 public school
projects in Hong Kong SAR. Their point of focus was to address certain limitations in
construction cost estimation models. Existing models tend to focus solely on project
characteristics and overlook the influence of external economic factors. The study aims
to quantitatively explore the effects of economic factors on construction cost estimation
by using Deep Neural Networks (DNN) as an estimator and Shapley Additive
explanations (SHAP) as a model interpreter. The analysis utilized data set and included a
comparison analysis with other popular machine learning models used in construction
cost estimation. The results indicate that economic factors play a significant role in
reducing estimation errors and may even be more influential than project characteristics.
In Cost Estimation According to Elmousalami (2020), the first model of ANNs were
proposed in 1943 by Warren McCulloch. It was not until 1982 when Hopfield
interconnected these neurons to construct a network that gave rise to modern artificial
neural networks (ANNs). Shehatto (2013) outlines the first application in construction
was in early 1980’s. According to Heravi & Eslamdoost (2015), ANN application has
been successful in construction engineering and management. They are used to estimate
productivity for use in excavation hauling operations, concrete formwork elements,
pouring concrete, and concrete finishing tasks. Heravi & Eslamdoost further outlines that
ANN facilitates the generation of precise labor production rates (labor/unit) for various
industrial construction activities, including welding and pipe installation.

There were some constraints in using the historical data in the ANN (Shehatto,
2013), which were the inputs of variables were limited to the collected data, Sufficient
number of projects should be available for each variable and any new variable that does
not belong to the adopted model would not be handled. Therefore, the limitations of the
ANN model could be summarized according to the inputs of variables; when the input
was registered in only one case (136 projects), the variable should have been excluded
from the analysis, but it was still present in the ANN model implicitly. On the other hand,
any inputs that did not appear in the collected data were excluded from the range of
variable inputs and the variable still was present in the ANN analysis.

Table 2 Variable’s inputs (encoding) Waled and Awad (2006)

Variable Variable’s inputs (encoding) Code

Project type Administration 1
Commercial 2
Educational 3
Residential 4
Health center 5
Degree of complexity Complex 1
Normal 0
Site area, m2 200–300 1
301–400 2
401–850 3
851–1200 4
1201–1350 5
1351–1600 6
1601–2050 7
2051–2300 8
2301–2750 9
2751–11700 10
Project position Mountain 1
Costal 2
Floor area, m2 100–200 1
201–250 2
251–300 3
301–400 4
401–500 5
501–550 6
>550 7
Number of stories From 1–4 1,2,3,4
Floor height, m 3.0 1
3.2 2
3.3 3
3.4 4
3.5 5
Slab type Drop beams 1
hollow block 2
Flat 3
Type of external finishing Normal plaster 1
Stones 2
Type of HVAC None 1
Window 2
Split 3
Type of tiles Ceramic 1
Granite 2
Geographic Conditions Flat 1
Gentle Sloped 2
 Steep 3
Ground Conditions Soft 1
Moderate 2
Hard 3
Free 4
Type of Foundation RR 1
Isolated 2
Strap 3
Column 4
Pile 5
Combined 6
Type of Building Residential 1
Commercial 2
Educational 3
Office 4
Others 5
Unforeseen items/Conditions yes 1
no 0
 CHAPTER 3

METHODOLOGY
In this chapter, the author briefly describes the Research Area, Research Design,
Research Approach, Sampling Technique, analysis techniques Data collection
techniques, Data type, Source of Data, Validation and Reliability and Ethical
Consideration according to research objectives.

3.1 Research Area

Ethiopia is located in the North-Eastern part of the African continent or what is known as
the “Horn of Africa.” One of Ethiopia's most long-lasting and extensive projects over the
coming years will be the restoration of its cities and rural areas. The current resurgence
of construction activity in its numerous manifestations is indicative of the lengthy
historical process of national self-expression and progress. Addis Ababa is the capital
city of Ethiopia and serves as the political, economic, and cultural hub of the country. It
is located in the central part of Ethiopia, situated at an elevation of around 2,400 meters
(7,874 feet) above sea level. In terms of infrastructure, Addis Ababa is undergoing rapid
development, with modern high-rise buildings, shopping malls, and transportation
networks being established. The city is also home to several construction companies,
consulting Architecture and Engineering Firms and Professionals. FDRE Construction
Work Regulatory authority is obliged to certify and registration of organizations and
professionals, as well as regulate unethical acts and operations. There are above 200
registered firms for consulting architecture and engineering services by FDRE
construction Authority.

3. 2 Research Design
The author adopted a descriptive research design to identify factors determines the
construction cost estimation, required data set and demonstrate how the artificial neural
network assist the estimation. This research design also portrayed the perception of the
population about the problem and it also enabled the researcher to establish the link
between study variables and the problem.

3.3 Research Approach

Based on the nature of data collection the author adopted the quantitative research
approach which According to Jansen (2010) utilized to count people sharing the same
characteristics, exploring experiences and establishing frequencies. Therefore, this
research adopted quantitative survey methods since the method avails the opportunity to
make inferences about the experiences and perceptions of participants on construction
cost estimation. Among different types of quantitative research approaches the author
will adopt survey method.

3.4 Data Collection Techniques

Sharique A, (2019) states Quantitative research involves the collection of data using
questioner. Therefore, the author adopted quantitative data collection techniques called
‘‘questioner survey, to seek views of key respondents.

3.4.1 Primary Data

The questioner survey involved asking questions to help respondents explore
the topic and to probe for further thoughts and reflections. Close-ended questions will
use to frame the responses in certain categories. Objective Responses of professionals
will collect from such as Architects and Engineers that are working in consulting
Architecture and Engineering firms, the ministry of urban development and
infrastructure, and construction permit offices in Addis Ababa.
Factors affecting the accuracy of pre-tender building cost estimates According to
Seo et al (2002) attributes used as inputs for ANN model. They must be meaningful to
the estimator and the design team at the pre-tender stage hence should consist of
attributes that are known during that stage. It is also useful that the attributes should, as
much as possible, be high-level project characteristics. The primary data regarding the
Characteristics of responding organizations in term of position of respondent, years of
experience for the organization and total number of employees and Factors affecting cost
estimating.

3.2.2 Secondary data

Secondary data will use in this research are building construction cost estimation
formats of a company. The secondary data sources will be Architecture Consulting
Firms, the Ethiopian Consulting Architects Association, the Ministry of Urban
Development and Infrastructure, the Construction works regulatory agency and
Construction Permit offices in Addis Ababa City Administration.

3.5 Sampling Technique

It is for Quantitative data collection when focusing on a several number of informants so
that their response gives optimal insight into an issue. simple random sampling
techniques will employ in this study to come up with valid outcomes. The reasons behind
selecting these sampling techniques is that the study decide whom to include as a
respondent for the questions that will be prepared to collect data and get a better chance
to select right respondents. The basic reason here is that, selected individuals are those
who are responsible for the issue under investigation and expected to have adequate
knowledge. The sample size used for this research is 240 respondents who are registered
by FDRE for consulting Architecture and construction services.

The sample size for the study calculated according to the formula recommended by
Yamane ‘s (1967) with 95% confidence and 5% acceptable sampling error. The formula
is presented below: To take a population sample, we must use a formula to figure out
what sample size we need to take. Using Slovene ‘s formula to figure out what sample
size, we need to take, which is written as:

n= N / (1+ N * (e) 2)

Where, - n= is number of samples

 N = total number of study population

 e = standard error = 5% at 95% confidence level

Based on the above formula, the study has n respondents and gather data through
questionnaire. Based on the calculated sample size, the study assigns the number of
respondents for each branch proportionally.

n = 240/(1+240x0.0025) = 150

3.6 Analysis Techniques

The collected data will analyze using quantitative data analysis technique and presented
using tables, and graphs and discuss the results. After that author conducted analysis
using a software SPSS (Statistical Package for the Social Sciences) version 2026 to
identify top ranked factors that determines construction cost estimation, the artificial
neural network modeling will proceed based on findings.

The author will use Relative Importance Indices (RII). For the research undertaken, it is
to be observed that feedbacks were received on a (1– 5) Likert scale. Relative
importance index method was used for determining the relative importance of
sustainable criteria. Relative Importance Index (RII) is a non-parametric technique
widely used by construction and facilities management researchers for analyzing
structured questionnaire responses for data involving ordinal measurement of attitudes.
For this part of the questionnaire, the five-point Likert scale of 1 to 5 1 = not at all
important, 2 = low important, 3 = neutral, 4 = very important 5 = extremely important
this adopted and the Relative Importance Indices (RII) for each of the sustainable
criteria. Formula for finding RII for each of sustainable criteria is as follows,

RII = ΣW / (A*N)

Where, W = weighting that is assigned to each variable by the respondent, A = highest

weight and N = total number of respondents.

The RII value ranges from 0 to 1 with 0 not inclusive. It shows that higher the value of
RII, more important was the sustainable criteria and vice versa. The comparison of RII
with the corresponding importance level is measured from the transformation matrix as
proposed by Chen et al. (2010).

According to him, derived importance levels from RII are as follows:

Table 1 Importance Level from RII

High (H) 0.8 < RII < 1.0

High-Medium (H-M) 0.6 < RII < 0.8
Medium (M) 0.4 < RII < 0.6
Medium-Low (M-L) 0.2 < RII < 0.4
Low (L) 0.0 < RII < 0.2
Vishal & Gomatesh (2016) states that the table 8, shows the Relative Importance
Index (RII) of the sustainable criteria along with the corresponding importance
level.

3.7 Selection and Justification of Modeling Tools

Neuro Solutions and other Neuro Dimension products can be used to apply neural
network technology to real-world applications. Neural network technology performs
"intelligent" tasks similar to those performed by the human brain. It acquires knowledge
through learning and then stores that knowledge within inter-neuron connection strengths
known as synaptic weights. In this active work provide how to use neuro solutions
software to solve all techniques of Neural Networks by using neuro solutions software.
The interaction between neuro solutions software and excel file and also, how to get
training, validation and testing. The goal is to establish the techniques understandable
and easily accessible and to allow continued focus on the chemistry and physics of the
problem. Computational elegance and efficiency are gladly sacrificed for ease.
3.8 Validity and reliability
3.8.1 Validity
Validity is referring to the extent to which an empirical adequately reflects the real
meaning of the concept under consideration. And also, it refers to the degree to which a
statistical instrument measures what it is intended to measure. It emphasizes the accuracy
of a measurement instrument (Saunders, et al; 2009).

3.8.2 Reliability
Reliability it refers to the extent to which your data collection techniques or analysis
procedure will yield consistent findings. It focuses on whether the research method and
design are accurate (Saunders, et al; 2009). The reliability test is an important instrument
to measure the degree of consistency of an attribute which is supposed to measure. It
measures the internal consistency of the item in a scale. The normal range of Cronbach’s
coefficient alpha value ranges between 0-1 and the higher value reflects a higher degree
of internal consistency. Cronbach's Alpha is preferable to the split-half procedure
because it supports correlation for all possible ways of dividing the measure into two
halves (Polit and Hungler, 1978). The reliability coefficient of the scale will establish by
Cronbach's Alpha using the SPSS package after data collection, which reflected the Alfa
coefficient to be in the range from 0.584 to 0.929.

3.9 Ethical Consideration

The researcher will address the ethical issues and practices that directly and indirectly
affect the development and evaluation of the proposal as well as overall research
processes. The researcher will take into account the ethical activities such as do not
abuse the respondents, fulfilling the promises what the researcher made to respondents,
completing questionnaires at the specified time, avoiding emotion, dishonest and
unsuited behaviors, ensuring to the respondents not to disclose their names, and personal
information. In addition, full acknowledgment of all the reference materials used in the
study.
 Schedule
2024 Gc.
Activities
June July August September to November
to to to November
July August September
Proposal Preparation
and Submission
Data collection
Data Analysis
Submission of draft
Final draft and
defense
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