Problems in Forming Cost Estimates for Construction Industry

Abstract

Problems of forming cost estimates for the construction industry is relevant in Russia, where many construction organizations face the issue of a current pricing system that does not consider new technologies in construction. This leads to underestimations of costs in construction and limits opportunity for competitive pricing between construction companies. This article aims to provide recommendations for improving reliability in calculating construction costs and enhance efficiencies in capital investments by construction participants. The article provides an analysis of the existing system of pricing in construction, and the peculiarities of the system of pricing in both Russia and the United States. Results indicate the need for expediency in applying certain provisions of the foreign system into that of Russia's for determining the cost of construction. These measures would help minimize the presence of contractors in the construction market who do not actually perform the construction and installation work on their own, and to achieve the desired level of profitability of 8 to 10%. JEL

Investigation of PESTEL factors driving change in capital project organizations

“…Examples of such consequences include an increase in material costs that the buyer of imported material needs to pay, volatility in pricing which negatively impacts project contracts and budgets, delays in receiving material as processing time at ports of entry become longer and thus delaying project schedules, and disruption of the supply chain when looking to new vendors for lower prices and changing projects' types of material to lower costs (SmithSchafer, 2021). Such consequences worsen project cost estimation for an industry that already struggles with cost estimation, budgeting, and overruns (Oparin et al, 2016;Bou Hatoum et al, 2021b).…”

Distributed Assessment of the Risk of Exceeding the Project Deadlines and Recommendations for Improving its Sustainability

“…Сложившаяся ситуация в управлении рисками приводит к необходимости развития цифровых методов управления рисками, которые основаны на утверждении о нелинейности систем управления рисками, о произвольном (не обязательно нормальном) распределении параметров системы и факторов риска, а также цифровом способе распределенной оценки риска, который позволяет определить уровень риска и цену риска [8,9].…”