Inadequate cost estimation and lack of data on land among causes of overvaluation of works

SANTO DOMINGO. The inadequate cost estimate, insufficient information the soil conditions and unrealistic prices in the tenders are the main technical causes that influence the cost overrun on construction projects in the Dominican Republic. This is how the owners of works, Contractors, designers y supervisors, both private sector such as public, consulted by civil engineering term students of the Instituto Tecnológico de Santo Domingo (INTEC).

 Your work is part of the international study "Root-Cause Analysis of Construction-Cost Overruns" in which a standardized survey was used to identify the 15 universal factors that generate variations in the costs of a construction in countries around the world and that began to be carried out in Israel. However, in the Dominican case, the supporters added five causes that they understood are present in the field of local construction.

 Martin Abbott, José Abreu, Milagros Guerrero, Englith Martínez, Ema Martínez, Nicole Mendizábal, Carolina Palacio, Johanna Pérez, Roque Rodríguez and Luis Suárez, authors of the study “Causes of the cost overrun in construction projects in the Dominican Republic ”, They classified the causes into three main groups: systemic, organizational y related to the project.

 The results

According to the data obtained, the most influential causes in the overvaluation of works in the Dominican Republic, with the Present in several = 40.15%Are the concerning the project: making a non-buildable design, breach with subcontractors, premature bidding documents, unclear, ambiguous and contradictory terms in the bidding documents, changes in the original design, changes in the requirements or definitions of the owner, the type of technology used in the construction and the supply of materials.

The systemic causes they take second place with the Present in several = 33.3% and they are: insufficient information on soil conditions, conflicts and lack of trust between the people involved in the project, the unbalanced risks assumed by the owner and the contractor, the unclear division of responsibilities and a lack of clear resources for management lack of high-quality personnel, unrealistic prices in the winning bid, and exogenous causes such as strikes or climate changes.

With the Present in several = 26.67%, organizational causes they are the least influential. Under that denomination factors such as meager investment At the design stage, the late start of the planning process, the inability of the owner to cope with the financial burden of the project, inadequate cost estimates and the lack of use of effective planning systems.

According to the data obtained, 47 of the respondents identified the project planning phase as the one in which the largest budget deviations are generated in the country; 39 selected the design stage and 211 the construction stage, which is equivalent to 71% of those consulted.

 Proposals for solutions to cost overruns

To avoid inappropriate cost estimates, the group of INTEC Civil Engineering students recommended preparing annually studies y Insights about behavior of prices of goods and services, the development of a bid estimating software construction and detailed estimation methods.

In addition, include supporting documents in the proposals, such as: documentation of the basis for the estimates, as well as all the assumptions used; indication of the range of possible estimates and the level of reliability of the final estimate.

In the case of insufficient information on soil conditions, they consider it necessary to faithfully comply with the Regulation for Geotechnical Studies in Buildings (R-024), have more resources in the budget to carry out the corresponding soil studies, work together with other regulatory bodies and establish greater control when validating the soil studies presented.

 Finally, to control unrealistic prices in the winning bid, they suggested implementing regulations limit the tenders to remain at a certain level of deviation from the sample average, keep a record of non-compliance, by contractors, in the economic bids presented in previous winning bids and develop and implement a quality factor in the selection stage, which is not based solely on the economic aspect.

The engineer Tulio Rodríguez, advisor to the investigation, clarified that the issue of corruption was not addressed because, in correspondence with the study that gave rise to the one carried out by INTEC, only the technical aspects of the overvaluation of works were focused.

 The exhibition

El Dominican College of Engineers, Architects and Land Surveyors (CODIA) provided them with a list of the professionals registered in the union for 2017, from that total the sample was selected. A total of 304 surveys distributed in the following ways: 106 contractors, 99 supervisors, 79 designers y 20 owners. Of the total of those surveyed, 95 of them belong to the public sector and 149 to the private sector, in the same way 60 were identified as participants in both sectors.

 Graphics

The survey had a section where the respondent was asked a score of 1 to 5 for the causes presented according to their incidence in the cost overruns of construction projects.

Hierarchical list of causes of cost overruns in the Dominican Republic

 Public sector vs. private sector

 El private sector tends to give major importance to the causes that generate overrun of construction than the public sector. Based on the 20 causes, the private sector gave an average valuation of 3.47, while the public sector gave a 2.97.

Stakeholder occurrence rate