Factors Governing Housing Construction Costs in Saudi Arabia Abdelrahman Al-Gwaiz Kamal Al Dihan Faisal Al Ankary.

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Presentation transcript:

Factors Governing Housing Construction Costs in Saudi Arabia Abdelrahman Al-Gwaiz Kamal Al Dihan Faisal Al Ankary

Purpose To identify the most influential cost factors affecting housing construction in Saudi Arabia and to make recommendations based on these factors.

Outline Introduction Introduction Literature Review Literature Review Research Methodology Research Methodology Results & Analysis Results & Analysis Conclusion Conclusion Recommendations Recommendations

Introduction Importance of housing sector Importance of housing sector –Basic human needs –Social implications –Largest single expenditure –Socioeconomic development

Challenges Population growth Population growth Saudi life style Saudi life style Affordable housing Affordable housing

Literature Review Identify common cost factors Identify common cost factors Use these factors in the study Use these factors in the study Factor Categories: Factor Categories: 1.Environmental 2.Operational 3.Contractual 4.Estimation 5.Financial

Environmental Factors Weather Effects Weather Effects Construction Demand Construction Demand Culture Shock Culture Shock Site Location & Conditions Site Location & Conditions Local Competition Local Competition Local Economy Local Economy Local Skills (Education/Training) Local Skills (Education/Training) Foreign Firm Domination Foreign Firm Domination Local Laws & Regulations Local Laws & Regulations Labor Nationality Labor Nationality

Operational Factors Project Planning & Scheduling Project Planning & Scheduling Project Coordination Project Coordination Construction Design Construction Design Materials & Workmanship Materials & Workmanship On-Site Control On-Site Control Work Experience Work Experience On-Site Disputes On-Site Disputes

Contractual Factors Management of Contract Management of Contract Type of Contract Used Type of Contract Used Overtime/Expedition Stipulations Overtime/Expedition Stipulations Design Changes Design Changes Duration of Contract Duration of Contract Qualified Labor Availability Qualified Labor Availability

Estimation Factors Material Cost Estimation Material Cost Estimation Labor Cost Estimation Labor Cost Estimation Equipment Cost Estimation Equipment Cost Estimation Equipment Maintenance Estimation Equipment Maintenance Estimation Interest Rate Estimation Interest Rate Estimation Productivity Expectations Productivity Expectations Supplier Expectations Supplier Expectations Historical Data Availability Historical Data Availability

Financial Factors Financing Financing Inflation Inflation Currency Exchange Rates Currency Exchange Rates

Research Methodology Opinion of Saudi professionals Opinion of Saudi professionals Qualifications: Qualifications: –Consultants, contractors, or developers –10 years experience Opinions gathered via questionnaire Opinions gathered via questionnairequestionnaire Responses are indexed for analysis Responses are indexed for analysis Index formula: Index formula:Index=[(A*5)+(B*4)+(C*3)+(D*2)+(E*1)]/N

Results & Analysis 35 Respondents: 35 Respondents: –16 Contractors –14 Consultants –5 Developers

Consolidated Ratings

Consolidated Ranking Rank Cost Factor Cost Factor 1 Qualified Labor Availability Qualified Labor Availability 2 Materials & Workmanship Materials & Workmanship 3 Construction Design Construction Design

Segregated Rankings RankConsultantsContractorsDevelopers 1 Design Changes Laws & Regulations On-Site Disputes 2 Duration of Contract Planning & Scheduling Work Experience 3 Qualified Labor Availability Construction Design Project Coordination

Correlation ConsultantsContractorsDevelopers Consultants100%22%26% Contractors22%100%49% Developers26%49%100%

Environmental Factors

Operational Factors

Contractual Factors

Estimation Factors

Financial Factors

Study Limitations Survey Target Survey Target Respondent Pool Respondent Pool Divergent Responses Divergent Responses Subjectivity of Respondents Subjectivity of Respondents Type of Projects Type of Projects Geographical Scope Geographical Scope

Conclusion Summary Summary By Respondent: By Respondent: –Consultants 1. Design Changes 2. Contract Duration –Contractors 1. Laws & Regulations 2. Planning & Scheduling –Developers 1. On-Site Disputes 2. Work Experience

Conclusion (Cont.) By Factor: By Factor: –Environmental 1. Laws & Regulations 2. Competition (Cost Saving) –Operational 1. On-Site Disputes 2. Planning & Scheduling –Contractual 1. Overtime/Expedition 2. Overtime/Expedition –Estimation 1. Equipment Costs 2. Interest Rates –Financial 1. Inflation 2. Financing

Recommendations Contractors center stage Contractors center stage Laws & Regulations: Laws & Regulations: –Authorities: Publicize –Contractors: Challenge Planning & Scheduling Planning & Scheduling –Reconsider/relax plans & schedules –Empower planners & schedulers