CRAWFORD UNIVERSITY, IGBESA, OGUN STATE
ECONOMIC EVALUATION OF INVESTMENT
“A SYSTEM FOR BUILDING CONSTRUCTION PROJECTS IN THE CONCEPTUAL PHASE”
ADENUGA OLUFEMI SOLOMON
MATRIC NO: PG14/05/005
ECONOMIC EVALUATION OF INVESTMEST
“A SYSTEM FOR BUILDING CONSTRUCTION PROJECTS IN THE CONCEPUTAL PHASE”
The conceptual phase of capital projects is of strategic importance – an economic evaluation at this early stage is critical to the owners’ decision-making with limited information. The current study developed a comprehensive but practical system that can be used in such an early phase for economic evaluation of capital building construction projects.
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However, most existing software programs in construction have been developed separately for cost estimation or for project evaluation while they have different levels of detail in the analysis.
Thus, the efficiency of the evaluation task has been limited – it is difficult to manage project information and any revision of it between the analytical steps, especially more when multiple alternates need to be analyzed. Also, controlling the information and the changes becomes complex if a project includes multiple buildings of mixed-use. The current study develops a comprehensive but practical economic evaluation system to combine the analytical steps so that the information flow can be efficiently managed in an integrated way based on the computerized automation, but using limited project information available in an early phase of project planning.
Information for an Economic Evaluation time
Quantity & Time |
All Capital Expenditures | | All Expected Revenues |
- Land Acquisition - Construction - O & M Costs - Other Expenditures | | - Sales - Rents - Operating - Other Revenues |
Fig. 1 Information for economic evaluation
2. EFFICIENCY OF EVALUATION SYSTEM
The essential element of economic evaluation is project cash flow analysis, which requires quantifying all monetary items and specifying the time of their occurrence.
The introduction conceptually depicts the information for an economic evaluation of a capital building construction project. All expenditures and revenues should be accounted for in the analysis in forms of quantity and time within the prediction period. For multiple alternates (the initial plan and its revisions), quantifying and scheduling of all the items for each alternate is a challenging task. A practical system for use by practitioners should be able to deal with all the quantity and time information in an integrated way based on automated estimating and scheduling.
However, the system should consider the trade-off between automation and flexibility – the efficient use of un-detailed project information supported by the automation, as well as the flexibility, that is, allowing manual adjustments by users.
Information for an Economic Evaluation -All Capital Expenditures All, Expected Revenues Quantity and Time Quantity
- Land Acquisition
- O & M Costs
- Other Expenditures
- Other Revenues
3. CONSTRUCTION COST ESTIMATING
3.1. Estimating in the Conceptual Phase
In the conceptual phase, cost estimate with a reasonable accuracy is required within a limited time period while information is limited. Various estimating methods for the conceptual phase have been proposed:
(i) Simple Square foot method,
(ii) Regression analysis,
(iii) Probabilistic estimating,
(iv) Neural network,
(v) Case-based reasoning,
(vi) Fuzzy models, and so on.
Meanwhile there are criticisms on some empirical...