Analysis of accuracies in cost estimates at various project stages and its implications in civil water projects in Tanzania

The purpose of this study was to analyze cost estimates accuracy level and factors contributing to increase in costs beyond the contract price and its impact. Finally, best ways to reduce inaccuracies in cost estimates were identified. To achieves study objectives, opinion on aspects of cost estimates were identified. To achieve study objectives, opinion on aspects of cost estimates accuracy level was sought from 55 water sector technical staff including 5 project coordinators. 53 projects were analyzed. Accuracy level of project costs as compared to actual costs at planning cycle range from 30 to +50, at design cycle from 50% to -20% and at tendering cycle from 0 to 40%. These data indicate that accuracy is low, while large projects have been less accurate because they were consistently underestimated. Factors causing cost inaccuracy include poor terms of reference and specification; poor project management teams; project complexity, and inflation. Effects associated with inaccurate estimates include failure to award a construction contract because of excessively high bids, receipt of embarrassing low bids, project delays, design problem and facilities with marginal or impaired operations. While impacts of inaccuracy estimates are project delays or uncompleted projects and lack of political as well as stakeholder’ acceptance. It is recommended that improvements in accuracy of cost estimates should involve having qualified and experienced project management teams, establish cost estimates guidelines and manual including use standardized estimation software(s) to enhance periodic data updates.