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Factors Governing Factors Governing Housing Construction Housing Construction Costs in Saudi Arabia Costs in Saudi Arabia
Abdelrahman Al-GwaizAbdelrahman Al-GwaizKamal Al DihanKamal Al DihanFaisal Al AnkaryFaisal Al Ankary
PurposePurpose
To To identifyidentify the most influential the most influential cost factors affecting housing cost factors affecting housing construction in Saudi Arabia and construction in Saudi Arabia and to make to make recommendationsrecommendations based based on these factors.on these factors.
OutlineOutline
IntroductionIntroduction Literature ReviewLiterature Review Research MethodologyResearch Methodology Results & AnalysisResults & Analysis ConclusionConclusion RecommendationsRecommendations
IntroductionIntroduction
Importance of housing sectorImportance of housing sector– Basic human needsBasic human needs– Social implicationsSocial implications– Largest single expenditure Largest single expenditure – Socioeconomic development Socioeconomic development
ChallengesChallenges
Population growthPopulation growth Saudi life styleSaudi life style Affordable housingAffordable housing
Literature ReviewLiterature Review
Identify common cost factorsIdentify common cost factors Use these factors in the studyUse these factors in the study Factor Categories:Factor Categories:
1.1. EnvironmentalEnvironmental2.2. OperationalOperational3.3. ContractualContractual4.4. EstimationEstimation5.5. FinancialFinancial
Environmental FactorsEnvironmental Factors
Weather EffectsWeather Effects Construction DemandConstruction Demand Culture ShockCulture Shock Site Location & ConditionsSite Location & Conditions Local CompetitionLocal Competition Local EconomyLocal Economy Local Skills (Education/Training)Local Skills (Education/Training) Foreign Firm DominationForeign Firm Domination Local Laws & RegulationsLocal Laws & Regulations Labor NationalityLabor Nationality
Operational FactorsOperational Factors
Project Planning & SchedulingProject Planning & Scheduling Project CoordinationProject Coordination Construction DesignConstruction Design Materials & WorkmanshipMaterials & Workmanship On-Site ControlOn-Site Control Work ExperienceWork Experience On-Site DisputesOn-Site Disputes
Contractual FactorsContractual Factors
Management of ContractManagement of Contract Type of Contract UsedType of Contract Used Overtime/Expedition StipulationsOvertime/Expedition Stipulations Design ChangesDesign Changes Duration of ContractDuration of Contract Qualified Labor AvailabilityQualified Labor Availability
Estimation FactorsEstimation Factors
Material Cost EstimationMaterial Cost Estimation Labor Cost EstimationLabor Cost Estimation Equipment Cost EstimationEquipment Cost Estimation Equipment Maintenance EstimationEquipment Maintenance Estimation Interest Rate EstimationInterest Rate Estimation Productivity ExpectationsProductivity Expectations Supplier ExpectationsSupplier Expectations Historical Data AvailabilityHistorical Data Availability
Financial FactorsFinancial Factors
FinancingFinancing InflationInflation Currency Exchange RatesCurrency Exchange Rates
Research MethodologyResearch Methodology
Opinion of Saudi professionalsOpinion of Saudi professionals Qualifications:Qualifications:
– Consultants, contractors, or developersConsultants, contractors, or developers– 10 years experience10 years experience
Opinions gathered via Opinions gathered via questionnairequestionnaire Responses are indexed for analysisResponses are indexed for analysis Index formula:Index formula:
Index=[(A*5)+(B*4)+(C*3)+(D*2)+Index=[(A*5)+(B*4)+(C*3)+(D*2)+(E*1)]/N(E*1)]/N
Results & AnalysisResults & Analysis
35 Respondents:35 Respondents:– 16 Contractors 16 Contractors – 14 Consultants 14 Consultants – 5 Developers5 Developers
Consolidated RatingsConsolidated Ratings
Consolodated Rating for Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Labo
r Ava
Mat
/Wrk
shp
Design
Design
Ch
Site C
trl
Coord
inatio
n
Cont D
urat
ion
Mat
Cos
t
Disput
es
Exper
ience
Compe
tition
Laws &
Reg
Plannin
g
Labo
r Cos
t
Financ
ing
Labo
r Nat
Overti
me
Econo
my
Equip
Cost
Inte
rest
Suppli
er
Wea
ther
Infla
tion
Skills
Cont T
ype
Loc/C
ond
Equip
Main
t
Cont M
gt
Deman
d
Cultur
e
Produ
ctivit
yDat
a
Curre
ncy
Foreig
n Firm
s
Consolidated RankingConsolidated Ranking
RankRank Cost FactorCost Factor
11 Qualified Labor Qualified Labor AvailabilityAvailability
22 Materials & WorkmanshipMaterials & Workmanship
33 Construction DesignConstruction Design
Segregated RankingsSegregated Rankings
RanRankk
ConsultantsConsultants ContractorsContractors DevelopersDevelopers
11 Design Design ChangesChanges
Laws & Laws & RegulationsRegulations
On-Site On-Site DisputesDisputes
22 Duration of Duration of ContractContract
Planning & Planning & SchedulingScheduling
Work Work ExperienceExperience
33Qualified Qualified
Labor Labor AvailabilityAvailability
Construction Construction DesignDesign
Project Project CoordinationCoordination
CorrelationCorrelation
ConsultanConsultantsts
ContractoContractorsrs
DeveloperDeveloperss
ConsultanConsultantsts
100%100% 22%22% 26%26%
ContractoContractorsrs
22%22% 100%100% 49%49%
DeveloperDeveloperss
26%26% 49%49% 100%100%
Environmental FactorsEnvironmental Factors
Environmental Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Weather Demand Culture Loc/Cond Competition Economy Skills ForeignFirms
Laws & Reg Labor Nat
Consultants
Contractors
Developers
Operational FactorsOperational Factors
Operational Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Project Planning& Scheduling
ProjectCoordination
Design Materials &Workmanship
On-Site Control Work Experience On-Site Disputes
Consultants
Contractors
Developers
Contractual FactorsContractual Factors
Contractual Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Management ofContract
Type of ContractUsed
Overtime/ExpeditionStipulations
Changes in Design Duration of Contract Qualified LaborAvailability
Consultants
Contractors
Developers
Estimation FactorsEstimation Factors
Estimation Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Material CostEstimation
Labor CostEstimation
EquipmentCost
Estimation
EquipmentMaintenanceEstimation
Interest RateEstimation
ProductivityExpectation
SupplierExpectations
Historical CostData Avail.
Consultants
Contractors
Developers
Financial FactorsFinancial Factors
Financial Cost Factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Financing Inflation Currency Exchange Rates
Consultants
Contractors
Developers
Study LimitationsStudy Limitations
Survey TargetSurvey Target Respondent PoolRespondent Pool Divergent ResponsesDivergent Responses Subjectivity of RespondentsSubjectivity of Respondents Type of ProjectsType of Projects Geographical ScopeGeographical Scope
ConclusionConclusion
SummarySummary By Respondent:By Respondent:
– ConsultantsConsultants1.1. Design ChangesDesign Changes2.2. Contract DurationContract Duration
– ContractorsContractors1.1. Laws & RegulationsLaws & Regulations2.2. Planning & SchedulingPlanning & Scheduling
– DevelopersDevelopers1.1. On-Site DisputesOn-Site Disputes2.2. Work ExperienceWork Experience
Conclusion (Cont.)Conclusion (Cont.)
By Factor:By Factor:– EnvironmentalEnvironmental
1.1. Laws & RegulationsLaws & Regulations2.2. Competition (Cost Saving)Competition (Cost Saving)
– OperationalOperational1.1. On-Site DisputesOn-Site Disputes2.2. Planning & SchedulingPlanning & Scheduling
– ContractualContractual1.1. Overtime/ExpeditionOvertime/Expedition2.2. Overtime/ExpeditionOvertime/Expedition
– EstimationEstimation1.1. Equipment CostsEquipment Costs2.2. Interest RatesInterest Rates
– FinancialFinancial1.1. InflationInflation2.2. FinancingFinancing
RecommendationsRecommendations
Contractors center stageContractors center stage Laws & Regulations:Laws & Regulations:
– Authorities: PublicizeAuthorities: Publicize– Contractors: ChallengeContractors: Challenge
Planning & SchedulingPlanning & Scheduling– Reconsider/relax plans & schedulesReconsider/relax plans & schedules– Empower planners & schedulersEmpower planners & schedulers