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A study of clients' and estimators' tolerance towards estimating errors

Cheung, Franco K. T., Wong, Margie W. L., & Skitmore, Martin (2008) A study of clients' and estimators' tolerance towards estimating errors. Construction Management and Economics, 26(4), pp. 349-362.

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Abstract

Previous research on building pretender cost estimating stresses the importance of giving accurate estimates and minimizing estimating errors. Cost models, especially those mathematical models using mean square error or the like for model training and validation, often treat positive errors (overestimates) and negative errors (underestimates) of equal magnitude the same. The implicit assumption is that the regret or disutility of positive errors (overestimates) is equal to that of negative errors (underestimates).

A survey was conducted in Hong Kong to study estimating practice and in particular, the attitude of clients and estimators towards estimating errors. This involved the use of regression analysis to model the relative disutility of underestimates (in terms of overestimates) for four different building types.

The results suggest that both clients and estimators are risk-averse - tolerating overestimates more than underestimates - and, arguably, clients are satisfied with overestimates. The study also revealed contrasting views between clients and estimators on the desired characteristics of estimates, with clients considering the ability to identify cost sensitive elements to be more important than accuracy.

Impact and interest:

6 citations in Scopus
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ID Code: 15072
Item Type: Journal Article
Keywords: Expert judgement, cost planning, client, accuracy, disutility, survey, statistical regression
DOI: 10.1080/01446190701802380
ISSN: 0144-6193
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Building Construction Management and Project Planning (120201)
Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Quantity Surveying (120203)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Past > Schools > School of Urban Development
Copyright Owner: Copyright 2008 Taylor & Francis
Copyright Statement: This is an electronic version of an article published in [Construction Management and Economics 26(4):pp. 342-362.]. [Construction Management and Economics] is available online at http://dx.doi.org/10.1080/01446190701802380
Deposited On: 09 Oct 2008
Last Modified: 29 Feb 2012 23:50

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