Letter of memo transmittal
Re: Planning proposal
Here is my planning proposal for cost estimation in Tatweer Buildings Company. It contains a budget which I request that you help me to fund. If you have any questions on it, I’ll be ready to respond.
List of illustrations
Page 5: images for the Tatweer buildings Company
Page 9: table of schedule for the proposal
Page 11: table containing the proposal’s budget estimates
Abstract
In this planning proposal, the variables that identify with the cost estimations in the Tatweer Buildings Company are initially considered. After which, the possible issues that results from these cost estimations, how it impacts the organization's benefit and the consequences for the organization's strength everywhere was then investigated. The techniques that will be utilized to gather the information are also covered in this proposal. The budget estimates are also considered in this proposal. Finally, the proposal compares previous research done in this field, analyses their shortcomings and then provides possible solutions to the shortcomings.
Introduction
The problem
In order to be successful in the construction field, the construction companies must thoroughly consider cost estimation and its future effects to the survival of the company. Cost estimation is the way toward giving expectations on cost of the development work. This procedure is vital to organizations since all the business offering techniques depend on the cost estimations and forecasts (Potts, 2008).
This act of predicting and estimating the costs is a highly subjective process in the construction companies, and requires the company’s experience at large. The previous records of the company in relation to cost estimation also play a vital role.
Figure 1: Images of Tatweer Buildings Company (Tatweer Buildings Company, 2015).
Figure 2: Engineers from Tatweer Buildings Company at work (Tatweer Buildings Company, 2015).
Figure 3: Tatweer Buildings Company staff undertaking a construction seminar (Tatweer Buildings Company, 2015).
Background of the problem
Construction cost has got five areas that require thorough estimation. These areas include: estimation for change orders, estimation for feasibility, estimation for construction, and estimation for conceptual planning, and estimation during the design and engineering levels (Schexnayder & Mayo, 2004). These cost factors are very critical and should be considered in the determination of accurate cost, thus every company should factor them in, for them to give the client a cost prediction that is accurate and which will complete a given construction successfully.
Because of the complexity involved in the process of construction, it is important for the construction companies to do cost estimation since this will help to provide detailed estimation which is accurate and necessary for the projects. These detailed estimations include those costs that are classified as direct costs and those of the bottom line costs that the organizations doing construction purpose to incur in accordance to the existing economic trends, as stated by Potts (2008). This cost estimation should, in addition, be very considerate in order to win the approval of the clients. This estimation should also be done with care and the clients’ ability to pay the estimated cost should be considered for the firms not to incur losses.
In the process of cost estimation, there are challenges that the firms meet. These are grouped into three categories: these include poor methods of assessing the risks, poor contract strategies, and human characteristics resulting from the estimator (Smith, 1995). These problems must be taken care of by the firms in order to make an appropriate estimation.
Tatweer Buildings Company is one of the known companies that support cost estimation which is accurate and a much detailed. Thus the company has been able to win the interest of the clients and in turn has won many contracts. This has led to the rise of its economic growth for years. However, as was accounted for by the Business Monitor International in the year 2009 that the economy will fall in the coming years with a decay of 2.28% for the whole world , this has affected Tatweer Buildings Company too. Thus the situation can only be redeemed if the Cost estimation is checked and addressed.
Sources of data
This research will utilize interviews, which are semi-structured together with case study which will be conducted in the firm to empower the researchers discover answers for the exploration questions. Case study is critical for this situation since it utilizes the context-based examination, which is exceptionally proper when researching issues existing in the mind boggling society (Yin, 2003). A semi-structured interview is critical in following up the answers and to decide legitimate answers for the issue (Brian and Bell, 2007).
Previous studies on the topic
There exist no reviews in connection to the cost estimation with the Tatweer Buildings Company, however a few reviews have been directed for the other development ventures in the Middle East. These past reviews have had a wide extension and have considered the issues coming about because of cost estimation as a different issue from other development issues, yet it depends on other factors related to it. For instance, Mezher and Tawil (1998) found out that Lebanon Company faced cost estimation problems as one of their major shortcomings. This study endeavored to show how important cost estimation is to the construction firms, but did not focus on the onset of the problems resulting from cost estimation and give solutions. Odeh and Battaineh also carried out another study in 2002 which demonstrated the relationship that lies between cost estimations and the delays experienced during construction. This too did not give in- depth discussion as to what causes the flaws in cost estimation.
Constraints to the problem
Cost estimation comes with the challenges which include the changes in the market prices, delays in delivering the materials and inadequate information that can assist to come up with the expected costs.
The thesis statement for the proposal is to come up with the cost estimation problems facing Tatweer Buildings Company and suggest the possible solutions to the shortcomings.
Discussion
The research into the Tatweer Buildings Company will deal with cost estimation problems that this company faces. This research will then determine what onsets the problems, and then outline the solutions.
Two factors relate problem of cost estimation in Tatweer Buildings Company. These include the time delays and changing market prices in the materials for construction.
In addition, financial limitations and contractor fulfillment also has a role to play in the problems of cost estimation. The financial limitations majorly originate from the client's inability to meet the estimated cost. In order to address these issues, the company’s management can enact by laws that will govern the agreements surrounding the contract. In the process, cases that results from the client not willing to continue with the payment when construction is on will be eliminated. Kartam and Kartam (2001), suggest that when cost estimation is accurate, risks can be managed easily. This can be achieved by ensuring that risks do not reoccur (Kartam & Kartam, 2001).
Tatweer Buildings Company should also consider the information needs and its relation to construction in the company. Anwar and Tupan (2006) suggest in this area that in order to carry out credible cost estimation, one must rely on the past information. However, the information should match the market trends of the material costs.
Methods
In this research proposal, both the primary and the secondary methods of data collection will be employed. As part of the primary data, interviews will be conducted with the manager of the Tatweer Buildings Company. The questions will be pegged on their process of cost estimation and the challenges they face. From the existing magazines, journals and books, secondary data with relevant information will be collected.
Scheduling
Capabilities
This research will be able to determine the reasons for cost estimations that lead to overestimations or the underestimations that resulting from Tatweer Buildings Company. The result will then give suggestions for the possible solutions.
Materials and Equipment
The use of questionnaires and secondary sources such as relevant books, journals and magazines will be handy as the materials for this research.
Expected results
The research is expected to solve cost estimation problems in order to boost the income and stability of the Tatweer Buildings Company. Methods of future improvements in relation to cost estimation together with room for future study will be determined in this field.
Plan for evaluating results
The assessment procedure in this exploration will include the utilization of qualitative and quantitative strategies. The qualitative strategies to be connected will incorporate structured interviews, as well as questionnaires, while the quantitative techniques will be the utilization of estimations and examination of charts keeping in mind the end goal to contrast the normal result and the genuine outcome.
Feasibility
In this research, the feasibility is that carrying it out is a possibility, since it is one of the company’s immediate needs and those who are expected to respond to the questions have the matter at heart. Thus the researchers expect no difficulties in the research conduction process.
Budget
EXPENSES
Materials required for interviews$100.00
Travel expenses to compare data with other companies in Riyadh... $500.00
Lunch to be given to the respondents$200.00
Cost for analyzing and presenting data $300.00
Total expenditure .. $ 1100.00
Justification
Tatweer buildings Company seriously needs this research to the fact that there are losses that have resulted from cost estimation problems. This is therefore a timely research that will settle the issue that the company and other global construction companies need have desired to solve for long in vain.
Conclusion
The profit margin of every company closely relates to the cost estimation that it undertakes. In the process of cost estimation, there are challenges that the firms meet. These are grouped into three categories: these include poor methods of assessing the risks, poor contract strategies, and human characteristics resulting from the estimator. These problems must be taken care of by the firms in order to make an appropriate estimation. Thus in case of underestimation, the company will incur a loss. On the other hand, in case of overestimation, the company will lose the clients. It is thus important for the company to consider researching on this area in order to hit the balance and remain relevant in the construction market. Tatweer Buildings Company is one of the known companies that support cost estimation which is accurate and a much detailed. Thus the company has been able to win the interest of the clients and in turn has won many contracts. This has led to the rise of its economic growth for years. However, as was accounted for by the Business Monitor International in the year 2009 that the economy will fall in the coming years with a decay of 2.28% for the whole world, this has affected Tatweer Buildings Company too.
References
Bryan, A. & Bell, E. (2007). Business Research Methods. New York: Oxford University.
Business Monitor International. (2009, June 2). Business monitor International. The Kuwait
Infrastructure Report 2009. , p. 1.
Kartam, N. A. & Karkam, S. A. (2001). Risks and its Management in construction. International
Potts, K. (2008). Construction cost Management: Learning from case studies. Oxon: Taylor &
Francis.
Tatweer Buildings Company (2015). About Tatweer.
http://www.tbc.sa/en/News.aspx?NewsID=1039
Schexnayder, C. J. & Mayo, R. (2004). Construction Management Fundamentals. New york:
McGraw-Hill.
Smith, N. J. (1995). Project Cost Estimating. London: Thomas Telford Ltd.
Yin, R. k. (2003). Case Study Research: design and methods. london: Sage publications.
Appendixes
Images of Tatweer buildings Company
Budget proposal table
