Relationship Between Construction Time and Project Cost of Health Sector Construction Works in Bangladesh

 

Prediction of construction time represents a problem of continual concern and interest to both researchers and contractors. It is also important for studies related to international construction taught at a graduate level in the Department of Construction Science, Texas A&M University. Given the significant impact of construction segment on the Bangladesh economy and the interest of international construction companies in that construction market, this study attempts to establish a time-cost relationship in health sector construction works in Bangladesh.

The unique characteristics of the construction industry, with reference to health sector construction works, in the context of Bangladesh has been reviewed in this study; a time-cost model developed by Bromilow (1974) and validated by a few other researchers has been used to verify whether such a relationship holds good in the Bangladesh construction industry. It is hypothesized that the total construction time of a health sector project in Bangladesh is positively correlated with total construction cost of the project.

Bangladesh construction industry grew at a rate of more than 10 percent during the 1990’s. The country's gross construction output is about 9 per cent of its GDP (World Bank, 1998). Most of the construction works are in the public sector. Funding for a high percentage of construction projects come from multilateral development agencies (MDA) like the World Bank or Asian Development Bank. For large MDA funded projects, the usual practice to go for international competitive bidding. Most public contracts are awarded on the basis of the lowest responsive tenders submitted by contractors. Local contractors are given a margin of preference to secure public sector tenders under MDA funding. The maximum premium is 7.5 per cent.

Bangladesh has a basic healthcare infrastructure. The objectives of the Health and Population Program Project are to achieve better access to essential services for the poor, lower maternal mortality and morbidity, and continued improvements in child health and family planning. Reorganization and reform of public services are expected to enable the government to improve the quality and utilization of its system and to allocate its limited resources more cost-effectively. The project components are: (a) service delivery (including an essential services package, hospital/other health and nutrition services, support services,) and health policy reform, and (b) organization and management reform including reorganization and rationalization of the Ministry of Health and Family Welfare, Government of Bangladesh and sector-wide program management. Both the World Bank and Asian Development Bank provide credits to the government for construction of projects related to health services.

A relationship between the duration and cost of construction projects was first mathematically established by Bromilow (1974). He analyzed the time-cost data for a total of 370 building projects in Australia and presented the following mathematical model to predict the construction time of a project:

T = k*c^b                                                                                                                (1)

where T = duration of construction time in days from project layout to completion all works, C = completed cost of a project in millions of Australian dollars adjusted to constant labor and material prices, K= a constant indicating the general level of time performance for a project worth one million Australian dollars, and b = a constant indicating how the time performance is affected by the size of the construction project measured by its cost.

The model indicates that the duration time of a construction project is basically a function of its total cost. It provided a basis for all parties concerned with the building process to establish probable construction time for a project, given the estimated cost of the project. Bromilow also analyzed the overruns on cost and time that provided a measure on the accuracy of the industry’s time and cost prediction.

Taking a cue from Bromilow, a few other studies have been performed to make similar predictions for either a specific sector of construction or construction industries, in general, around the world. Ireland (1986) replicated the study to predict construction time for high-rise buildings in Australia; Kaka and Price (1991) conducted a similar survey both for buildings and road works in the United Kingdom; Kumaraswamy and Chan (1995) investigated the effect of construction cost on time with particular reference to Hong Kong; and Chan (1999) did a similar research for Malaysian construction industry. All these studies found that the time-cost relationship for construction projects can be predicted using Bromilow’s model.

Completion of construction projects is affected by numerous factors apart from the cost. Studies show a relationship between attitude of the workforce and management practices to the duration of a construction project (Ireland, 1986; Nkado, 1995). In a developing country like Bangladesh, these factors may include (among others) seasonal shortage of labor, equipment, and materials, disputes on site, labor unrest, inclement weather conditions, frequent changes in design and materials, delay in periodic payments to contractor, and changes in government policies with a change in political situation. The construction time also may vary according to project type.

This study is limited to the validation of the time-cost relationship developed by Bromilow (1974) in Bangladesh construction industry, particularly with reference to the government-financed construction projects in the health sector (i.e. clinics and hospitals). It does not incorporate the effects of other factors that are likely to influence the total time required for the completion of a construction project.

Project duration time and completed cost data of 35 health sector construction projects were obtained from Sthapati Sangshad, a leading design and construction management company in Bangladesh. The firm has provided design and construction management services for over 500 projects in health sector funded by the World Bank and Asian Development Bank. The sample projects were completed during 1999 and 2000. The company was involved in design, preparation of construction documents, assisting the clients in the bidding process and selection of contractors, fulltime construction supervision, and project management of the works. All the projects were constructed by different contractors. Sthapati Sangshad did not provide any construction service for any of these projects.

Construction time (TIME): It is the actual time measured for the completion of a health sector construction project. It was measured in months.

Project cost (COST): It is the total cost of construction works of a health sector construction project. It was measured in millions taka, which is the unit of currency in Bangladesh (1 US dollar = 55 Bangladesh taka).

A scatterplot of the data was prepared to make a visual analysis of the relationship, if any, between actual construction time and total construction cost of the projects (Figure 1). The plot indicated a positive relationship between the variables. The data collected for the study was then used to validate the following

time-cost relationship model derived by Bromilow:

TIME = k*cOST ^β                                                                                                  (2)

where TIME = duration of construction time in months from project layout to completion all works, COST = completed cost of a project in millions of Bangladesh taka adjusted to constant labor and material prices, K= a constant indicating the general level of time performance for a project worth one million Bangladesh taka, and β = a constant indicating how the time performance is affected by the size of the construction project measured by its cost.

A simple linear regression technique was used to analyze the data. For the purpose of statistical analysis of the data, Bromilow’s model was rewritten in the natural logarithmic form as follows:

Ln TIME = Ln K + βLn COST                                                                            (3)

where Ln TIME = the natural logarithm of TIME, Ln COST = the natural logarithm of COST, Ln K = the natural logarithm of K, and β = the coefficient of Ln COST.

The results of the analysis are shown in Table 1.

The value of Ln K was required to be transformed to K, using an exponential function [exp(Ln K )], for expressing the model in its original form (Equation 2). It was found to be 4.96.

An important aspect of a statistical procedure that derives model from empirical data is to indicate how well the model predicts results. A widely used measure the predictive efficacy of a model is its coefficient of determination, or R² value. If there is a perfect relation between the dependent and independent variables, R² is 1. In case of no relationship between the dependent and independent variables, R² is 0. Predictive efficacy of this particular model was found to be moderately high with an R² of 0.65, and an adjusted R² of 0.64. A residual plot indicated a good fit of the sample data (Figure 2).

The results indicated that actual completion time of a project in health sector is positively related to the total project at the level of significance of 0.001. The F statistic of a model basically tests how well the model, as a whole, accounts for the dependent variable's behavior. The F-value of this particular model was found to be statistically significant at the 0.0001 level. It is therefore concluded that the time-cost relationship for the sample health sector construction projects in Bangladesh can be expressed using Bromilow’s model. It can be expressed in the following form:

TIME = 4.96*COST ^0.27                                                                                                             (4)

The results of the statistical analysis indicate that for a health sector construction project in Bangladesh, an increase in total construction cost results in an increase in total construction time. It is found that a health sector project in Bangladesh costing one million taka (about $18,500) takes 4.96 months to be completed. The model is useful for all parties associated with the construction industry to predict the mean time required for the delivery of a project, when the cost of the project is known. It provides an alternative and logical method for estimating construction time, both by bidders and clients, to supplement the prevailing practice of estimation predominantly on individual experience. The study will hopefully generate enough interest to do further research for deriving models for time-cost relationships of construction projects in other sectors.

The study was limited to investigate only the effect of cost on construction time in the context of health sector projects in Bangladesh, keeping all other variables constant. For future studies, it will be useful to include other variables such as productivity of the workforce, impact of client decision-making, delays in making progress payments, etc. and analyze their effect on total construction time.

Bromilow, F. J. (1974). Measurement and scheduling of construction time and cost performance in building industry. The Chartered Builder, 10, 79-82.

Chan, A. P. C. (1999). Time-cost relationship of public sector projects in Malaysia. International Journal of Project Management, 19, 223-229.

Ireland, V. (1986). A comparison of Australia and US building performance for high-rise buildings. University of Technology, Sydney, Australia: School of Building Studies.

Kaka, A. & Price, A. D. F. (1991). Relationship between value and duration of construction projects. Construction Management and Economics, 9, 383-400.

Kumaraswamy, M. M. & Chan, D. W. M. (1995). Determinants of construction duration. Construction Management and Economics, 13, 209-217.

Nkado, R. N. (1995). Construction time-influencing factors: The contractors perspective. Construction Management and Economics, 13, 81-89.

The World Bank (1998). Bangladesh 2020: A Long-run Perspective Study. Dhaka, Bangladesh: University Press Limited.