Development of a Parametric Cost Estimating Model for University of Alaska System Renovation Construction Projects

Abstract

Early building construction planning strategies provide the foundation for the subsequent performance and success of a project. Cost estimates for projects with minimal scope of work definition, but within the range of accuracy established by industry-recognized professional standards, represent a critical factor in screening potential endeavors against competing alternatives and establishing baseline budgets. Parametric cost estimating models provide owners and managers a tool to develop a prediction of costs and determine the feasibility of a project. This study investigated the process and performance of parametric cost estimates for building renovation projects by analyzing cost data and construction documentation for 50 University of Alaska system jobs from seven campus locations. Cost data was normalized for inflation and location. Project construction documentation was analyzed to determine the extent of the performed scope of work in terms of both building area and systems. The data was entered into a statistical software package and assessed for correlation between project cost and building area/systems criteria. A cost estimating relationship algorithm was formulated from the analysis to establish a parametric model. The generated model was determined to provide a quality fit to the data and adequate predictor of renovation project costs. The work demonstrates that a representative parametric cost estimating model can be formulated for University of Alaska system renovation projects. Given the current State of Alaska fiscal climate and the financial challenges facing the statewide higher education system, developing a tool to facilitate the planning, budgeting, and feasibility assessment of competing project alternative represents an important accomplishment that can provide guidance to university managers, system regents, and state legislators.