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dc.titleMaterial price fluctuation and impact on project costs
dc.contributor.authorMUNIRAH BTE MANAP
dc.identifier.citationMUNIRAH BTE MANAP (2011-05-20). Material price fluctuation and impact on project costs. ScholarBank@NUS Repository.
dc.description.abstractMaterial price fluctuation is an inevitable aspect of construction projects – and this trend is expected to continue due to competition for resources, continued strong growth and excess work available. Worldwide, the media highlighted the taxing effect it had on the construction industry players – Singapore‟s construction sector shrank 11% in 2003. Building contractors were worried as soaring steel prices added an extra $2.5 million on a typical $50 million condominium development. It can be seen how material price fluctuation plays a critical role within the cost paradigm of a construction project and should be acknowledged as a critical factor affecting project cost greatly – yet also, opens up avenues for effective risk mitigation strategies. Therefore, it is useful to carry out a study on material price fluctuation and find out how it is viewed among the construction industry players in Singapore. Henceforth, this dissertation aims to find out whether material price fluctuation on project costs is seen as the most significant cost variable by these 3 groups of local construction industry players – consultants, contractors and developer,. Secondly, it seeks to determine if the fluctuation clause is useful in local construction contracts for these 3 groups of construction industry players, in response to the material price fluctuation. And therefore if the fluctuation clause does prove useful, whether the fluctuation clause should be provided for in local construction contracts or not. Similar to other literature reviews assessing the significance of several listed cost variables that can affect project cost, it can be deduced from the survey results undertaken in this dissertation involving the 3 groups abovementioned that material price fluctuation is still perceived as the most significant cost variable affecting project cost for all survey respondents. The difference in ranking for the most significant cost variable ranked by each group reflects their willingness in accepting the material price fluctuations – the local contractors will strongly agree on incorporating the clause, followed by the local consultants and local developers. III The reason behind the ranking given to the most significant cost variable in each group is that the cost variable ranked most significant within each group actually reflects on the main role/responsibility of each group itself. The views between these 3 groups on the significance of material price fluctuation are also not significantly correlated. This is possibly due to the different company culture and practices of each respondent. With regards to the fluctuation clause, 67% of the respondents agreed that it is useful in construction contracts – although for the local developers, only 40% of them agreed that the clause will be useful in construction contracts. Incorporating the fluctuation clause will be useful in local construction contracts – although it can be tweaked to apply to specified materials agreed by the client and contractor. It has been mentioned in several literature reviews how the incorporation of a fluctuation clause in construction contracts is useful not only to the contractors but also the consultants and developers. Hence, it will be useful for the local construction industry players to incorporate the fluctuation clause in the local construction contracts and specify the 3 main construction materials; concrete, steel reinforcement and sand to be subjected to the fluctuation clause in light of the unexpected fluctuations in the prices of these materials.
dc.subjectProject and Facilities Management
dc.subjectChan Chuen Fye Philip
dc.subject2010/2011 PFM
dc.contributor.supervisorCHAN CHUEN FYE PHILIP
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