Improving Predictability of Construction Project Outcomes through Intentional Management of Indirect Construction Costs
Publication: Journal of Construction Engineering and Management
Volume 140, Issue 6
Abstract
Indirect construction costs (IDCC) comprise from as little as 10 to 40% or more of the total cost of construction projects, in part depending on the type and nature of the project. Yet, any location in this range represents a significant component of total project costs, which justifies the need to better understand and develop effective practices to estimate, control, and manage IDCC. When IDCC practices are not afforded intentional management and appropriate resources, key project performance outcomes are affected. As its unique contribution to the body of knowledge, this paper operationally defines IDCC, outlines certain innovative IDCC practices, and identifies statistically significant relationships between key IDCC practices and project outcome metrics. Empirical recommendations are premised upon data collected through testimonials, structured interviews, and brainstorming sessions of an extensive set of construction industry professionals. Statistical findings are based upon data collected through 56 one-on-one data-collection interviews with subject matter experts and 47 project-level surveys. Qualitative data were filtered, organized, and aggregated and are technically presented as instructional guidelines. Quantitative data were statistically analyzed and results from this analysis show several significant relationships between IDCC practices and key project outcomes, including a positive correlation between the frequency of IDCC review meetings that included project managers and field supervisors and quality and cost performance.
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Acknowledgments
The authors gratefully acknowledge the funding support provided by the Construction Industry Institute (CII) for the study. The authors would also like to thank the members of the CII Research Team RT-282 for their support, guidance, and valuable contributions made throughout this research project. It is recommended that the results of this project become an integral part of the CII Benchmarking and Metrics program by using the operational definition provided as a framework to collect actual project data related to IDCC. This data would allow for the calculation of useful benchmarking ratios related to IDCC expenditures.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 140 • Issue 6 • June 2014
Copyright
© 2014 American Society of Civil Engineers.
History
Received: Jul 16, 2013
Accepted: Jan 13, 2014
Published online: Mar 7, 2014
Published in print: Jun 1, 2014
Discussion open until: Aug 7, 2014
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