Assessments of the Factors Affecting Indirect Cost Determination for Public Building Construction Project, the Case of Ambo Town Public Building Project

Abstract

The purpose of the study was assessment of factors affecting indirect cost determination of public building construction project in Ambo town. The research was related primarily based on literatures, interviews and Questionnaires data collected for analysis of data to achieve the objectives of the study. To this respect, a total of 28 questionnaires were distributed to purposively selected employee of Ambo town building construction project and structured and unstructured interviews was held with five employers, which constituted response rate of (25) or 89% and this was used for statistical generalization of the study findings. The data gathered was analysed through use of mean likert scale, percentages and from SPSS to determine Chronbach alpha for pilot test are used these information was displayed by use of charts and tables. The findings showed that factors affecting overhead (Administration), Site overhead, external risk and profits of indirect cost. The data analysis on component of indirect cost presented that above 64% of respondent agreed with component of site overhead, office overhead and profit and risk, the reasonable percentage of indirect cost ranges are 20-30% and techniques used for indirect cost determination presented that 100% were using lump sum technique and only 30% are using detail estimation techniques consequently this shows series attention. On the basis of these major findings the following conclusion and recommendations were made: the mean likert score result ranges from 3.16-4.44 value was shows that the importance of identifying factors affecting indirect cost of building construction because there are many factors influencing and tackle measuring project overhead costs. Different reviewed and identified component of indirect cost result were 88-100% was agreed with site overhead component, 68-100% result was agreed with component general overhead and 64- 92% was agreed with identified component of profit and risk, the type of estimation are essential to cross check indirect cost incurred with detailed estimated, that helps the future accuracy of indirect cost determination this integrated with to the use of detail estimation techniques through the help of collecting data during and after completion of the project and finally the study was identified the following challenges of indirect cost determination these are Lack of breakdown, Poor identification and evaluation of the effects of factors , Lack of information on materials' price ,Incomplete Tender document , Difficult indirect cost item to estimate , Lack of application of standard software for indirect cost estimating and Lack of manual are presented in this study paper.