Cost Estimation Practice in the Gaza Strip: A Case Study

Abstract

The construction sector has a strategic role in developed and developing countries. Employing more than 16 per cent of Palestinian work force, the sector is the largest industrial employer in Palestine. The construction industry accounts for 17 per cent of the value added to the gross national product. Cost estimation is a fundamental part of the construction practice as it represents the compilation and analysis of many items that influence, and contribute to, the total cost of project. The aim of this paper is to present a practical case study on cost estimation practice of a construction project implemented by a local contractor while project clients’ was the United Nations Relief and Works Agency (UNRWA). The findings obtained from the case study showed that the most five important factors that affect contractors’ cost estimate are financial status of owner, type of project, contractor workload, location of project, and method of paying Value Added Tax (VAT). Excluding VAT from the quotation analysis sheet will provide more accurate and obvious bid estimates. Therefore, clients and owners are encouraged to advertise their projects based on zero VAT rating. The results of this study recommend that there is a need to change the traditional awarding system for contracts from the first lowest bidder to the most accurate one.