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(EST-2447) Estimating Construction Costs in an Emerging and Unsophisticated Market

Level: Intermediate
Author(s): Juan P. Malo R.; Gustavo Vinueza C.
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: Construction in Ecuador has been evolving at a speed never seen before. The growth and stability of the economy, plus a government believing in local spending and consumption has generated a new market condition. The housing market has been propelled by a mortgage increase from both public and private banks, which gave birth to a market worth billions of dollars.

One of the crucial components in real estate business is to accurately estimate the construction costs for each project. Nowadays, companies use several usually unprolific methods in order to generate estimations for feasibility analysis. Speed and precision are keys to succeed in this process.

Our objective through this investigation is to test and describe a methodology for estimation processes in an emergent market. These estimations are based on prices per unit combined with a series of local factors for profiling each segment. Calculations are detailed ahead.

Part I describes the current situation in Ecuador, and the situation of the market. Part II describes the hypothesis and the calculation models and its architecture, and Part III resumes our experience.