Rethinking the challenges to the pricing of projects in the Ghanaian construction industry

Abstract

Purpose

The aim of the paper is to examine the challenges to the pricing of construction projects in the Ghanaian industry. This remains a persistent problem among construction stakeholders because price is the basis for which offers are made. Project stakeholders are always faced with challenges relating to effective and efficient pricing system making it difficult to achieve value for money.

Design/methodology/approach

Research data were collected through a questionnaire survey involving quantity surveyors in the Ghanaian construction industry. Data collected were analyzed using exploratory factor analysis which helped to reduce the factors into six components. Confirmatory factor analysis (CFA) was further carried out to explore whether these six observed variables would form a latent variable called challenges to pricing of construction projects.

Findings

The paper highlighted six underlying challenges which were cost-related, managerial-related, quality-related, variation of works, poor understanding of the terms of contract and time-related. Strong and significant relationships were found between all six of the observed variables. A CFA confirmed that they formed a latent variable the authors called challenges to pricing of construction projects.

Research limitations/implications

The findings clearly can serve as a reference for both developed and developing countries in the quest for finding an antidote to pricing challenges. In addition, use of CFA improves measurement of the constructs and thus enhances understanding of the underlying components of a construct and their individual relationship with pricing. The paper is particularly useful for policy making and industry regulation because it identifies some of the factors that need attention.

Originality/value

This paper presents an exceptional contribution to the construction management literature by concentrating on the factors that challenge effective and efficient pricing system in the construction industry.

Citation

Kissi, E., Ahadzie, D.K., Adjei-Kumi, T. and Badu, E. (2017), "Rethinking the challenges to the pricing of projects in the Ghanaian construction industry", Journal of Engineering, Design and Technology, Vol. 15 No. 5, pp. 700-719. https://doi.org/10.1108/JEDT-11-2016-0090