International Journal of Engineering Advanced Research eISSN: 2710-7167 | Vol. 4 No. 4 [December 2022]
Journal website: http://myjms.mohe.gov.my/index.php/ijear
ANALYSIS ON INFLUENCING FACTORS OF CONSTRUCTION PROJECT MANAGEMENT COST
CONTROL OF INTERNATIONAL REAL ESTATE COMPANIES
Bin Deng1*
1 School of Housing, Building and Planning, Universiti Sains Malaysia, Pulau Pinang, MALAYSIA
*Corresponding author: [email protected]
Article Information:
Article history:
Received date : 5 November 2022 Revised date : 22 November 2022 Accepted date : 30 November 2022 Published date : 15 December 2022
To cite this document:
Deng, B. (2022).ANALYSIS ON INFLUENCING FACTORS OF CONSTRUCTION PROJECT
MANAGEMENT COST CONTROL OF INTERNATIONAL REAL ESTATE COMPANIES. International Journal of Engineering Advanced Research, 4(4), 50-61.
Abstract: With the downturn in the global economy and the impact of coronavirus (COVID-19), international real estate companies are experiencing a decline in revenue, and cost reduction in project management is more beneficial for real estate companies to increase their revenue, therefore cost control in project management is crucial. This paper utilizes CiteSpace to analyse the literature over the last five years to find the factors influencing project costs, and AHP (Analytic Hierarchy Process) as a research method to analyse the factors influencing construction project cost control and identify the key factors with the highest weights. The research objectives are to find out the influencing factors and key factors of cost control in construction project management and to help real estate companies to reduce the cost of international project management. A large number of scholars have studied the cost of project management, but not many have studied the cost control factors in the international real estate project environment, and this study fills a gap in this area.
Keywords: international, cost control, factors, construction project management, real estate companies.
1. Introduction
1.1 International Projects and Real Estate Projects
Since the 21st century economic glocalization international projects are becoming more and more numerous and the links between the different stakeholders in international projects are getting closer and closer, while real estate projects occupy more than 70% (Wu, J. et al, 2012) of international projects, it occupies a major part of international projects.
While international real estate projects have become the current trend of international projects there are also many issues that arise, specifically including (1) the complex international environment that affects the development and construction of real estate projects. International projects involve many different stakeholders, including government departments, contractors, design companies and consulting firms (Dziubaniuk, O. et al, 2021). The scope of international project management is manageable and involves a number of steps, including the initiation, planning, implementation, control and closure phases of project management (Imran, R., 2022;
Soomro, T. R., 2022). However, international projects can offer new marketing and sales potential to real estate developers, as well as maximize the profitability of project management and increase the competitiveness of real estate companies.(2) The context of project management is complex due to the operating environment of international projects, coupled with the COVID-19 environment which has resulted in a downturn in the economy and an impact on the incomes of the population in various countries (Maire, J., et al., 2022). International real estate companies are also guided by government policy, which forces them to keep an eye on local government policy during the construction and operational phases of a real estate project. Real estate prices in the US are expected to rise and S&P CoreLogic expects prices in the US to rise in the future (Morgan, J.
D., et al, 2022). Real estate sales rose for the third consecutive month. In European countries, according to Knight Frank, 17 of the world's countries with year-on-year house price increases of more than 5% are from the European region, leading to the conclusion that the potential benefits of real estate investment in major European cities already outweigh the risks. In Asia, property investment firm M&G Real Estate's Asia Property Outlook 2020 report also shows the market is starting to heat up. In the Australian region, lower interest rates for real estate projects (Ullah, F.
et al, 2021) mean that international real estate projects are developing more and more favourably.
1.2 International Real Estate Companies and Cost Control
Cost control in real estate projects is again a key factor in the profitability and growth of real estate projects (Wang, J. et al., 2021). The construction costs of real estate projects are increasing year on year, especially in the COVID-19 environment where labour, materials and machinery are used in construction costs are increasing (Kaklauskas, A. et al, 2021). Property management and property sales are currently the main means of profitability, but real estate companies can incur significant costs in terms of upfront land and construction costs if they are not controlled, which can lead to a rapid reduction in profitability, especially in the face of international projects with complex international environments and culturally diverse populations (Norton, R. K., 2022).
International real estate projects must therefore start with construction cost control, which is a
The real estate sector has contributed to gross domestic product (GDP) in various countries. Cost control in the Americas is concentrated on the two main components of land costs and design and construction costs. Industries and associations have standards for construction management and pricing, and market competition mechanisms are too evident cost control is mainly through consultancy and high levels of mandatory standards and management staff (Gepner, P. et al, 2022).
International real estate companies in European countries generally commission professional intermediary organizations to carry out investment estimates. Cost control for real estate projects in the UK is achieved within a defined investment horizon, with the project's costs being achieved within the expected targets as the work progresses through the phases (Karjalainen, M. et al, 2021).
Construction cost control in Asian countries is based on the preparation of project estimates and project budgets to keep investment within the plan. Secondly, real estate projects are constructed in strict accordance with the plans, accounting for the volume of work and ensuring that the final accounts are completed within the cost of the project budget.
The research objectives is to identify the key factors among the many cost control factors for international real estate projects. This paper is dedicated to the study of cost analysis for real estate projects focusing on the international environment and using influencing factors as variables for the study. With the development of the real estate economy and international projects, international real estate companies have started to pay attention to construction cost management. This paper will address four aspects of construction cost control in international real estate projects.
2. Literature Review 2.1 Problem Statement
The study has reviewed and analyzed a large body of literature and found that many scholars have researched the costs of real estate construction projects and some have worked on the direction of international projects, but this study focuses on the field of international construction projects and real estate companies, and at the same time, it fills a gap in this field by examining construction projects and cost control factors in the context of international real estate projects. The purpose of this study is to identify the key factors among the many cost control factors for international real estate projects.
2.2 Real Estate Industry and Construction Cost Control
The future of international real estate companies is focused on the control of construction costs, not only in terms of labour, materials and machinery in the construction management process, but also in terms of human resources, the level of construction management and the level of construction technology. In this paper, the last five years of literature on international projects, real estate development and cost control were identified and analysed using CiteSpace to address the co-occurrence of keywords (Figure 1). Analysis of the keywords in Figure 1 and the 389 pieces of literature on construction and costs revealed that studies on cost control in recent years have focused on company operating costs, management costs of human resources and real estate construction costs, with real estate construction costs and management accounting for the major part.
Figure 1: Keyword Analysis of the Real Estate Industry and Construction Cost Control
In international project cost control, Hou, H. et. al. (2018) show that international real estate companies are taking more account of investment and project management capabilities in the cost control of their projects. In addition to political environment costs such as national interests and interventions by domestic interest groups, the market for international real estate projects is gradually becoming more integrated. Government policy is also an influential factor in the control of construction costs in international real estate projects, and Huy, D. T. N., et. al. (2021) emphasize the need to focus on the project management environment and maintain links with government departments in the development and construction management of real estate as a means of reducing costs.
In addition, real estate companies need to expand internationally in order to gain access to larger development markets, and real estate management in the face of international projects needs to be more prepared. Similarly, this study used the CiteSpice tool to make a keyword co-occurrence of international projects and cost control risks from 132 related literature, and it is evident in Figure 2. Project management strategies and methods focus on the international project management, and this is also the key to cost control in international projects.
Figure 2: Keyword Analysis of International Projects and Construction Cost Control
Arabiyat, S. M., (2020) argues that in project management there is a need to focus on the level and quality of management of project managers, technically international projects require skilled workers and the implementation of local specifications. There is also a need for segmented implementation in the allocation of funds to ensure the proper functioning of each construction section. On the other hand, market prices, lack of knowledge and inefficient use of resources and international environmental issues can also lead to increased costs in international projects (Abbas, N. N. et al, 2022). Ahmed, A. A. A. et al, (2022) suggests that cost control needs to be phased and that cost control needs to be integrated with the realities of international real estate projects and the real estate company's investment strategy. Costs are minimized within the planned time frame.
3. Method
The research is dedicated to the study of construction cost control of international real estate companies in the development of international projects, and the research variables are mainly the control of construction costs in international real estate projects.AHP is a research method that uses a combination of quantitative and qualitative methods, and this research method determines the weights of different research variables through two rounds of expert scoring, and the scoring criteria are shown in Table 1.
3.1 Research Design
The AHP method allows for a combination of bottom-level and top-level factors to be studied as a result of the literature analysis to find the key influencing factors. These include the top-level factors of technical, environmental, policy and human factors and the bottom-level factors of advanced construction techniques, favourable sites, inflation rates of construction materials and the relationship between contractors, owners and designers. The entire analysis process is shown in Figure 3.
3.1.1 Samples
The study was based on a random sample of two experts from academic and real estate companies in the Americas, Europe, Australia and Asia, with more than five years' experience and managerial positions. eight experts from different countries were evaluated through two rounds of online scoring.
3.1.2 Site
The scope of the research is real estate projects in international engineering, and the experts sampled for AHP scoring are from four regions: the Americas, Europe, Australia and Asia.
3.1.3 Procedures
The process of the study starts with (1) expert scoring (2) AHP analysis (3) identification of key influencing factors.
Design and Variables: The study uses a hierarchical analysis of the main factors, including the top- level factors (technology, environment, policy and human factors) and the bottom-level factors (advanced construction techniques, favourable sites, inflation rates of construction materials and the relationship between contractors, owners and designers) in Table 2).
3.2 Measurement
The measurement method for this study is the same weight scoring method and AHP calculation to find the key weights. The weights were calculated as follows.
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3.3 Data Analysis
(1) Literature collation and analysis method to collect the cost control influencing factors of international real estate companies, the research variables are marked in excel sheet. (2) This study AHP method and expert scoring are combined to calculate the weights between different variables, the study will be based on expert scoring and the weighting calculation will be supplemented by the use of Yaahp software for analysis and calculation.
4. Results and Discussion
The results of the study confirm the importance of key factors in cost control for construction materials in international real estate companies on construction projects. Overall, the study was conducted by drawing on eight international project and real estate experts and senior managers from different countries (Table 3), who had sufficient industry experience and reliability.
4.1 Step 1: Determining a Hierarchical Model
The AHP method is a method for solving multi-factor problems. It is primarily a combined qualitative and quantitative weighting calculation method for multi-objective complex problems.
In this study, the research variables are divided into top-level variables and top-level variables and weights are calculated. Figure 4 shows the structure of AHP for construction cost control in international real estate projects, where the problem is broken down into its different components and key factors are found based on the overall objectives.
Figure 4: Hierarchical Structure Diagram
4.2 Step 2: Constructing Judgment Matrix
In the AHP method, a matrix is constructed by constructing the influencing factors for cost control of different international real estate projects and then comparing all the influencing factors as an element of the matrix two by two with each other. In the comparison process, eight experts and senior managers from different countries with more than five years of experience were invited to rate the study. The constructed matrix and study variables were derived from the weighting formula (Formulate 1). In the matrix model, the mean of each row is calculated based on a weighted decision matrix. The mean value of each row is the weighted weight value of the factors influencing cost control in international real estate projects (Table 3).
4.3 Step 3: Comparison of Two-By-Two Matrix
This paper lists the bottom influencing factors, including the four categories of Advanced techniques, Favourable sites, Inflation rates and Relationship between stakeholders to be used as bottom influencing factors and compares them to the top influencing factors Technology, Environment, Policy and Human factors (Table 5). Environment, Policy and Human factors (Table 5). The weights of each row in the matrix are averaged and calculated to give the weight importance of the influencing factors for cost control in international real estate projects.
4.4 Step 4: Hierarchical Single Sort and Its Consistency Test
This step is mainly used to investigate whether the weights calculated by AHP are out of order, and it uses the eigenvectors corresponding to λmax to calculate whether the CR index is within the range of 0.1. A table of standard values of random index RI was obtained in the study with reference to Table 6, but different standards correspond to different RI values one by one. In this study, the RI of the fourth-order matrix is 0.89.
𝐶𝑅 =𝐶𝐼
𝑅𝐼 (CI versus value 0.1) (3)
4.5 Step 5: Total Ranking and Prioritization
AHP allows for a combination of quantitative and qualitative analysis in the absence of sufficient statistical data and primary sources. By analyzing and comparing the data through AHP, this study concluded that the factors influencing cost control in international real estate projects are, in descending order, Technology>Policy>Environment>Human factors. rates>Favourable sites>Relationship between stakeholders.
5. Conclusion
The study will identify the influencing factors suitable for construction cost control in international real estate projects from the methods of literature collation and analysis, hierarchical analysis of the influencing factors of social cost control and combine with the weight calculation method so as to analyse and identify the main factors of construction cost control in international real estate projects. Through the analysis of the main construction cost control influencing factors, combined with the actual situation of real estate companies and international projects, to improve the core competitiveness of construction companies to reduce expenditure costs.
In terms of the future direction of construction cost control in international real estate projects, this study can draw the following conclusions (1) Depending on the different situations in which cost control is carried out in different regions and types of international real estate projects, international real estate companies can quickly find the influencing factors and key factors of construction costs. This study finds that the key influencing factor for construction cost control in international real estate projects is the level of construction technology. (2) International real estate companies can reduce construction and management costs and increase the profitability of international real estate project development according to their own situation and key factors of construction cost control.
6. Acknowledgement
Thanks to the jury and reviewers of the 4th International Conference on Economics, Education, Engineering Technology, Business and Social Sciences for their help and support. Thank you to Universiti Sains Malaysia and the university faculty for developing my academic skills.
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