Industry readiness for inflation adjusted data driven cost estimation in Sri Lankan construction industry

Abstract

Accurate cost estimation at the tendering stage is essential for the financial success of construction projects. However, in the Sri Lankan construction industry, significant discrepancies are often observed between bid price and final contract price, primarily due to economic volatility and limitations in traditional estimation practices. This study aims to examine current cost estimation practices and assess the industry’s readiness to adopt inflation adjusted data driven cost estimation models. A mixed method was adopted and a questionnaire survey was used for the data collection, The questionnaire was distributed to 75 construction professionals, and 40 valid responses were received. The questionnaire collected both quantitative and qualitative data, which analysed using descriptive and content analysis techniques. The findings indicate that traditional cost estimation methods are widely used in Sri Lankan construction industry, while the adoption of software-based tools remain limited. The results further reveal that a majority of respondents perceive a considerable difference between bid price and final contract price. Despite this, there is a strong positive perception towards adopting data driven cost estimation models, with most respondents recognising the importance of incorporating inflation adjusted approaches to improve estimation accuracy. However, several challenges were identified, including limitations in historical data availability, economic instability and lack of technical expertise. The study highlights the need to address these challenges to facilitate the adoption of advanced cost estimation approaches. It contributes to both practice and research by providing insights into industry readiness and identifying key areas for future development in the Sri Lankan construction industry.