Construction cost index: a case study in Malaysia

Abstract

Abstract Construction Cost Index (CCI) is introduced to enhance cost forecasting in construction projects. However, the effectiveness and its application in the developing countries are limited. Therefore, a case study is conducted in Malaysia to investigate the effectiveness of CCI in developing country. In order to achieve the aim, the objectives of the study are to identify the CCI implementation factors, challenges of CCI that hindering its implementation and to justify its applicability in developing countries. Quantitative approach is selected for data collection. 1000 sets of questionnaires were distributed to the construction industry stakeholders. Principal Component Analysis (PCA) and Structural Equation Modelling (SEM) were employed to analyse the collected data. It is found that encouragement from local government plays a vital role in CCI concept. Meanwhile, the reliability and validity of CCI remain as the major CCI implementation challenges in the industry. From the SEM, a causal relationship framework of CCI implementation factors and CCI functions is developed. The framework is important to serve as an implementation guideline for the stakeholders. This study is significant to provide an insight overview of CCI to the stakeholders to enhance cost estimating efficiency.