Question: 3 . 1 . What are the implications and consequences of overestimating costs, and of underestimating costs? ( 2 ) 3 . 2 . Identify

3.1. What are the implications and consequences of overestimating costs, and of
underestimating costs? (2)
3.2. Identify the sources of cost escalation in a project. (5)
3.3. You are a cost engineer tasked with preparing a parametric estimate of material
costs for a residential housing project in Monavoni Centurion. The project involves
constructing 20 identical houses. Each house will have a floor area of 150 square
meters. Based on historical data, the average material cost per square meter for similar
residential houses in the area is ZAR 3,000. The project will also include the following
additional material components for each house:
Roofing Material: R450 per square meter. The roof area for each house is 180 square
meters.
Windows and Doors: R25,000 per house.
Interior Finishes: R1,200 per square meter of floor area.
Calculate the total material cost estimate for the project (20 houses).

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