Evaluation of Cost Estimation Techniques in Drc Valuation: A Comparative Assessment of Valuers and Quantity Surveyors in Lagos State

Open access

Abstract

The aim of the research is to comparatively assess the knowledge and competency levels among valuers and quantity surveyors of cost estimation techniques used in DRC valuation. The study investigates the need for estate surveyors and valuers in Nigeria to improve their current knowledge of cost estimation techniques when valuing non-rent yielding and specialized properties using the DRC method of valuation. More importantly, it evaluates the need for valuers to engage in the services of quantity surveyors in order to ensure that accurate cost estimates are provided for use in the valuation process. The research methodology adopted in actualizing the aim of the present study made use of primary and secondary sources of data, which included texts, published research work and semi-structured questionnaire. Identical questionnaire was distributed to both valuers and quantity surveyors in Lagos and their responses were measured using statistical tables and simple percentages. A proficiency scale of the National Institute of Health was adopted to test the level of competence of cost estimation techniques amongst valuers and quantity surveyors and their responses were ranked. Furthermore, a two-sample t-test was used to compare the means of random samples drawn from the responses of these two populations. The findings showed that there was a lack of awareness more on the part of valuers than quantity surveyors when it came to the knowledge and use of current cost estimating methods when valuing properties using the DRC method of valuation. These findings also gave credence to the fact that the services of quantity surveyors most times were not commissioned when these cost estimates were to be determined for valuation, hence leading to properties being undervalued or overvalued. In a nutshell, the recommendations postulated dwelt on improving the cost estimating knowledge of estate surveyors and valuers through seminars, symposiums and workshops organised by NIESV and NIQS, awareness of the need for valuers to work with quantity surveyors to perfect valuation briefs involving the use of the DRC method and slight changes made to the curriculum of the study course “Estate Management” in tertiary institutions so as to accommodate taking courses in quantity surveying.

Aihie, V. U., & Ikuabe, M. (2018). Estimating the reinstatement or replacement cost in valuation: A case for the estate surveyor and quantity Surveyor to work in tandem in perfecting valuation briefs When using the contractor’s method (Depreciated Replacement Cost Method) in determining the value of Properties, International Journal of Civil Engineering, Construction and Estate Management, 6(1), 26-39.

Akomolede, K. (2004). Business Valuation: The Practice versus the Theories and the Way Forward. Paper presented at the Continuing Professional Development Workshop organized by the Nigerian Institution of Estate Surveyors and Valuers held in Lagos, Kaduna and Enugu.

American Society of Appraisers (2009). ASA Business Valuation Standards. Retrieved from https://www.appraisers.org/docs/default-source/discipline_bv/bv-standards.pdf?sfvrsn=0

Ashworth, A. & Perera, S. (2015). Cost Studies of Buildings (6th ed.). Abingdon, Oxon: Routledge. https://doi.org/10.4324/9781315708867

Bello, M. O. & Bello, V. A. (2007). The Influence of Contemporary Models on Valuation Practice in Nigeria, Hong Kong SAR, TS 3C- Valuation Practice, Strategic Integration of Survey of Services, FIG Week, 13-17.

Blogspot.com. Quantity Surveying. Retrieved from www.qskiru.blogspot.com (2010, October 2)

Breedt, J. (2010). “Estimating: A valid exercise or a false sense of security?” An unpublished B.Sc dissertation submitted to the Department of Built Environment and Information Technology University of Pretoria, South-Africa.

Brook, M. (2017). Estimating and tendering for construction work (5th ed.). Abingdon, Oxon: Routledge.

Coates S. J, & Steed L. G. (2001). SPSS Analysis without Anguish (10th ed.). Sydney, Australia: John Wiley and Sons Ltd.

Ekenta, C., & Iroham, C. O. (2014). Challenges of mortgage valuation in Port Harcourt, Nigeria. Issues in Business Management and Economics 2(4), 074-079.

Estate Surveyors and Valuers (Registration, Etc.) Act. CAP 111, Laws of the Federation of Nigeria-1990.

Field, A. (2005). Discovering Statistics Using SPSS, London: Sage Publications.

French, N., & Gabrielli, L. (2007). Market value and depreciated replacement cost: contradictory or complementary?, Journal of Property Investment & Finance, 25(5), 515-524. https://doi.org/10.1108/14635780710776693

Hore, A. V., Kehoe, J. G., McMullan, R., & Penton, M. R. (1997). Construction 1: Management finance Measurement. Hong Kong: Macmillan Press Ltd. https://doi.org/10.1007/978-1-349-13932-3

Ifediora, G. S. (2009). Appraisal Framework: Institute for Development Studies, Enugu, Nigeria.

IVSC. (2017). International Valuation Standards, International Valuation Standard Council, London. Retrieved from https://www.ivsc.org/standards/international-valuation-standards/consultation/IVS-review

Jagboro, G. O. (2016). Unmasking the Tower of Babel and the Scourge of Abandoned Projects in Nigeria, Obafemi Awolowo University, Ile-Ife, Inaugural lecture series 286.

Kuye, O. (2011). Estate Office Practice (2nd Edition). AdroDadar Heritage Company Limited, Lagos, Nigeria.

National Institutes of Health. Office of Human Resources. Retrieved from www.hr.nih.gov (2018, September 2)

NCSS Ltd. NCSS Statistical Software. Retrieved from www.ncss.com (2018, September 2)

Nigerian Institute of Quantity Surveyors (NIQS) (2015), Vision Statement, 2015 Dairy.

Nkado, R. N. (2000). Competencies of Professional Quantity Surveyors in a Developing Economy, Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.199.1152&rep=rep1&type=pdf

Ogunba, O. (2011). Valuers' perceptions of depreciation models in DRC valuations. Journal of Property Investment & Finance, 29(2), 190-209. https://doi.org/10.1108/14635781111112792

Okorie, A, Daniel, D. I., & Abdullahi, I. (2012). Mortgage investment in Osun State: An Evaluation of the Role of Estate Surveyors and Valuers In: Laryea, S., Agyepong, S.A., Leiringer, R. and Hughes, W. (Eds) Procs 4th West Africa Built Environment Research (WABER) Conference, 24- 26, Abuja, Nigeria, 1085-1094.

Olatunde, J. (2006). New Opportunities for Quantity Surveyors in Nigeria Business Environment, 21st Century Quantity Surveying, Agenda for the Future, NIQS Biennial. 1-3 November.

Olatunde, N. A., & Okorie, V. N. (2016). Appraisal of Awareness Level of Quantity Surveying Profession among Secondary School Students in Benin City, Nigeria. International Journal of Advanced Engineering, Management and Science (IJAEMS), 2(8), Aug- 2016.

Olunloyo, O. A. (2012). Mitigating informal economic sectors’ proliferation through microcredit scheme for small and medium scale entrepreneurs in metropolitan Lagos In: Laryea, S., Agyepong, S. A., Leiringer, R. and Hughes, W. (Eds), Proceedings in 4th West Africa Built Environment Research (WABER) Conference, 24-26 July 2012, Abuja, Nigeria, 1155-1167.

Onyejiaka, J. C., Emoh, F. I., & Egolum, C. C. (2012). Developing a Database for Efficient Property Valuation in Nigeria, Journal of the Nigerian Institution of Estate Surveyors and Valuers. 36(2), pp. 22-23.

Pienaar, J. S. (2004). Construction Cost Management Part1: Estimating and Pricing Revision 6. Pretoria: University of Pretoria.

Plimmer F., & Sayce S. (2006). Depreciated Replacement Cost: Consistent Methodology? Shaping the Change XXIII FIG Congress, Munich, Germany.

Seeley, I. H. (1976). Building economics. (3rd ed.) London: The Macmillan Press Ltd. https://doi.org/10.1007/978-1-349-03068-2

Shapiro, E., Mackmin, D., & Sams, G., (2012). Modern methods of valuation. (11th ed), Oxford: Estates Gazette.

Simon-Eigbe, B. O. (2003). Introduction to Tendering and Estimating, Benin City, Edo state: Olive Publishers.

Udechukwu, C. E. (2009). Principles of Valuation, Lagos, Nigeria: Treem Nigeria Limited.

Whipple, R. (1995). Property Valuation and Analysis, Sydney: The Law Book Company.

Wyatt, P. (2009). Replacement cost and market value, Journal of Property Investment & Finance, 27(6), 593-602. https://doi.org/10.1108/14635780910993186

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 70 70 9
PDF Downloads 53 53 10