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Significant cost-push factors in owner-built incremental housing construction in Tanzania

Samwel Alananga, Charles Lucian and Moses Mpogole Kusiluka

Construction Management and Economics, 2015, vol. 33, issue 8, 671-688

Abstract: The owner-built incremental housing approach is highly prevalent in developing countries although its economic rationale is questionable. This study uses descriptive statistics and regression analysis to examine the flexibility of owner-built housing construction cost in response to different cost-push factors based on survey data on 43 main and 20 outbuilding projects implemented in Dar es Salaam Tanzania between 1990 and 2013. It has been observed that factor cost-flexibility of incremental construction is significantly enhanced through longer construction periods, the use of local cement and drainage system materials and larger built space. This flexibility is explained by the owner-builders' ability to internalize these cost-push factors over time which is reflected through lower annual construction costs facing owner-builders even at times of shortage in services and material supply, cost underestimation or high interest rate. These observations suggest that longer construction periods not only offer the cost-spread advantage but also allow a more thorough search for appropriate plot location, cheaper sources of materials, more affordable design and an appropriate match between changing life cycle housing needs and household income. Therefore, the incremental owner-built approach has lower annual construction costs not only because of the cost-spread effect of a longer construction period but also as a result of owner-builders' cost-saving choices made in terms of utilization of certain local materials, purchasing plots in less challenging environments, preferring single-storey over two-storey houses and avoiding complex house design.

Date: 2015
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DOI: 10.1080/01446193.2015.1090007

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Handle: RePEc:taf:conmgt:v:33:y:2015:i:8:p:671-688