Cost of Construction and Performance of Housing Projects in Nairobi County, Kenya: a Case of Pangani Housing Project

Abstract

According to CAHF (2022), the demand for housing in Kenya stands at 250,000 units whereas housing supply is 50,000 units annually. This translates to only 20% of housing demand being met. In this light, this research project probed the effect of cost of construction on performance of Pangani AHP. The study was guided by the Agency Cost and the Program theories. Project managers and contractors overseeing Pangani AHP, Nairobi County Ministry of Infrastructure, Ministry of Lands, Public Works, and State department of housing and urban development staff were among the target participants. The researcher used questionnaires as well as interview schedules in collection of data. For analysis of data, the researcher employed descriptive and inferential statistics. The independent variables for the study included cost of building materials, land, financing and professional services. The findings indicated there is a substantial and positive correlation of 70.2% between building materials’ costs and performance of housing projects. The study’s findings also revealed there is a positive relationship of 60.5% between cost of land and performance of housing projects. In addition, the study demonstrated there is a strong positive relationship of 73.3% between cost of financing and performance of housing projects. Further, the study showed there is a substantial positive correlation of 58.4% between performance of housing projects and professional services’ costs. The research concluded that there is a positive significant effect of cost of construction on performance of housing projects. The study recommends use of strategic procurement methods such as bulk purchases as well as land acquisition planning. The study further recommends employment of cheaper and flexible loan terms in addition to negotiating favorable professional fees with service providers.