Cost Estimation Techniques and Financial Sustainability of Non-Governmental Organizations Projects in Nairobi City County, Kenya

For non-governmental organizations operating in Nairobi City County, Kenya, the financial sustainability of their projects continues to be an important concern. These organizations have been criticized for their inadequate budgeting, excessive reliance on intermittent funding, and cost overruns, all of which typically led to project failure. This study used a mixed-methods approach to examine the effects of cost estimation methods on the stability and financial performance of livelihood and economic development projects carried out by non-governmental organizations. Additionally, a valid sample of 197 participants was obtained from the distribution of structured questionnaires to 293 participants, which were contextualized with qualitative document analysis of organizational reports. The study was particularly interested in four different cost estimation techniques that included the door-in-the-wall analogy, as well as the parametric technique. The descriptive statistics revealed that the analogous host estimation technique was the most commonly used in projects (M=3.72), while the bottom-up estimation technique was regarded as the most accurate (M=3.87). Results from multiple regression analysis demonstrated that the perceived accuracy of both parametric (β = 0.613, p<.001) and bottom-up (β = 0.253, p<.001) estimation techniques was statistically significant and a positive predictor of project-level financial outcomes. On the other hand, the perceived accuracy of both the top-down and analogous techniques revealed that they had no significant contribution. Moreover, a thematic analysis of qualitative data was conducted, contextualizing these findings and confirming a strong reliance on donor funding, as was the case for 76.6% of non-governmental organizations, thereby necessitating very rigorous and defensive budgeting, which was easily handled by the bottom-up and parametric techniques. The study concludes that the utilization of a hybrid system that integrates the strategic foresight and the data-driven nature of the parametric technique together with the operational accountability and detail orientation of the bottom-up technique, is the key to the enhancement of stability and financial control at organizations’ project level. This approach would foster trust among donors and ensure that organizations have control over their budgets and, through the processes, mitigate risks associated with funding volatility. In addition, the study recommends that NGOs should institutionalize this hybrid model and encourages policymakers to offer organizations facilitation in sharing knowledge within the sector. This research provides a validated framework for non-governmental organizations to improve project success and long-term organizational resilience.