| Title |
Quantifying Risk Factors on Cost Performance By Characterizing Capital Facility Projects |
| Authors |
Cha Hee Sung ; Jang Myung Hoon |
| Keywords |
Cost Performance ; Risk-based analysis ; Building projects ; Project Characteristics |
| Abstract |
Risk-based estimation has been successfully introduced into the construction industry. By incorporating historical data associated with probability analysis, risk-based estimate is an effective decision support aid in considering whether to launch a particular project. The industry challenges, however, especially related with management issues, such as labor shortage, wage growth, and supply chain complexity, have often resulted in poor cost performance. The insufficient assessing the project characteristics (i.e., resource availability, project complexity, and project delivery method) can be the main reasons in the poor cost performance. Because the accuracy level of cost performance prediction can be enhanced by extensive evaluation of the subject project characteristics, a new approach for predicting cost performance in an earlier stage of a project can improve the industry substantiality, in other words, value maximization. The purpose of this paper is to develop a new methodology in developing a risk-based estimate tool by incorporating extensive project characteristics. To do this, an extensive industry survey was conducted from both private and public sectors in building industry in Korea. In addition, significant project characteristics were identified in terms of cost performance indicator. Although the data collection is limited to Korean industry, the suggested approach provides the industry with a straightforward methodology in risk management. As many researchers maintained that front-end planning efforts are crucial in achieving the successful outcome in building projects, the new method for risk-based estimation can improve the cost performance as well as enhance the fulfillment in terms of business sustainability. |