The computer-based contingency estimation through analysis cost overrun risk of public construction project

Abstract

The causes of contract change at the construction phase can become the main risk factor which was not accurately understood or was unexpected leading to the increase in the direct and/or indirect costs. Therefore the contingency is necessary to swiftly handle and respond to such occasion However, when it comes to estimating contingency, it is difficult to respond to risks arising variously depending on the nature of the project. This is because the assessment method is based on lump-sum ratio application. To address such problems, the final contingency estimation system has been established using contingency estimation modeling based on the analysis on the current contract change status and on the results of identification and analysis of cost overrun risk. To verify the usability of the constructed system, case study has been performed targeting risk management experts. As a result of case application, it was possible to provide the information on the relevant project in advance, to derive the cost overrun factors, to identify the risk factors in detail, and thus to understand the nature of project by analyzing the contract change status in public construction projects. Furthermore, this method is differentiated from the traditional lump-sum ratio application because the accuracy of risk analysis improved by using 3 input variables instead of single variable and by putting risk analysis methods together (importance analysis+ fuzzy theory).