Wherever a construction project is embarked upon, there always exists some risk inherent elements in it, such as physical risk, environmental risk, logistic risk, financial risk, legal risk, political risk and construction risk among other forms of risks that abound in the investment environment the world over. Traditionally, during the pre-contract stage of a project's life most of these risks are not properly identified and quantified in a bid to effectively manage them. Rather, a contingency sum and insurance cover are allowed in order to accommodate the effect of unforeseen circumstances. However, a study by Pouliquen [3], showed that most of these contingency allowances were based on intuitive guesswork and this explains the attendant high cost over-runs involved and or their implications [4]. Moreover, the conventional way in the construction industry is to present construction cost estimates in deterministic terms usually by a single figure, with quantifications, assumptions and exclusions. Pouliquen [3], stated that the single figure could be saidto "represent the estimator's assessment of uncertainty", but this would be too vague as there is no means whatsoever of ascertaining the risk that exists as to whether the estimate will be exceeded or bettered and by what proportion. This conventional approach that uses single value estimate has posed a lot of problems in construction projects, especially where public spending is involved. This is because there are frequently cost over-runs to the tune the client is not even expecting and there is no way he could determine the likely increases beforehand since the single value estimate would not reveal the degree of risk in the cost estimate [5].
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.