Publications / 2002 Proceedings of the 19th ISARC, Washington, USA

Simulation-Facilitated Factor-Based Approach for Cost Correlation Evaluation

W. Wang
Pages 97-102 (2002 Proceedings of the 19th ISARC, Washington, USA, ISSN 2413-5844)

Project cost becomes increasingly variable if many cost items for a construction project are correlated, and this can increase the uncertainty of completing a project within a target budget. This work presents a factor-based computer simulation model for evaluating project costs given correlations among cost items. Uncertainty in the total cost distribution of an item is transferred to several factor cost distributions according to qualitative estimates of the sensitivity of each cost item to each factor. Each cost distribution is then decomposed further into a family of distributions (children; costs given factor conditions), with each child corresponding to a factor condition. Correlations are retrieved by sampling from the child distributions with the same-condition for a given iteration of the Simulation.

Keywords: Computer Simulation; Cost Estimating; Risk Factor; Uncertainty