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A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast

Biomedical Sciences Research Institute Computer Science Research Institute Environmental Sciences Research Institute Nanotechnology & Advanced Materials Research Institute

Odeyinka, H, Lowe, John and Kaka, Ammar (2002) A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. In: RICS Foundation Construction and Building Research Conference (COBRA), Nottingham Trent University. Royal Institution of Chartered Surveyors (RICS). 12 pp. [Conference contribution]

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Abstract

Construction cash flow forecasting has attracted a lot of research interests over the last two decades. Researchers have employed forecasting methodologies, which include mathematical formula-based, statistical, computer simulation and artificial intelligence applications. In spite of the quantity of research efforts, accuracy of the forecast is still a major problem, largely due to risks and uncertainties inherent in construction. This paper presents part of three-year year programme of research aimed at evaluating the impacts of risk on construction cost flow forecast. The study which is at the end of the second year identified and assessed the risk factors responsible for the variation between the forecast and actual cost flow. The study was conducted through a questionnaire survey administered on contracting organisations. On a project by project basis, contractors' opinions were sought on the extent of occurrence of 26 risk variables considered in the study. An initial analysis was carried out using mean response analysis. This shows that the main factors responsible for variation between the forecast and actual cost flow are client's changes to initial design, inclement weather, variation to works (AI), labour shortage, production target slippage, delay in agreeing variation/day works, delay in settling claims, problems with foundations and underestimating project complexity. Further analysis based on factor analysis showed that the identified risk variables could be grouped into six generic groups; the most important factor group being delayed payment and variation to works. Other generic factors are economic changes, project disruption, project complexity, shortage of construction resources and natural inhibitions. These groupings are of significant value in providing a parsimonious reduction of the risk variables and they subsequently provide direction for developing a cost flow risk assessment model.

Item Type:Conference contribution (Paper)
Keywords:Construction cost flow, contractor, factor analysis, mean response analysis, risk variable,
Faculties and Schools:Faculty of Art, Design and the Built Environment
Faculty of Art, Design and the Built Environment > School of the Built Environment
Research Institutes and Groups:Built Environment Research Institute
Built Environment Research Institute > Centre for Sustainable Technologies (CST)
ID Code:10616
Deposited By:Dr Henry Odeyinka
Deposited On:20 May 2010 13:33
Last Modified:20 May 2010 13:33

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