Touran, A (1993) Probabilistic cost estimating with subjective correlations. Journal of Construction Engineering and Management, 119(1), pp. 58-71. ISSN 0733-9364
Abstract
One of the difficulties in probabilistic estimating is accounting for the existing correlations among cost components modeled as random variables. Even if the estimator is aware of the existence of correlations among random variables, calculating accurate values of correlation coefficients is not feasible most of the time. A methodology for generating correlated random numbers in a Monte Carlo simulation for construction cost estimating is reviewed. A methodology is then suggested that simplifies the process of incorporating the effect of correlation coefficients in probabilistic estimating. This methodology consists of assigning subjective measures of correlation between variables. Also, a method is suggested for adjusting the covariance matrix in which correlation estimates are not accurate. Procedures presented are further explained by two examples using actual construction cost data.
| Item Type: | Article |
|---|---|
| Index terms: | estimating, accounting, estimator, methodology, cost estimating, estimate, construction cost, Monte Carlo simulation |
| Subjects: | profession, economic analysis, financial and cost management, modelling and simulation, research methods |
| Topics: | Research Practice, Cost Management, Business Strategy, Roles and Professions |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here