Odeyinka, H A; Lowe, J G and Kaka, A P (2002) A construction cost flow risk assessment model. In: Greenwood, D (ed.) Proceedings of 18th Annual ARCOM Conference, 2-4 September 2002, Northumbria, UK.
Abstract
Various 'short cut' approaches have been adopted in cash flow forecasting ranging from the statistical, mathematical, simulation and the use of artificial intelligence techniques. However, the majority of these approaches failed to consider the issues of risks and uncertainties inherent in construction. As such, a wide variation is observable between the predicted cash flow profile and the actual. This study attempts to model the variation between predicted and actual cost flow due to inherent risks in construction. Data were obtained through questionnaire survey and empirical data collection. Contractors on individual projects were requested to score on a Likert type scale, the extent of occurrence of each identified risk variable that resulted in the variation between the predicted and actual cost flow profiles. An analysis of the responses, using ranking of the mean response enabled the study to focus on the most significant risk variables. The impact of these risk variables on cost flow forecast was then investigated by collecting data on predicted and actual cost flow from completed construction projects in order to determine their variation. Neural network was employed using the back propagation algorithm to develop the cost flow risk assessment model. The developed model was tested on 20 new projects with satisfactory predictions of variations between the forecast and actual cost flow at 30, 50, 70 and 100% completion stages.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | cost flow; contractor; modelling; neural network; risk and uncertainty |
| Index terms: | actual cost, cash flow, survey, construction cost, neural network, back propagation, questionnaire, variation, construction project, risk assessment, artificial intelligence, cash flow forecasting, modelling |
| Subjects: | financial management, algorithms, contractual condition, production management, financial risk, data collection methods, artificial intelligence, financial and cost management, analytical methods |
| Topics: | Digital Applications, Contract Administration, Cost Management, Engineering Principles, Research Practice, Project Management |
| Descriptive scope: | 4 PCEA |
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