Moret, Y and Einstein, H H (2012) Modeling correlations in rail line construction. Journal of Construction Engineering and Management, 138(9), pp. 1075-1084. ISSN 0733-9364
Abstract
The total construction cost and time of projects are often overrun. It is known that when positive correlations between costs are disregarded, the range of possible total construction costs is underestimated. A model is needed to estimate the effect of correlations on the probability distributions of total cost and total time. Four cost-cost and one cost-time correlations in the construction of rail lines were identified, two of which were investigated in detail using a model applicable to the construction of any networked system. This paper presents the theoretical background of the model, the correlations occurring in rail line construction, and the analysis of the impact of such correlations in two case studies including several scenarios and one sensitivity analysis. The results clearly show that the standard deviation of the total cost increases with the magnitude of the correlation and, most importantly, it dramatically increases with the number of costs that are correlated; it also depends on the type of correlation matrix. Correlation between costs must be modeled to capture the wide range of the possible total cost; otherwise, the total construction cost of projects will continue being significantly underestimated.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | case studies; construction costs; correlation; Monte Carlo method; norta method |
| Index terms: | sensitivity analysis, overrun, cost increase, case study, probability distribution, construction cost, deviation, estimate, modelling |
| Subjects: | economics, project controls, environmental hazards, statistical analysis, data collection methods, financial and cost management, analytical methods |
| Topics: | Sustainability, Cost Management, Research Practice, Engineering Principles, Time Control |
| Descriptive scope: | 4 PCEA |
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