Revolutionizing steel building project cost overrun risk assessment by Bayesian network

Purpose: In recent years, cost overrun becomes a common problem in steel building construction projects. The average percentage can vary widely depending on the project type, size, complexity and location. The steel structure change ratio in Taiwan is from 1 to 18% in statistics. The contractors always put every possible effort into preventing or mitigating project cost overruns, and one of the approaches is an accurate cost overrun risk estimate. Traditional project cost overrun risk assessment models mainly focus on macro-level evaluation and may not function well for the project-specific level (micro-level). This study creates a network-like connection model between the outcome (i.e. cost overrun risk) and the associated root causes in which the project status evaluation checklists of design, manufacturing, construction and interfaces are used to evaluate the checklists' influences through the Bayesian network (BN) composed by intermediate causes. Design/methodology/approach: Due to the constraint of data availability, BN nodes, relationships and conditional probabilities are defined to establish a BN-based steel building project cost overrun assessment model following the knowledge of experts. Because of the complexity of the BN, the construction of the BN structure is first to build BN's fault tree (FT) hierarchy. And then, basic BN framework is constructed by the transformation of the FT hierarchy. Furthermore, some worthwhile additional arcs among BN nodes are inserted if necessary. Furthermore, conditional probability tables (CPTs) among BN nodes are explored by experts following the concept of the ranked node. Finally, the BN-based model was validated against the final cost analysis reports of 15 steel building projects done in Taiwan and both were highly consistent. The overall BN-based model construction process consists of three steps: (1) FT construction and BN framework transformation, (2) CPT computation and (3) model validation. Findings: This study established a network-like bridge model between the outcome (i.e. cost overrun risk) and the root causes in a network of which cost influences are evaluated through the project-specific status evaluation checklists of design, manufacturing, construction and interfaces. This study overcame several limitations of the previous cost overrun risk assessment models: (1) few past research support assessment of cost overrun based on real-time project-owned data and (2) the traditional causal models inadequately depict interdependencies among influence factors of cost overrun at the network. The main influence factors of the cost overrun risk at the steel building projects in Taiwan were also examined using sensitivity analysis. The main root causes of cost overrun in steel building projects are design management and interface integration. Originality/value: The proposed model belongs to the project-specific causal assessment model using real-time project-owned status checklist data as input. Such a model was seldom surveyed in the past due to the complicated interdependence among causes in the network. For practical use, a convenient and simple regression equation was also developed to forecast the cost overrun risk of the steel building project based on the root causes as input. Based on the analysis of cost overrun risk and significant influence factors, proper tailor-made preventive strategies are established to reduce the occurrence of cost overrun at the project.