A strategy for the development of a knowledge based system for predicting out-turn costs of heavy engineering works within a multi-national cost consultancy

The heavy engineering industry (principally process based activities such as sewage treatment, chemical, pharmaceutical, oil and gas facilities) is one of the major contributors to the British economy and generally involves a high level of investment. Clients of this (or in this) industry are demanding increased accuracy with project cost estimates. This includes structured analyses of out-turn costs and their related cost escalation. In addition, clients are calling for high quality continuous risk assessments throughout the entire project life cycle. A review of current practices in the industry has suggested that there is a lack of structured methodologies and systematic cost escalation procedures to achieve an appropriate cost analysis at the outset of projects and throughout their progression. In this context, the prime objective of this research work was to develop a structured methodology for predicting cost escalation with the aim or improving estimating management and control for construction activities in the heavy engineering industry. The methodology is primarily composed of a forecasting model, to predict the cost indices of major items, and a risk knowledge base model for identifying and quantifying causes of cost escalation. In order to achieve the objective of the research work, a number of tasks were undertaken. The initial tasks included the review of existing literature on cost estimation, forecasting methodologies, knowledge based systems and knowledge elicitation strategies. The principal research tasks incorporated the development of an appropriate forecasting methodology (a variation on the classical time series decomposition method) and a knowledge elicitation strategy for collating, presenting and processing knowledge in the area of the research work. The knowledge elicitation strategy consisted of questionnaires, semi-structured interviews and workshops. finally. a prototype was developed to encapsulate these methodologies. This forms the main deliverable of the research work. A number of actual case studies were carried out to illustrate and justify the methodology. These are presented in detail. It is concluded that the utilisation of such a methodology in the industry has the potential to make a major contribution to meeting the need for delivering projects to client requirements with minimum cost escalation, through the identification and quantification of risk factors.