Integrated Risk of Progress-Based Costs and Schedule Delays in Construction Projects

Abstract

This article aims to explore the impact of the integration of risk factors into delayed milestones for construction projects. A simulation model was developed to determine the impact of schedule variability on cost estimation. To generate random scenarios a Monte Carlo Simulation (MCS) technique was applied. The developed model computes the cost impact of delayed milestone in the expected budget. Using a risk integration approach revealed the critical time frame that may lead to a budget deficit for a project. As a result, a number of cost-sensitive risk factors and schedule delays were identified for the critical time period where the risk of budget deficit increases. The method of integration proposed in this article highlights the priority of risk factors and schedule delays for construction contracts involving Payments at Event Occurrences (PEO). Consequently, the developed method can be useful for practitioners in anticipation of potential increase of costs, hence, prevention of failure due to budget deficit.

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