Cost-risk contingency framework for managing cost overrun in metropolitan projects: using fuzzy-AHP and simulation
International Journal of Managing Projects in Business
ISSN: 1753-8378
Article publication date: 16 May 2020
Issue publication date: 22 June 2020
Abstract
Purpose
Risk analysis plays a vital role in controlling and managing cost overruns in complex construction projects, particularly where uncertainty is high. This study attempts to address an important issue of cost overrun that encountered by metropolitan rapid transit projects in relation to the significance of risk involved under high uncertainty.
Design/methodology/approach
In order to solve cost overrun problems in metropolitan transit projects and facilitate the decision-makers for effective future budgeting, a cost-risk contingency framework has been designed using fuzzy logic, analytical hierarchy process and Monte Carlo simulation.
Findings
Initially, a hierarchical breakdown structure of important complexity-driven risk factors has been conceptualized herein using relative importance index. Later, a proposed cost-risk contingency framework has investigated the expected total construction cost in order to consider the additional budgeted cost required to mitigate the risk consequences for particular project activity. The results of cost-risk analysis imply that poor design issues, an increase in material prices and delays in relocating facilities show higher dependency and increase the risk of cost overrun in metropolitan transit projects.
Practical implications
The findings and implication for project managers could possibly be achieved by assuming the proposed cost-risk contingency framework under high uncertainty of cost found in this research. Furthermore, this procedure may be used by experts from other engineering domains by replacing and considering the complex relationship between complexity-risk factors.
Originality/value
This study contributes to the body of knowledge by providing a practical contingency model to identify and evaluate the additional risk cost required to compute total construction cost for getting stability in future budgeting.
Keywords
Acknowledgements
We are grateful to the anonymous respondents for their impartial participation in the focus group study and experts for their unconditional support, helpful comments and suggestions in early versions of this article.Funding: This work was supported by the national natural science foundation of China under Grant 71572028 and 71872027.
Citation
Afzal, F., Yunfei, S., Junaid, D. and Hanif, M.S. (2020), "Cost-risk contingency framework for managing cost overrun in metropolitan projects: using fuzzy-AHP and simulation", International Journal of Managing Projects in Business, Vol. 13 No. 5, pp. 1121-1139. https://doi.org/10.1108/IJMPB-07-2019-0175
Publisher
:Emerald Publishing Limited
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