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A fuzzy model for evaluating risk impacts on variability between contract sum and final account in government-funded construction projects

Ernest Effah Ameyaw (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China.)
Albert P.C. Chan (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China.)
De-Graft Owusu-Manu (Department of Building Technology, Kwame Nkrumah University of Science & Technology, Kumasi, Ghana.)
Ekow Coleman (Public Investment Division, Ministry of Finance and Economic Planning, Accra, Ghana.)

Journal of Facilities Management

ISSN: 1472-5967

Article publication date: 2 February 2015

Abstract

Purpose

The purpose of this paper is to identify and then evaluate perceived risk factors influencing variability between contract sum and final count, and to develop a fuzzy risk assessment model for evaluating the overall impact of established critical risk factors impacting on variability between contract sum and final account in government-funded construction projects. Construction projects are characterised by risk factors that significantly impact on variability between the contract sum and final account.

Design/methodology/approach

A research approach integrating questionnaire survey, mean scoring ranking and principal component factor analysis (PCFA) methods was adopted to evaluate and classify the critical risk factors. A fuzzy synthetic evaluation method was sequentially applied to compute the overall risk impact (ORI) of eight critical risk factors’ impact on variability between contract sum and final account.

Findings

Initial results showed that eight critical risk factors have high impact on variations between contract sum and final account, namely (in order): project funding problems, underestimation of quantities, variations by client, change in scope of works, inadequate specification, change in design by client, defects in design and unexpected site (ground) conditions. PCFA produced two factor solutions: “professional-related factors” and “client factors”. The fuzzy model further showed that the ORI is 5.48, indicating that these risk factors have a high impact on variability between contract sum and final account in public construction projects. The client factors have a very high impact (5.59), while the professional-related factors indicated a high impact (5.41) on project cost variability.

Originality/value

A practical model is proposed to evaluate the key risks associated with cost overruns in public projects. By giving effective and sustained attention to these factors, variability between contract sum and final account, a common situation in Ghana, can be controlled to achieve cost savings in public infrastructure projects.

Keywords

Citation

Ameyaw, E.E., Chan, A.P.C., Owusu-Manu, D.-G. and Coleman, E. (2015), "A fuzzy model for evaluating risk impacts on variability between contract sum and final account in government-funded construction projects", Journal of Facilities Management, Vol. 13 No. 1, pp. 45-69. https://doi.org/10.1108/JFM-11-2013-0055

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited