Risk assessment in construction cost estimation of a motorway project

Abstract

Construction projects face substantial and unique risk factors at every stage. These factors threaten the project targets unless the uncertainty is moved away from the project. Risk management is one of the most effective systems in order to optimize performance and minimize the risks involved in a project. This process has to be realized and considered in every stage of a project. This study presents potential risks that cause an increase in the total construction cost and analyses how construction risks are assessed in a motorway project. Construction risks are considered from the contractor's point of view. First, real forecasts of the motorway project provided by the contractor are analysed in order to define contractor's risk policy. Then, the existing risks are assessed by a probabilistic, Monte Carlo simulation method using crystal ball software. The results of the simulation method are compared with the results of the actual situation. The results show that simulation method helps the contractors to manage the costs with high risk.