A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast

H Odeyinka, John Lowe, Ammar Kaka

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

    Abstract

    Construction cash flow forecasting has attracted a lot of research interests over the last two decades. Researchers have employed forecasting methodologies, which include mathematical formula-based, statistical, computer simulation and artificial intelligence applications. In spite of the quantity of research efforts, accuracy of the forecast is still a major problem, largely due to risks and uncertainties inherent in construction. This paper presents part of three-year year programme of research aimed at evaluating the impacts of risk on construction cost flow forecast. The study which is at the end of the second year identified and assessed the risk factors responsible for the variation between the forecast and actual cost flow. The study was conducted through a questionnaire survey administered on contracting organisations. On a project by project basis, contractors' opinions were sought on the extent of occurrence of 26 risk variables considered in the study. An initial analysis was carried out using mean response analysis. This shows that the main factors responsible for variation between the forecast and actual cost flow are client's changes to initial design, inclement weather, variation to works (AI), labour shortage, production target slippage, delay in agreeing variation/day works, delay in settling claims, problems with foundations and underestimating project complexity. Further analysis based on factor analysis showed that the identified risk variables could be grouped into six generic groups; the most important factor group being delayed payment and variation to works. Other generic factors are economic changes, project disruption, project complexity, shortage of construction resources and natural inhibitions. These groupings are of significant value in providing a parsimonious reduction of the risk variables and they subsequently provide direction for developing a cost flow risk assessment model.
    LanguageEnglish
    Title of host publicationUnknown Host Publication
    EditorsR. Morledge
    Place of PublicationLondon, United Kingdom
    Pages120-131
    Number of pages12
    Publication statusPublished - Sep 2002
    EventRICS Foundation Construction and Building Research Conference (COBRA) - Nottingham Trent University
    Duration: 1 Sep 2002 → …

    Conference

    ConferenceRICS Foundation Construction and Building Research Conference (COBRA)
    Period1/09/02 → …

    Fingerprint

    Costs
    Factor analysis
    Risk assessment
    Contractors
    Artificial intelligence
    Personnel
    Economics
    Computer simulation
    Uncertainty

    Keywords

    • Construction cost flow
    • contractor
    • factor analysis
    • mean response analysis
    • risk variable

    Cite this

    Odeyinka, H., Lowe, J., & Kaka, A. (2002). A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. In R. Morledge (Ed.), Unknown Host Publication (pp. 120-131). London, United Kingdom.
    Odeyinka, H ; Lowe, John ; Kaka, Ammar. / A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. Unknown Host Publication. editor / R. Morledge. London, United Kingdom, 2002. pp. 120-131
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    Odeyinka, H, Lowe, J & Kaka, A 2002, A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. in R Morledge (ed.), Unknown Host Publication. London, United Kingdom, pp. 120-131, RICS Foundation Construction and Building Research Conference (COBRA), 1/09/02.

    A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. / Odeyinka, H; Lowe, John; Kaka, Ammar.

    Unknown Host Publication. ed. / R. Morledge. London, United Kingdom, 2002. p. 120-131.

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

    TY - GEN

    T1 - A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast

    AU - Odeyinka, H

    AU - Lowe, John

    AU - Kaka, Ammar

    N1 - Hard copy deposited at BERI Office

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    N2 - Construction cash flow forecasting has attracted a lot of research interests over the last two decades. Researchers have employed forecasting methodologies, which include mathematical formula-based, statistical, computer simulation and artificial intelligence applications. In spite of the quantity of research efforts, accuracy of the forecast is still a major problem, largely due to risks and uncertainties inherent in construction. This paper presents part of three-year year programme of research aimed at evaluating the impacts of risk on construction cost flow forecast. The study which is at the end of the second year identified and assessed the risk factors responsible for the variation between the forecast and actual cost flow. The study was conducted through a questionnaire survey administered on contracting organisations. On a project by project basis, contractors' opinions were sought on the extent of occurrence of 26 risk variables considered in the study. An initial analysis was carried out using mean response analysis. This shows that the main factors responsible for variation between the forecast and actual cost flow are client's changes to initial design, inclement weather, variation to works (AI), labour shortage, production target slippage, delay in agreeing variation/day works, delay in settling claims, problems with foundations and underestimating project complexity. Further analysis based on factor analysis showed that the identified risk variables could be grouped into six generic groups; the most important factor group being delayed payment and variation to works. Other generic factors are economic changes, project disruption, project complexity, shortage of construction resources and natural inhibitions. These groupings are of significant value in providing a parsimonious reduction of the risk variables and they subsequently provide direction for developing a cost flow risk assessment model.

    AB - Construction cash flow forecasting has attracted a lot of research interests over the last two decades. Researchers have employed forecasting methodologies, which include mathematical formula-based, statistical, computer simulation and artificial intelligence applications. In spite of the quantity of research efforts, accuracy of the forecast is still a major problem, largely due to risks and uncertainties inherent in construction. This paper presents part of three-year year programme of research aimed at evaluating the impacts of risk on construction cost flow forecast. The study which is at the end of the second year identified and assessed the risk factors responsible for the variation between the forecast and actual cost flow. The study was conducted through a questionnaire survey administered on contracting organisations. On a project by project basis, contractors' opinions were sought on the extent of occurrence of 26 risk variables considered in the study. An initial analysis was carried out using mean response analysis. This shows that the main factors responsible for variation between the forecast and actual cost flow are client's changes to initial design, inclement weather, variation to works (AI), labour shortage, production target slippage, delay in agreeing variation/day works, delay in settling claims, problems with foundations and underestimating project complexity. Further analysis based on factor analysis showed that the identified risk variables could be grouped into six generic groups; the most important factor group being delayed payment and variation to works. Other generic factors are economic changes, project disruption, project complexity, shortage of construction resources and natural inhibitions. These groupings are of significant value in providing a parsimonious reduction of the risk variables and they subsequently provide direction for developing a cost flow risk assessment model.

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    Odeyinka H, Lowe J, Kaka A. A Factor Approach to the Analysis of Risks influencing Construction Cost Flow Forecast. In Morledge R, editor, Unknown Host Publication. London, United Kingdom. 2002. p. 120-131