International conference on construction engineering and project management (국제학술발표논문집)
- 2007.03a
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- Pages.96-105
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- 2007
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- 2508-9048(eISSN)
IMPACT OF CONSTRUCTION MATERIAL COST VARIATION ON THE ON THE FEASIBILITY OF BUILDING PROJECTS IN DEVELOPING COUNTRIES: A CASE STUDY IN VIETNAM RISK
- Soo-Yong Kim (Division of Construction Engineering, Pukyong National University) ;
- Luu Truong Van (Interdisciplinary Program of Construction Engineering and Management, Pukyong National University) ;
- Byeong-Gi Yoo (Executive Director, Project & Construction Management Dept., KUNWON ENGINEERING CO., LTD) ;
- Luong Thanh Dung (Department of Civil Engineering, HCMC University of Architecture)
- Published : 2007.03.01
Abstract
This paper presents a study on the impact of variation of construction material prices on the feasibility of building projects in Vietnam. The paper makes use of Monte-Carlo simulation for financial risk analysis of net present Value (NPV) and internal rate of return (IRR). To well illustrate the influencing, a case study is presented. The research results show that there is a strong correlation between steel prices, gold prices, and $US exchange rate. Outputs of statistics also reveal that the concurrent variation of prices of cement, steel, sand, brick, formwork and stone has strongly negative impact on NPV and IRR of building projects. The results also indicate that the proportion of steel cost to total construction cost is 17.95% which is the cause of risks for the feasibility of building project in Vietnam. The paper stresses that feasibility study of building project must integrate the impact of construction materials prices in order to mitigate risks in developing countries as Vietnam.