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Application of Probabilistic Risk Analysis for Profitability-Evaluation of Apartment Reconstruction Projects  

Woo, Kwang-Min (동아대학교 대학원 건축공학과)
Lee, Hak-Ki (동아대학교 건축학부)
Publication Information
Korean Journal of Construction Engineering and Management / v.7, no.5, 2006 , pp. 167-176 More about this Journal
Abstract
It was found that Korean Standard of Estimate which has been used as the only basis of cost estimate of public construction projects had some side effects such as jerry-build construction and over-estimation because it failed to reflect the current price and the state-of-the-art construction methods in a changing construction environment. Therefore, the government decided to gradually introduce historical construction cost into cost estimate of public construction projects from 2004. This paper presents analytic criteria and a process model for deducing more current and reasonable historical construction cost for contract items from not only previous contract prices but also all of the other bid prices that were not contracted. The procedure of estimating actual unit cost proposed in this paper focuses on the removal of abnormal values including strategically too low or high prices and the time correction. In addition, basic research is conducted for the correction of actual unit cost through the analysis of fluctuation of bid price depending on bidding types and rates of successful bid. It is anticipated that the effective use of the proposed process model for estimating actual unit cost would make the cost estimation more current and reasonable.
Keywords
Historical Construction Cost; Actual Unit Cost; Bid Price; Cost Estimation; PRA; MCS;
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