Accurate estimation of cost and time utilizing risk analysis and simulation (case study: Road construction projects in Iran)

Cost and time are essential decision-making factors in the early stages of road construction projects. It has been observed that road construction projects often lack adequate risk analysis before they are scheduled and costed. Also, there is a lack of data in a comprehensive operational plan. The estimated time/cost of the scheduled program (without considering the risks) differs greatly from the time/cost of delivered projects. Risk analysis is essential for preventing enormous losses resulting from delays and cost increases. With the help of an integrated modelling framework, this study examines the effects of risks on the cost/time of road construction based on three delivered projects in Iran. For this purpose, the Delphi method is used to identify the main risks. Next, a questionnaire is developed using the Failure Modes and Effects Analysis method to prioritize critical risks as well as their probability and severity of occurrence. Afterwards, Monte Carlo Simulations and regression models are employed to perform quantitative analysis. On average, the estimated time and cost values of the proposed method differed by only 4% and 6% from the values of the delivered projects, respectively. Furthermore, sensitivity analysis revealed a strong correlation between critical risk occurrence probability and simulated/scheduled time/cost differences. Road project managers can use these findings to estimate the time and cost of projects more accurately. By controlling critical risk probabilities, they can also reduce and control cost overruns and delays.