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Al-Jibouri, S and Mawdesley, M J (2001) Development and application of a stochastic based cost prediction model for construction. Journal of Financial Management of Property and Construction, 6(01), 61–9.
- Type: Journal Article
- Keywords: cost model; construction; stochastic; forecasting
- ISBN/ISSN: 1366-4387
- URL: http://www.emeraldinsight.com/journals.htm?issn=1366-4387
This paper describes a study of the uncertainty associated with the cost of site work. For representing the stochastic nature of the likely cost of a piece of work, two parameters, the cost per unit earning and its standard deviation are proposed. These are used for interpreting cost measurements on site and estimating their variability. Based on these two parameters a cost model is developed and its use for control and forecasting is examined. For testing the practicality of the developed control model, real cost and earning measurements made on civil engineering projects are used. The collection, processing and the analysis of these measurements are carried out using a computer based control system. A forecasting technique is also developed on the basis of the cost model. Its accuracy is measured in terms of the differences between the actual cost of work and its forecasts produced on the basis of the information of the earlier periods. The paper discusses the variability of the results based on real construction projects and the effectiveness of the developed model for cost control. Application of the model has shown that the model provides an effective control mechanism. It has also shown that it can be produce reasonable forecasts of costs