Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects

Roghaye Mousazade; Abbas Mahmoudabadi

doi:doi:10.11648/j.jccee.20170202.11

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Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects

Roghaye Mousazade, Abbas Mahmoudabadi

Published in Journal of Civil, Construction and Environmental Engineering (Volume 2, Issue 2)

Received: 24 January 2017 Accepted: 20 February 2017 Published: 3 March 2017

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Abstract

In the present paper, a cost-risk and income-risk evaluation model has been developed in order to evaluate the risks of cost and incomes those may happen in construction projects. Since, it is important to determine risk factors for different activities and stages of various projects; the main aim is to propose an evaluation model for estimating the present value of risks corresponding to costs and incomes of the construction projects. The estimating procedure which has been proposed in this research work is that a project is broken into stages and related activities and the present value of cost and income risks as well as the value of different risk groups are calculated and compared to three pre-defined risk categories. Utilizing the proposed procedure using experimental data gathering for a under construction primary school building shows that the proposed model can help decision makers to determine and assess the risks of cost and incomes over the project activities. In addition, using the proposed procedure helps them to talk about how to deal with those risks to be reduced, accepted or transferred to other project components.

Published in	Journal of Civil, Construction and Environmental Engineering (Volume 2, Issue 2)
DOI	10.11648/j.jccee.20170202.11
Page(s)	34-43
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Time, Cost, Risk, Time Value of Money, Cost-Benefit Analysis

References

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[2]	Memon, A. H., Rahman, I. A, Zainun, N. Y., Abd Karim, A. T., Web-based Risk Assessment Technique for Time and Cost Overrun (WRATTCO) – A Framework, Procedia - Social and Behavioral Sciences 129 (2014) 178–185, ICIMTR 2013.
[3]	Taroun, A. Towards a better modeling and assessment of construction risk: Insights from a literature review, International Journal of Project Management 32, Pages 101–115, 2014.
[4]	Nasir, D., McCabe, MC., Hartono, L., Evaluating Risk in Construction–Schedule Model ERIC–S: Construction Schedule Risk Model, 10.1061/(ASCE)0733-9364 (2003) 129: 5 (518), 2003.
[5]	El-Karim, M. S. B., El Nawawy, O. A. M., Abdel-Alim, A. M., Identification and assessment of risk factors affecting construction projects, HBRC Journal, 2015.
[6]	Dziadosza, A., Tomczykb, A., Kaplińskic, O., Financial risk estimation in construction contracts, Operational Research in Sustainable Development and Civil Engineering - EURO working group meeting and 15th German-Lithuanian-Polish colloquium (ORSDCE 2015), 2015.
[7]	Choudhry, R. M., Aslam, M. A., Hinze, J. W., Arain, F. M., Cost and Schedule Risk Analysis of Bridge Construction in Pakistan: Establishing Risk Guidelines, DOI: 10.1061/(ASCE)CO.1943-7862.0000857, American Society of Civil Engineers, 2014.
[8]	Tamosaitiene, J., Zavadskas, E. K., Turskis, Z., Multi-criteria risk assessment of a construction project, Procedia Computer Science 17 (2013) 129–133.
[9]	Karimi Azari, A. R., Mousavi, N., Mousavi, S. F., Hosseini,, S. B., Risk assessment model selection in construction industry, Expert Systems with Applications 38, Pages 9105–9111, 2011.
[10]	Purnus, A., Bodea, C. N., Correlation between time and cost in quantitative risk analysis of construction projects, Creative Construction Conference, CC2014, 2014.
[11]	Fouzi A. H., Project cost risk assessment: an application of project risk.
[12]	Rezaian, A, Time Cost Quality Risk Of Construction And Development Projects Or Investment”, Middle-East Journal of Scientific Research 10 (2), Pages 218-223, 2011.
[13]	Toth, T., Sebestyen, Z., Time-varying risks of construction projects, Creative Construction Conference 2015, (CCC2015).

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APA Style

Roghaye Mousazade, Abbas Mahmoudabadi. (2017). Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. Journal of Civil, Construction and Environmental Engineering, 2(2), 34-43. https://doi.org/10.11648/j.jccee.20170202.11

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ACS Style

Roghaye Mousazade; Abbas Mahmoudabadi. Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. J. Civ. Constr. Environ. Eng. 2017, 2(2), 34-43. doi: 10.11648/j.jccee.20170202.11

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AMA Style

Roghaye Mousazade, Abbas Mahmoudabadi. Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. J Civ Constr Environ Eng. 2017;2(2):34-43. doi: 10.11648/j.jccee.20170202.11

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@article{10.11648/j.jccee.20170202.11,
  author = {Roghaye Mousazade and Abbas Mahmoudabadi},
  title = {Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects},
  journal = {Journal of Civil, Construction and Environmental Engineering},
  volume = {2},
  number = {2},
  pages = {34-43},
  doi = {10.11648/j.jccee.20170202.11},
  url = {https://doi.org/10.11648/j.jccee.20170202.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jccee.20170202.11},
  abstract = {In the present paper, a cost-risk and income-risk evaluation model has been developed in order to evaluate the risks of cost and incomes those may happen in construction projects. Since, it is important to determine risk factors for different activities and stages of various projects; the main aim is to propose an evaluation model for estimating the present value of risks corresponding to costs and incomes of the construction projects. The estimating procedure which has been proposed in this research work is that a project is broken into stages and related activities and the present value of cost and income risks as well as the value of different risk groups are calculated and compared to three pre-defined risk categories. Utilizing the proposed procedure using experimental data gathering for a under construction primary school building shows that the proposed model can help decision makers to determine and assess the risks of cost and incomes over the project activities. In addition, using the proposed procedure helps them to talk about how to deal with those risks to be reduced, accepted or transferred to other project components.},
 year = {2017}
}

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TY  - JOUR
T1  - Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects
AU  - Roghaye Mousazade
AU  - Abbas Mahmoudabadi
Y1  - 2017/03/03
PY  - 2017
N1  - https://doi.org/10.11648/j.jccee.20170202.11
DO  - 10.11648/j.jccee.20170202.11
T2  - Journal of Civil, Construction and Environmental Engineering
JF  - Journal of Civil, Construction and Environmental Engineering
JO  - Journal of Civil, Construction and Environmental Engineering
SP  - 34
EP  - 43
PB  - Science Publishing Group
SN  - 2637-3890
UR  - https://doi.org/10.11648/j.jccee.20170202.11
AB  - In the present paper, a cost-risk and income-risk evaluation model has been developed in order to evaluate the risks of cost and incomes those may happen in construction projects. Since, it is important to determine risk factors for different activities and stages of various projects; the main aim is to propose an evaluation model for estimating the present value of risks corresponding to costs and incomes of the construction projects. The estimating procedure which has been proposed in this research work is that a project is broken into stages and related activities and the present value of cost and income risks as well as the value of different risk groups are calculated and compared to three pre-defined risk categories. Utilizing the proposed procedure using experimental data gathering for a under construction primary school building shows that the proposed model can help decision makers to determine and assess the risks of cost and incomes over the project activities. In addition, using the proposed procedure helps them to talk about how to deal with those risks to be reduced, accepted or transferred to other project components.
VL  - 2
IS  - 2
ER  -

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Author Information

Roghaye Mousazade

Department of Civil Engineering, Faculty of Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran
Abbas Mahmoudabadi

Department of Industrial Engineering, Mehr Astan University, Guilan, Iran

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APA Style

Roghaye Mousazade, Abbas Mahmoudabadi. (2017). Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. Journal of Civil, Construction and Environmental Engineering, 2(2), 34-43. https://doi.org/10.11648/j.jccee.20170202.11

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ACS Style

Roghaye Mousazade; Abbas Mahmoudabadi. Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. J. Civ. Constr. Environ. Eng. 2017, 2(2), 34-43. doi: 10.11648/j.jccee.20170202.11

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AMA Style

Roghaye Mousazade, Abbas Mahmoudabadi. Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects. J Civ Constr Environ Eng. 2017;2(2):34-43. doi: 10.11648/j.jccee.20170202.11

Copy | Download

@article{10.11648/j.jccee.20170202.11,
  author = {Roghaye Mousazade and Abbas Mahmoudabadi},
  title = {Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects},
  journal = {Journal of Civil, Construction and Environmental Engineering},
  volume = {2},
  number = {2},
  pages = {34-43},
  doi = {10.11648/j.jccee.20170202.11},
  url = {https://doi.org/10.11648/j.jccee.20170202.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jccee.20170202.11},
  abstract = {In the present paper, a cost-risk and income-risk evaluation model has been developed in order to evaluate the risks of cost and incomes those may happen in construction projects. Since, it is important to determine risk factors for different activities and stages of various projects; the main aim is to propose an evaluation model for estimating the present value of risks corresponding to costs and incomes of the construction projects. The estimating procedure which has been proposed in this research work is that a project is broken into stages and related activities and the present value of cost and income risks as well as the value of different risk groups are calculated and compared to three pre-defined risk categories. Utilizing the proposed procedure using experimental data gathering for a under construction primary school building shows that the proposed model can help decision makers to determine and assess the risks of cost and incomes over the project activities. In addition, using the proposed procedure helps them to talk about how to deal with those risks to be reduced, accepted or transferred to other project components.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Developing a Risk Assessment Model Based on Time Value of Money and Cost-Benefit Ratio in Construction Projects
AU  - Roghaye Mousazade
AU  - Abbas Mahmoudabadi
Y1  - 2017/03/03
PY  - 2017
N1  - https://doi.org/10.11648/j.jccee.20170202.11
DO  - 10.11648/j.jccee.20170202.11
T2  - Journal of Civil, Construction and Environmental Engineering
JF  - Journal of Civil, Construction and Environmental Engineering
JO  - Journal of Civil, Construction and Environmental Engineering
SP  - 34
EP  - 43
PB  - Science Publishing Group
SN  - 2637-3890
UR  - https://doi.org/10.11648/j.jccee.20170202.11
AB  - In the present paper, a cost-risk and income-risk evaluation model has been developed in order to evaluate the risks of cost and incomes those may happen in construction projects. Since, it is important to determine risk factors for different activities and stages of various projects; the main aim is to propose an evaluation model for estimating the present value of risks corresponding to costs and incomes of the construction projects. The estimating procedure which has been proposed in this research work is that a project is broken into stages and related activities and the present value of cost and income risks as well as the value of different risk groups are calculated and compared to three pre-defined risk categories. Utilizing the proposed procedure using experimental data gathering for a under construction primary school building shows that the proposed model can help decision makers to determine and assess the risks of cost and incomes over the project activities. In addition, using the proposed procedure helps them to talk about how to deal with those risks to be reduced, accepted or transferred to other project components.
VL  - 2
IS  - 2
ER  -

Copy | Download