Cost estimation method based on parallel Monte Carlo simulation and market investigation for engineering construction project

Abstract

In this paper, a new cost estimation method based on parallel Monte Carlo simulation and market investigation for the chemical engineering construction project is proposed to consider both the uncertainties of cost estimation and market drivers. The critical items of exerting large impacts on the cost estimation are selected by the market investigation. Then important critical items are chosen by the sensitivity analysis based on the parallel Monte-Carlo simulation combining with the Likert scale method from critical items. The Relative Important Indices and Normalized Important Indices are obtained according to the discipline and procurement experts' experience in the relative construction market. Then re-rankings of market drivers will be acted as guidelines for carrying out project cost simulations based on the parallel Monte-Carlo method, with inquired information of important critical items with more efficiency. An illustrative example in a petrochemical Engineering Procurement Construction contracting project in Saudi verified the validity and practicability of the proposed method.