Predicting Project Cost Performance Level by Assessing Risk Factors of Building Construction in South Korea

Abstract

There exists a strong relationship between the level of planning effort and overall project performance. Project stakeholders are concerned about various project objectives among which cost performance has long been regarded as one of the most crucial. Recognizing the lack of a systematic approach in assessing building project risk in association with cost performance prediction, this study identified 49 risk factors from various sources and quantified the relative impact of each factor. By normalizing these values, a Project Risk Score (PRS) has been developed for the purpose of predicting cost performance on a particular project. The 13 real case studies showed a statistically significant relationship between the PRS and cost performance. Predicting cost performance is not simple. Project managers must consider not only factors that are innate to the project, but also project-independent circumstances. This study provides straightforward guidance in assessing a particular project in order to recognize the level of cost performance before project execution. This risk-based performance prediction can improve early-stage project evaluation and enhances the possibility of achieving a sustainable business in a challenging environment.