The Impact of Failure Types in Construction Production Systems on Economic Risk Assessments in the Bidding Phase

Milan Mirkovic

doi:10.1155/2018/5041803

Abstract

The aim of the paper is to research and analyze the impact of the type of failure on economic risks in the bidding phase, as the most important part in the management of construction projects. The survey included the impact of risk on the process of determining unit prices from the perspective of a potential contractor. Also, the failure rate and repair rate of the 34 machines from the machine park of the company for road construction were researched. On the basis of obtained parameters and depreciation periods, the operational availability of components of construction production systems was determined. The proposed methodology for estimating impact of the availability function is a modified method of the frequency balancing. It has been tested on a concrete project from the practice in the process of harmonizing construction norms of time that preceded the final adoption of the unit prices. Differences in prices are results of the system failure of construction machinery and plants and have justified a hypothesis of obtaining more realistic costs that can occur in the projects.

Highlights

Risk management as the most important part in the project management, in the construction field, is a topic that is the subject of research of a large number of published works
Risk management in the preproject phase is a very specific and insufficiently explored area. This phase of project management is of great importance from the perspective of a potential contractor because it refers to the development of the offer, i.e., calculation of costs and profits within the price of works
The harmonization of the average construction norms in the process of determining unit costs and prices in the preparation of tenders is a consequence of the specificity that each construction project contains

Summary

Introduction

Risk management as the most important part in the project management, in the construction field, is a topic that is the subject of research of a large number of published works. In an integral approach to risk management, from the conceptual projects to the construction phase, significant risks have been analyzed in terms of (i) Project financiers (ii) Project investors (iii) Design companies (iv) Contractors (v) Subcontractors (cooperatives and suppliers of equipment and materials). There are different approaches to managing economic risks, for all it is valid that they are in the function of the participants in the project, i.e., the type of mutual agreements, the specifics of the projects, and the stage in which the projects are. This phase of project management is of great importance from the perspective of a potential contractor because it refers to the development of the offer, i.e., calculation of costs and profits within the price of works. Unlike the quantity of works, prices remain unchanged in most cases that could not be claimed for the costs of individual positions and total works

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