by Jeffrey C Kadlowec, Registered Architect

Decision making throughout the project life cycle will have a significant impact on the final performance of a construction project. It is imperative that project managers be able to make informed decisions related to resources, schedules and alternatives. Uncertainty and a lack of information about the project present challenges that require probability-based assessments. The majority of these uncertainties occur in the planning stage before construction implementation. Accuracy in measuring construction performance has been shown to vary by 25–40% from fluctuations in project cost, duration and environmental impacts (Wang 2022).

Probability-based methods provide ways of analyzing these factors using statistical data and historical experience. The cost of changes increases drastically between design and construction with less opportunities for improvement in later stages. The size and complexity of mega buildings and large infrastructure projects create unique challenges due to lack of reliable comparisons and limited similarities. Monte Carlo (MC) simulations and Program Evaluation and Review Technique (PERT) are two methods used to estimate future outcomes under high uncertainty (Wang 2022).

Figure 1: Influence of decisions throughout the project life cycle (Wang 2022)

Construction organizations are constantly looking for answers to a wide variety of questions. The answers to these questions are often absent or uncertain. To reduce the level of uncertainty, the solution involves acquiring factual and objective data (Levander 2011). When the answers are not readily apparent, defining the problem, seeking clarification and exchanging subjective opinions is one approach. Media richness theory (MRT) provides a conceptual framework with respect to information obtained for reducing uncertainty and resolving equivocality. Proper management of these conditions involves 1) improving communication between different areas of expertise, 2) developing systematic processing of information, 3) continuously revising criteria for decision making, 4) maintaining and spreading knowledge throughout the organization, and 5) analyzing the processes of related business entities (Levander 2011).

Figure 2: Structural Characteristics for Reducing Equivocality (Levander 2011)

Cost estimating is one of the most critical tasks in the early stages and throughout the life cycle of a project. The accuracy of these numbers is calculated from quantities, unit costs and price of resources. These predictions must address the risks and uncertainty associated with variability of material and equipment prices, fluctuations in labor rates and quality of work, and changes to interest rates. Project costs are underestimated at a rate of approximately 90% with the actual costs averaging 28% over the estimate (Judson 2022). Inaccurate estimates can cause losses, lead to increased costs, scheduling delays, and reduced quality. Contingency cost is one item that estimators may utilize to account for these unforeseeable conditions. Scope changes and delays in approval of revised estimates are the most frequent cost factors, with cash flow problems, poor management by the contractor, delayed payments to the contractor, poor execution by the subcontractor, and labor shortages having the most cost impact (Rauzanna 2018).

Construction projects are the culmination of hundreds of activities and numerous resources. Successful completion of contract requirements requires proper management of schedules and objectives (Milat 2021). Planning and scheduling must account for this dynamic environment and counter the negative impacts of internal and external uncertainties. Rework is one area with extreme potential for time extensions and costly overruns. Denial and dismissal of errors along with diversion and displacement of responsibility by people and organizations can worsen these issues (Love 2020). Strategies for continuous improvement should be implemented in the areas of safety, quality, design, program and management.

The profitability and sustainability of construction companies is dependent upon its ability to work efficiently and effectively. It must fulfill contractual obligations in a competitive industry with changing workloads and variable market conditions (Abramov 2020). Not all risk and uncertainty can be identified, eliminated or mitigated. Developing organizational structures and technological measures are reliable methods of addressing these economic concerns.

References
Abramov, I. (2020). Sustainability of Construction Companies under Construction Uncertainty and Risks. IOP Conf Series: Materials Science and Engineering. 753. Doi: 10.1088/1757-899X/753/4/042088.
Judson, Luke & Paul, Virendra. (2022). Known Uncertainty Factors Affecting Building Construction Project Cost. NICMAR Journal of Construction Management. 37(4).
Levander, Erika; Engström, Susanne; Sardén, Ylya & Stehn, Lars. (2011). Construction Clients’ Ability to Manage Uncertainty and Equivocality. Construction Management and Economics. 29:7, 753-764. doi.org/10.1080/01446193.2011.595423.
Love, Peter & Matthews, Jane. (2020). Quality, Requisite Imagination and Resilience: Managing Risk and Uncertainty in Construction. Reliability Engineering and System Safety. 204.
Milat, Martina; Knezić, Snježana & Sedlar, Jelena. (2021). Resilient Scheduling as a Response to Uncertainty in Construction Projects. Applied Sciences. 11(14), 6493. doi.org/10.3390/app11146493.
Rauzanna, Anita. (2018). Uncertainty Variables on Cost Estimation in Project Construction. IOSR Journal of Business and Management. 20:1, 80-86. DOI: 10.9790/487X-2001018086.
Wang, Shuo; Feng, Kailun & Wang, Yaowu. (2022). Modeling Performance and Uncertainty of Construction Planning under Deep Uncertainty: A Prediction Interval Approach. Buildings. 13(254). doi.org/10.3390/buildings13010254.