A Stochastic Risk Management System for Construction Projects in Gaza Strip

Abstract

The construction industry has an important role in the economic activities in Gaza Strip. A construction project is associated with different levels of risk in terms of cost and duration. This research is aimed to develop a computer-based tool to help Palestinian contractors better manage risks in estimating the cost of building projects. This tool, in principle, provides users with an efficient mechanism that helps identify risks, estimate their costs, and propose possible ways that may help avoid or minimize these risks. Risk Cost Estimation and Management software (RCEM) is developed mainly based on categorizing construction key risk factors for each work group, determining their resulting consequences and proposing mitigation actions to prevent or mitigate risk effects. The questionnaire is used as a tool to collect primary data related directly to this study. The researcher determined the main risk factors and their resulting consequences for each work category/group. The questionnaire's design allows respondents to scale freely their weights for the mentioned factors. It also allows them to give their own suggestions for new factors and add their relevant weights. Ninety eight copies of the questionnaire were distributed by direct contact to building contractors in Gaza Strip. Seventy five copies were answered which represents a good responding percentage. The procedure followed in RCEM encourages disciplined estimating. It calculates the required contingency utilizing Monte Carlo Simulation technique. By using RCEM, the researcher hopes that contractors can estimate risk cost in more accurate way, which leads to a safer and more practical bid price of a project. It decreases the possibility of having a loss and increases of the possibility of having a reasonable profit. RCEM is designed using C# (C-Sharp) programming language. The software evaluators are generally satisfied with its performance. They indicated that it is suitable for use in the local estimating practice and they found many advantages that can be obtained by using it such as contributing in improvement of project planning, contributing in developing of bids pricing process in Gaza Strip, and helping in recognizing main risk factors and their resulting consequences for work categories. Recommendations for further studies are mentioned to give chance to enrich RCEM in the future.