Construction Cost Estimates Related Risks

Construction projects are one-off endeavors with many unique challenges such as long period, complicated processes abnormal environment, financial intensity and dynamic organization structures and comes with enormous risks. One of the major challenges is to manage the initial cost estimate and the risk associated with it. However construction cost estimate is carried out under conditions of uncertainty. The preparation and accuracy of any type of cost estimate will depend heavily on the amount of information available and tools used during different project phases. While risks cannot be eliminated completely, where there is a cost but successful projects are those where risks are effectively managed of which early and effective identification and assessment of the relationships between cost and risks is essential. A good cost estimate: is built on understanding of the cost driven relationships and risk is one of these cost driven relationship associated with cost. Therefore risk is a cost that cannot be exactly measured with mathematical accuracy, then Cost and risk share a relationship which is verb and more so approximation relationship .With the exception to when a risk occurs and is translated into cost. In particular the risk analysis is used to examine the expected cost of the project and to assess whether the contingency allowance is fit for the project. The relationship between cost and risks is discussed in same details.