Engineering Commons^™

Quantifying Uncertainty Of Construction Material Price Volatility Using Monte Carlo, Douglas D. Gransberg, Erin J. Kelly

Douglas D. Gransberg

This study uses Monte Carlo simulation to derive a quantitative measure of construction price volatility for two case study projects in Oklahoma. In the past four years, the impact of events like Hurricane Katrina and the economic growth in China have induced unprecedented volatility in US construction prices. This has caused a huge number of public construction project bids to exceed the owners' estimates, making it difficult for public construction agencies to be able to predict construction budgets. Construction prices are a function of many factors beyond pure material costs. This study broke down the pay items from a typical …