PSI - Issue 64

Rubina Canesi et al. / Procedia Structural Integrity 64 (2024) 1712–1719 Author name / Structural Integrity Procedia 00 (2019) 000 – 000

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previous five years stood at around 1.02%, not predicting the surge that occurred later. Considering this trend, in the prior proposed model it was estimated for RCC, a Probability of occurrence distributed as follows: (P a ) =10%, (P b ) =30%, (P c ) =25%, (P d ) =25%, (P e ) =10%. Considering the construction cost increase detected, these Probabilities (P i ) have now been revised by increasing the percentages relating to the highest Increase in Value Levels ( IV i ), Tab 2.

Table 2. Risk value estimation for RCC.

Increase Level ( i )

Increase in value (IV i )

Increased Cost (IC i )

Cost Impact (CI i )

Probability (P i )

Risk Value RV i =(CI i ) x (P i )

Estimated Risk Value (%) ERV i = (RV i )/(IC a )

1% 4%

- €

0.00% 0.10% 0.82% 5.25% 3.45% 9.63%

0.0% 48,030,074 € 2.5% 49,230,826 € 8.0% 51,872,480 € 15.5% 55,474,735 € 50.0% 72,045,111 €

- €

a b c d e

48,030 € 396,248 € 2,521,579 € 1,657,038 € 4,622,895 €

1,200,752 € 2,641,654 € 3,602,256 € 16,570,375 €

15% 70% 10%

Total RCC Risk Value

The increase in the estimation of the probability of occurrence concerning higher Increase Levels led to an adjustment of the total Estimated Risk Value of the RCC Risk ( ERV tot2023 ) to 9.63%. The previous assessment, performed in 2017, had calculated for this Risk an Estimated Risk Value ( ERV tot2017 ) of 7.54%. The adjustment, in light of market changes, has therefore identified the need to foresee a possible increase in cost overruns of 2.18% compared to pre-COVID estimates for the sole risk category referred to as inaccurate assessment of construction costs. This increase suggests that cascading effects could impact other risk categories, previously classified as "Non-Highly," due to the change in probability of occurrence, thus requiring further revision and consequently estimating possible increases in project overrun costs. 5. Conclusions Life Cycle Thinking Approaches are commonly utilized as decision-making aids in extensive projects, facilitating a comprehensive evaluation of construction costs from design to decommissioning. This research focused on the adaptation of a cost management tool designed by the National Anti-Corruption Authority and applied by the authors to an infrastructure construction project. Construction costs, initially estimated during the design phase, undergo changes and fluctuations as the project progresses and adapts to various circumstances. Early access to accurate cost projections during the project's infancy plays a pivotal role in its success, mitigating delays and time overruns in subsequent phases. However, the analysis of the construction producer price index (CPPI) trends revealed significant fluctuations in construction costs over the past recent years, with notable increases observed, particularly after the onset of the COVID-19 pandemic. This necessitated the adaptation of existing cost assessment models to accommodate these exponential cost trends, ensuring their reliability and relevance in contemporary project evaluations. The adaptation of the risk matrix proposed by the ANAC served as a crucial tool in evaluating and quantifying the impact of cost increases on project risks. By applying this tool to an infrastructure project in the Province of Treviso, significant insights were gained into the potential cost overruns associated with various risk types. The current study, revealing the necessity of revising risk assessment models to account for changing market dynamics, adjusted the probability of occurrence, previously estimated based on observed trends, resulting in a more accurate estimation of risk values. This revisiting of the model highlighted the adaptability of the risk matrix and its ability to respond to evaluators' sensitivity to project’s endogenous agent changes. Overall, this study underscores the importance of continually updating and refining cost management tools to adapt to evolving market conditions and ensure the economic sustainability of large-scale projects. By employing a simple risk management tool, like the one proposed in this study, local administrations can significantly enhance their project oversight capabilities, enabling the ex-ante estimation of possible cost overruns. By incorporating these insights into project planning and decision making processes, public stakeholders, involved in the negotiation, design, construction, and management phases of the projects, can therefore better navigate the complexities of construction projects and mitigate potential risks associated with cost overruns.