Development of a Model for Risk and Cost Analysis in Overseas Plant Construction Projects Focusing on Petrochemical Plant Construction Projects

Abstract

The importance of preliminary analysis of risk and cost for overseas plant construction projects is more and more emphasized due to intensive cost bidding competition. The vigorous competition between contractors causes a financial loss due to the low price bidding and risks factors of the project. Accordingly, the main purpose of this study is to present an analysis model that relates the risk and cost of overseas plant construction projects and to develop a prototype tool for the risk and cost analysis based on the model. Moreover, a case study is conducted using this prototype to analyze its risk and cost. The main contributions of this study are as follows: 1) A model and a prototype tool are developed for an analysis that relates the risk and cost 2) Risk factors are studied for a case analysis object and their impact has been numerically evaluated. As a result of the cost analysis, the risk cost of risk factors is defined and the related variation range of contract price, profit (residual profit) and loss are given. This research contributes in presenting an analysis method that relates the risk factors to the cost. Also, the examined results from a case study can be used as a reference data to predict the variation in the risk cost due to the risk factors in overseas plant construction projects.