Predicting Cost Contingency Using Analytical Hierarchy Process and Multi Attribute Utility Theory

An endeavor to predict the optimum contingency value that balances between maintaining business competitiveness and achieving project objectives is definitely an essential contributor to the survival of contractors. The chief objective of this research, therefore, is to develop a mathematical prediction model of the optimum cost contingency value for building projects in Saudi Arabia. The analytical hierarchy process (AHP) technique was used to define the most significant risk factors inherent in public work projects. The multi attribute utility theory (MAUT) technique was used to measure contractors' risk attitudes and to establish the utility functions through MATLAB. The required data to build the model for the AHP and MAUT were collected from 17 contractors mostly through intensive face-to-face interviews and email-response to a developed structured questionnaire. The integrated contingency model reflects the basic dimensions of risk and considers the various risk attitudes of contractors. The model has been implemented in prototype software using object-oriented programming. Two completed local building construction projects were used to validate and demonstrate the use of the developed model in recommending the optimum cost contingency value for building projects in Saudi Arabia. The developed model was proven reliable in estimating the contingency with an accuracy skewed 9% to the high side.