A Fuzzy Logic Application to Manage Construction-Cost Escalation

Abstract

In large-scale projects, such as transport infrastructures, the cost-planning phase stands out as one of the most crucial for the project’s success. Cost and time overruns, during the construction phase, are often the cause of project failure. A meticulous, conscious, and accurate ex-ante analysis of cost and time assessment can greatly contribute to the efficient and effective completion of a project. Various approaches have been developed to estimate and mitigate cost overruns. Such mitigation is subject to careful analysis of project risks, encompassing construction, environmental, social acceptance, and market risks. In this contribution, we propose the implementation of the risk-assessment tool, suggested by the National Anti-Corruption Authority (ANAC), using fuzzy logic to enhance its effectiveness. Thanks to the implementation of fuzzy prioritizations, the risk matrix and the associated risk levels, which are obtained by combining the event’s probability of occurrence and its expected impact on costs, have been clearly and structurally defined. This tool can facilitate risk ranking and, therefore, the implementation of their management strategies during the design and construction phases as well as the consensus-creation process. This application can therefore be used by public authorities as a transparent and manageable tool to assess expected risk during the design and implementation phases of the project.