AHP- and simulation-based budget determination procedure for public building construction projects

Abstract

Public construction project budgets account for a high percentage of annual government budgets. Thus, objectively determining project budgets is of priority concern for effectively allocating these budgets by government officers. However, Taiwanese regulations for setting construction project budgets only qualitatively describe the governmental administration process. Without a systematic quantitative method, government officers typically determine project budgets based on their personal experience; thus, budgeting results can be unreliable. This study presents a novel procedure for determining construction project budgets. The proposed procedure integrates an analytical hierarchy process (AHP)-based multi-criteria evaluation model with a simulation-based cost model. The AHP reflects officer evaluations with respect to budget determination criteria. Cost items are variables. The cost model generates a cumulative cost distribution for establishing project budget boundaries. The merits of the proposed procedure are demonstrated through its application to a Taiwanese project. (C) 2007 Elsevier B.V. All rights reserved.