Supporting project cost threshold decisions via a mathematical cost model
By: Wei-Chih Wang.
Material type: ArticlePublisher: Nijkerk : Elsevier, 2004International Journal of Project Management 22, 2, p. 99-108Abstract: A project cost threshold must be determined in a relatively short time by a project owner as a reference for evaluating competitive bids. In practice, such a decision is mainly based on subjective experience. This work presents a novel systematic procedure for assessing a reasonable project cost threshold. The proposed procedure involves a utility-based multi-criteria evaluation model and a cost model. The multi-criteria evaluation model is applied to accurately reflect an owner's preferences in relation to the decision criteria, as the cost model is derived to generate a cumulative cost distribution to set boundaries on the cost threshold. The proposed cost model potentially saves the computer time and coding effort that required by a simulation-based modelA project cost threshold must be determined in a relatively short time by a project owner as a reference for evaluating competitive bids. In practice, such a decision is mainly based on subjective experience. This work presents a novel systematic procedure for assessing a reasonable project cost threshold. The proposed procedure involves a utility-based multi-criteria evaluation model and a cost model. The multi-criteria evaluation model is applied to accurately reflect an owner's preferences in relation to the decision criteria, as the cost model is derived to generate a cumulative cost distribution to set boundaries on the cost threshold. The proposed cost model potentially saves the computer time and coding effort that required by a simulation-based model
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