Project risk simulation under uncertain construction duration

This paper establishes a two-phase model to explore the financial risk of construction project under uncertain construction duration. Treated as a random variable in the model, the construction duration affects the random present worth of cash flow in both construction and operation phases. An illustration of BOT project under uncertain construction duration was utilized for simulation. The simulation result was applied to reveal how uncertain construction duration affects project risk. The paper also shows how the standard deviation of the NPV increases whenever the variance of construction duration rises, thus accentuating the contingency of the project. The results´ analysis extended to the discussion of its effect on the probability of negative NPV and its theoretical meanings.