Abstract
The fluctuation of the price of construction materials has an influence on the viability of construction projects, and is one of the key risks to manage. In the case of PFI (private finance initiative) projects, the risk is more serious because the period between contract signing and the procurement of materials is longer than that with conventional projects. The purpose of the present study is to establish a quantitative risk analysis system with which more rational risk sharing regarding construction materials can be investigated between the public and the private sectors. Structural equations determining the prices based on related economic variables are built for seven major construction materials with the data recorded by month for 15 years. With additional time-series analysis of the economic variables, a Monte Carlo simulation system is built to estimate the total cost of construction projects. By applying the system to some model PFI projects, it is found that the present prevailing rule of risk sharing in Japan is biased in favor of the public sector.
