Cost Overruns Risk Analysis from Construction Material Price Changes of a Four-story Condominium in Chiang Mai Province

Abstract

Chiang Mai is experiencing continuous economic growth and increasing demand for residential housing, particularly condominiums catering to the needs of working professionals and new families. However, the issue of construction cost overruns caused by fluctuating material prices significantly impacts developers and project owners, as it is a key factor that is difficult to control. This study analyzes the risk value associated with construction cost overruns using a case study of a 4-story condominium in Chiang Mai. This medium-scale project has not been extensively studied. The research uses five years of historical Construction Materials Price Index (CMI) and Bill of Quantities (BOQ) documents from the Ministry of Commerce. This data is combined with Monte Carlo Simulation, conducted using the Model Risk program, to develop a risk model and assess potential impacts. The experimental results indicate that the average construction cost overrun is 687,044.64 THB or approximately 2.08% of the total budget. Steel products exhibit the highest risk among the material categories, while sanitary ware has the lowest risk. The results provide insights into the likelihood of construction cost overruns and the variability of material prices across different categories. This study is expected to support risk management for construction industry stakeholders, enhance accuracy in pricing strategies, and facilitate careful and sustainable construction budget planning.