Utilizing the Monte Carlo Simulation for Estimating Construction Costs of Residential Buildings

Cost risk in a residential construction project is one of the risks developers have to cope with. It is not unusual that the developer allocated a budget lower than what is needed to complete the project. This study aims to provide a practical way to estimate a more realistic cost of a construction project using the Monte Carlo Simulation method. A typical house type 36 construction activities and their respective costs were simulated with 5000 iterations to obtain the probability density function and the cumulative density function of the project cost. The study found that to avoid cost underestimation, which is a primary reason for cost overrun, the budget should be increased by 8.38% to attain a 95% probability of the project's successful completio