An Accurate-Pricing Estimate Game-Theoretic Model for Determining Price Escalations in Construction Projects during Economic Uncertainties
Publication: Construction Research Congress 2024
ABSTRACT
Economic market uncertainties, such as those experienced during the COVID-19 pandemic, can make determining accurate prices estimate for construction materials a challenging task. While previous research focused on the contractual aspect of this issue by studying price escalation clauses, there is still a gap in the literature when it comes to proposing an accurate pricing model. Thus, this study develops an accurate pricing-estimate game-theoretical model that can efficiently and competitively account for escalations in construction materials prices during uncertain market conditions. First, data on past Producer Price Indexes (PPIs) of different construction materials were collected. Second, the percentage changes in the prices of four common construction materials, including asphalt, aggregates, non-reinforced concrete, and steel reinforcement, were calculated. Third, an algorithmic game theory model that leverages learning from historical bid data was proposed. The findings provided insights on how to account for construction materials price escalation under uncertain market conditions. Overall, this study contributes to the growing body of research related to construction materials price escalation under uncertain market conditions by proposing a practical approach that combines predictive modeling with game theory models.
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Construction Research Congress 2024
Pages: 1170 - 1180
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Published online: Mar 18, 2024
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