Applying efficient frontier analysis on selection of sustainable and conventional school buildings

Global economic crises cause fluctuation in the economics of some countries, which probably results in uncertainty in the construction domain such as material, labor, and construction costs. Making decision based only on a deterministic approach without considering the uncertainty is proved to have high level of risk which possibly leads to wrong or inappropriate decision. Risk assessment mainly depends on type of project, experience, historical data, and personal perception. In this paper Monte Carlo simulation is applied to address the uncertainty associated with constructing various structure and envelope types for conventional and sustainable school buildings. Furthermore, risk assessment is performed using Efficient Frontier analysis to enhance the selection of attractive alternative. The Efficient Frontier analysis utilizes the plots of means of life cycle costs of the various alternatives versus changes to the probabilistic standard deviation of the same alternatives. This analysis allows comparisons of the project mean costs against different levels of risk to enable decision makers at school boards to make well-informed decisions. The risk assessment is performed on the best seven among the fourteen alternatives studied. The sustainable precast concrete is selected as the most attractive or favorable alternative according to risk assessment of the NPV and running costs.