Measuring construction materials price fluctuation risk

Abstract

Construction projects costs are believed to be highly susceptible to a combination of internal and external factors. One of these factors is the prices of construction materials and the risk of their fluctuation. This paper explores this risk by statistically measuring the historical volatility of the prices of three key construction materials; namely steel, cement, and lumber. The main objective of this analysis is to assess the degree of risk involving construction materials as a first step in an ongoing research that targets developing means for hedging against the price fluctuation risk.