Risks, Classification of Estimates, and Contingency Management

Yeo, K.T.

doi:10.1061/(asce)9742-597x(1990)6:4(458)

Cited by 76 publications

(72 citation statements)

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“…The estimation of cost contingency and its ultimate adequacy is of critical importance to projects, hence the need to evaluate the effectiveness of contingency sum as a construction risk management tool and also determine how it can be improved. Contingency has been defined as the amount of money needed above the estimate to reduce the risk over runs of project objectives to a level acceptable to the organization (PMI, 2000).Risk is defined as events within the defined project scope that are unforeseen (Moselhi, 1997;Yeo, 1990), unknown (PMI, 2000, unexpected (Mak et al, 1998), unidentified (Levine, 1995) or undefined (Thompson and Perry, 1992). Various contingency estimating methods were also identified from literature.…”

Section: Introductionmentioning

confidence: 99%

“…Various contingency estimating methods were also identified from literature. These include traditional percentage (Ahmad, 1992;Moselhi, 1997), method of moments (Yeo, 1990), Monte Carlo Simulation (Lorance and Wendling, 2001), Factor Rating (Joseph et al, 2012). Regression (Aibinu and Jagboro, 2002), Artificial Neural Networks (Chen andHartman, 2000, Williams, 2003), Fuzzy sets (Pack et al, 1994), Influence diagrams (Diekmann and Featherman, 1998), and theory constraints (Leach, 2003).…”

Section: Introductionmentioning

confidence: 99%

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Effectiveness evaluation of contingency sum as a risk management tool for construction projects in Niger Delta, Nigeria

Otali¹,

Odesola²

2014

Ethiop. J. Env Stud & Manag

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Effectiveness evaluation of contingency sum as a risk management tool for construction projects in Niger Delta, Nigeria

Otali¹,

Odesola²

2014

Ethiop. J. Env Stud & Manag

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“…Still some researchers improved the extension rule, and put forward series of algorithms such as NER, RIER, etc (Yeo, 1990;Zayed, Amer & Pan, 2008).…”

Section: Definition and Attribute Of Contingencymentioning

confidence: 99%

“…Besides, many researchers applied the extension rule to the model counting problem (Touran, 2003), and many amended it so as to apply it into the TP of modal logic (Touran & Liu, 2015). Still some researchers improved the extension rule, and put forward series of algorithms such as NER, RIER, etc (Yeo, 1990;Zayed, Amer & Pan, 2008).…”

Section: Definition and Attribute Of Contingencymentioning

confidence: 99%

Choosing an Appropriate Contingency Sum Estimating Methods for Highway Construction Projects in Nigeria: A Literature Review

Hamid

Kehinde

2017

PMJ

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In order to establish a gap to be filled in a particular field, there is a need to gather information that allows the researcher to identify and analyse the current state of researches on the topic. Contingency sum estimation for projects plays an important role for inclusion for risk taken by the contractor on the bid amount. This is good in order to meet project objectives (cost, time, quality, health and safety, and environment). The main function of contingency sum is to cater for variations that arise during the construction phase of projects. The aim of the study is to identifying and examine the various methods for estimating contingency sum for projects with a view to propose an appropriate method which will be suitable for a specific project in order to increase accuracy and reduce cost overrun. A literature review of selected papers (journals, conference proceedings and theses) on contingency estimation was carried out. The major findings from this study is that most studies were carried out on building projects while few were carried out on highway projects. From the analysis carried out, no single method of estimating has been effective for all types of projects. These methods of estimating contingency sums have developed over the years as a result of shortcomings of one method after the other. It is therefore recommended that peculiarity of each project, ease of using each of the methods and accuracy of the estimates needed should be the basis of choosing method of estimating contingency sum. (2015) state that several studies establish that highway construction projects have higher risks than other construction projects. This is due to the fact that highway projects are capital intensive, take longer time to complete, spread over a wider geographic area and are threatened by underground conditions. Reeley and Brown (2004) posit that infrastructure and underground projects (of which highway projects) are complex and most of the time, span through several terrains, including sandy and rocky areas. Thomas, Kalindidi and Ganesh (2006) cited in El-Sayegh andMansour (2015) posits that highway projects involve very high risks due to long project duration, low market value of security packages and complex contract mechanisms and involvement of many participants with diverging interest and challenges. The required huge investment and difficult as well as complicated site conditions, according to Zayed, Amer and Pan (2008), make it imperative to have a robust contingency sum which can take care of this imminent risks inherent in highway projects. Cost contingency is included within a budget estimate so that the budget represents the total financial commitment for the project sponsor (Baccarini, 2006). Therefore, choosing an appropriate method of estimating cost contingency and its ultimate adequacy is of great importance to success of projects. Keywords

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“…The engineering allowance is added to the estimator's base estimate to raise the probability of success to an even chance level. While the management contingency accounts for projects that are high risk because of poor project definition and because management expects a better-than even chance of success (Yeo, 1990). …”

Section: Estimationmentioning

confidence: 99%

Contingency for Cost Control in Project Management: A Case Study

Jackson

2012

CEB

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This paper provides a case study of the application of cost management techniques for project management of capital works within a major Australian electricity corporation. Historical data was collected from the corporation 's archived files to establish the performance status of completed capital works projects. A survey of the corporation's project staff was also conducted to determine the current usage of cost management techniques and further explore the findings of the historical data search.The research indicates a reluctance to utilise formal cost management procedures on minor projects, estimated to cost less than $1 million. The time constraints allocated to project management planning and the perceived cost to implement procedures were identified as contributing to the limited use of formal cost management on minor projects.The paper concludes that increased risk of poor budget performance is inevitable if formal cost control is not applied to capital works projects, and recommends informal risk assessment and cost contingency measures to address this issue.

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Risks, Classification of Estimates, and Contingency Management

Cited by 76 publications

References 1 publication

Effectiveness evaluation of contingency sum as a risk management tool for construction projects in Niger Delta, Nigeria

Effectiveness evaluation of contingency sum as a risk management tool for construction projects in Niger Delta, Nigeria

Choosing an Appropriate Contingency Sum Estimating Methods for Highway Construction Projects in Nigeria: A Literature Review

Contingency for Cost Control in Project Management: A Case Study

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