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Interpreting Traditional Cost Contingency Methods in the Construction Industry

conference contribution
posted on 15.07.2021, 03:11 by Michael DonnMichael Donn, Alexis Dykman, Nilesh BakshiNilesh Bakshi
This research investigates how contingency is currently calculated in project budgets within the building industry. This is an important aspect to consider as a large proportion of construction projects are significantly over-budget. The study presents three non-simulation methods and one simulation method for calculating cost contingency following the results of a forthcoming journal paper. These methods are applied against a case study project in attempt to highlight the most reliable method, and to create a methodology that will be useful to the industry. This paper identifies that the traditional fixed percentage approach is not sufficient and suggests that this could be one of the main reasons why construction projects are over budget. While it is unclear which method is the most reliable, this study provides a focus for future research into reliability and utilisation of contingency methods in the building industry. The research demonstrates that current practice needs to change to reduce the large number of construction projects that run over budget.

History

Preferred citation

Dykman, A., Donn, M. & Bakshi, N. (2019, November). Interpreting Traditional Cost Contingency Methods in the Construction Industry. In Proceedings of the International Conference of Architectural Science Association (2019-November pp. 165-174)

Title of proceedings

Proceedings of the International Conference of Architectural Science Association

Volume

2019-November

Publication or Presentation Year

28/11/2019

Pagination

165-174

Publication status

Published

eISSN

2209-3850

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