Understanding project cost contingency: A survey

Patrascu (1988) observed nearly two decades ago that "contingency is probably the most misunderstood, misinterpreted, and misapplied word in project execution." Since that time there has been little empirical research into project people’s understanding of the concept of project cost contingency. This paper reports the results of a survey of 78 project practitioners’ comprehension of issues pertaining to project cost contingency. Whilst there is consensus that cost contingency is a reserve of money which should be used for scope changes, a key finding is that there is a lack of appreciation that project cost contingency is a risk management notion. Consequently, the majority of practitioners (77%) continue to use a deterministic percentage approach for estimating project cost contingency. Furthermore, 46% of respondents work in organisations that do not have a policy on contingency and 36% do not manage the use of contingency. Overall, this suggests there is significant room for improvement in the understanding, estimation and management of project cost contingency

Reflective learning journals for construction education - a case study

In recent years, journal writing has become an effective and widely used teaching and learning strategy which is popular with both students and lecturers in higher education. This paper provides a review of the literature of reflective learning journals, in particular: learning processes, types, uses, purposes, benefits and issues of implementation within an educational program. Using action research, the author describes the results of using learning journals within an undergraduate construction degree program. The key conclusions of the research were: students support the use of reflective journals for learning; reflective journals should be introduced early into the curriculum and developed gradually throughout the learning program; learners should be given instructions to facilitate the reflective learning process; and, journal structure and assessment support the reflective learning process

Accuracy in estimating project cost construction contingency - a statistical analysis

The cost performance of building construction projects is a key success criterion for project sponsors. Project cost performance is typically measured by comparing final cost against budget. A key component of the project budget for the construction contract is construction contingency, which caters for contract variations that arise during the implementation phase of projects. It is important for project sponsors to know the level of accuracy being achieved in estimating construction contingency. Statistical analysis of past projects provides a means for measuring the accuracy of construction contingency. The cost data for 48 road construction projects completed by an Australian government organisation were statistically analysed to investigate the accuracy of contingency. It was found that the average construction contingency was 5.24% of the Award Contract Value but the average value of contract variations was 9.92%. The organisation used a traditional percentage approach for estimating construction contingency. This suggests that the organisation has room to improve the accuracy of its construction contingency estimates by seeking alternative estimating methods. An investigation of an alternate estimating approach derived from the analysis of the data found that there were no significant correlations between project variables and construction contingency that might be used to create a prediction model for construction contingency

Estimating project cost continency - a model and exploration of research questions

The cost performance of building construction projects is a key success criterion for project sponsors. Projects require budgets to set the sponsor's financial commitment and provide the basis for cost control and measurement of cost performance. A key component of a project budget is cost contingency. A literature review of the concept of project cost contingency is presented from which a model for the estimating of project cost contingency is derived. This model is then used to stimulate a range of important research questions in regard to estimating project cost contingency and the measurement of its accuracy

The maturing concept of estimating project cost contingency: A review

Contingency is a ubiquitous component of project cost estimating. This paper provides a review of the literature pertaining to the estimating of project cost contingency. It describes the flaws of the tradition percentage method for estimating project cost contingency and sets out more robust estimation methods - regression analysis, Monte Carlo simulation and artificial neutral networks. In particular, the application of regression analysis for predicting project cost contingency is reviewed in detail as a prelude to the author’s research into the development and testing of a regression model for forecasting project cost contingency for engineering construction projects

The implementation of authentic activities for learning: a case study

The situated cognition theory of learning advocates that students should engage in the same types of activities in which expert practitioners in the various disciplines engage. Situated cognition promotes the use of authentic activities for learning and understanding. This paper reports the findings of a case study for implementing and evaluating authentic activities for learning in an undergraduate construction degree program. A key finding is that authentic activities should be introduced early and developed and applied progressively throughout the program in order to maximise effective learning outcomes. Students appreciated the value of learning through authentic activities, particularly the integration of different disciplines and areas of knowledge. However, students initially struggled with the ambiguity of problems to be solved and the range of possible acceptable solutions

Risk Pricing in Construction Tenders - How, Who, What

Construction projects are most commonlyprocured in Australia by means of atraditional design-tender-build model,whereby design is largely completed thencontractors submit tenders in acompetitive environment. Constructioncontractors must consider risks within theirtenders. This paper reports the researchfindings into pricing for risk in competitivetenders by construction contractors. Theresearch is based on structured interviewswith 10 contracting personnel;supplemented by 23 responses ofconstruction personnel from an onlinesurvey. Two common methods to price forrisk are a trade-by-trade basis or anoverall percentage or lump sum addition tothe base estimate. Experience andintuition plays a significant role in pricingfor risk in tenders and the number andtype of people involved varies with projectsize, with greater involvement as projectsize increases. The most significant riskspriced in tenders were: availability ofresources; design or documentation errors;incomplete design; buildability issues; andinclement weather. The most significantproject factors considered by contractorswhen pricing for risk in tenders are: valueof liquidated damages; type ofcontract/procurement; completeness ofdocumentation; project complexity; and. current workload. These risks and projectfactors are primarily those over which thecontractor has limited or no control

The Use of Bills of Quantities in Construction Projects - An Australian Survey

Bills of Quantities (BQs) have existed in one form or another for over 300 years. Debate over the use, benefits and problems of BQs has been long standing. A literature review on BQs is reported herein. The review found little empirical research into the use of BQs. Much of the literature is based on unsubstantiated opinion. The results of a survey of 86 Australian construction professionals, primarily consultant quantity surveyors, are reported to provide some empirical evidence of issues related to the use of BQs in construction projects. The key findings are that there is a strong desire to simplify the measurement process; there is a reluctance by building principals to formalise BQs as part of the contract; over the past five years there has been little change in the use of BQs by either clients or contractors; and BQs account for less than 25% of quantity surveyors' work load. The most useful aspect of BQs is its ability to provide a common basis for assessing change in a project

Project Success - A Survey

Over the past decade there has been a growing literature on project success criteria, however there has been relatively little empirical data. This paper provides a significant contribution to the knowledge of project success by providing empirical data on the subject, by means of a survey of 150 Australian project managers on the subject of project success criteria. An analysis of the data found two distinct views: those that perceived project success solely in terms of the traditional project objectives of time, cost and quality; and those that considered success in terms of these objectives and the effectiveness of the project?s product. The traditional project management success criteria of time, cost and quality still has a strong hold within the project management community in Australia. However, the most important success criterion was considered to be the product success criterion of meeting the owner?s needs