APPROACH FOR DETERMINATION OF COST CONTINGENCY RESERVE IN CONSTRUCTION PROJECTS

Ibrahim A. I. Eldosouky, Ahmed H. Ibrahim, Hossam E. Mohammed

Abstract


Many contractors are of the opinion that adding contingency funds to the tender price of a project may lead to loss of the tender They cover downside risks materialized during project execution by claiming for any reason. This research is a trial to put an end to this incorrect opinion. A broad definition of risk including both negative threats as well as positive opportunities started to appear by end of the 20th century. A more mature attitude to risk would recognize that contingency exists to be spent in order to avoid or minimize threats and to exploit or maximize opportunities. This research proposes an approach for determination of Cost Contingency Reserve (CCR) for a project. Application to a real project is carried out. Post mitigation simulations show the value of CCR is 2.88% of project cost but there is a potential saving due to opportunities.

Refbacks

  • There are currently no refbacks.