Search results

The purpose of this paper is to predict implementation cost contingencies for residential construction projects in flood-prone areas, where floods with storms frequently cause serious damage and problems for people.

Expert interviews are conducted to identify the study variables. Based on bills of quantities and project documents, historical data on residential construction projects in flood-prone areas are collected. Pearson correlation analysis is first used to check the correlations among the study variables. To overcome multicollinearity, principal component analysis is used. Then, stepwise multiple regression analysis is used to develop the cost prediction model. Finally, non-parametric bootstrap method is used to develop range estimation of the implementation cost.

A list of project-related variables, which could significantly affect implementation costs of residential construction projects in flood-prone areas, is identified. A model, which is developed based on an integration of principle component analysis and regression analysis, is robust. Regarding range estimation, 10, 50 and 90 percent cost estimates, which could provide information about the uncertainty levels in the estimates, are established. Furthermore, implementation cost contingencies which could show information about the variability in the estimates are determined for example case projects. Such information could be critical to cost-related management of residential construction projects in flood-prone areas.

This study attempts to predict implementation cost contingencies for residential construction projects in flood-prone areas using non-parametric bootstrap method. Such contingencies could be useful for project cost budgeting and/or effective cost management.

The purpose of the paper is 1) to address the importance of contingency at the right level when defining project control baseline, including cost reserves / “room to manoeuvre” and 2) present proactive uncertainty management as a regime to ensure cost effective management of project reserves and contribute to project success.

The paper is a combination of literature study and quantitative research on how contingency develops during the lifetime of a case project. The investigation into the case project includes document study into quantitative material from the case project. The combination of empirical material and theory makes the discussion robust.

Unrealistic low cost uncertainty will lead to unrealistic low contingency. The case study from a Norwegian mega project shows a contingency of 15 per cent in addition to expected costs. The case study shows that by continuous opportunity management and risk reduction, the needs for management reserves are systematically reduced and the contingency is controlled.

This research is limited to one case study. A higher number of cases are necessary to generalise the findings. However, the authors would claim that the systematic mapping of need for management reserve towards the project contingency, and a continuous uncertainty management system will help to obtain cost effective management. The findings from the case study could be applied on similar cases.

The case study shows a way of setting contingencies and managing contingencies through systematic uncertainty management.

Improved management of project provisions will increase the value of future projects.

Builds on earlier work which reported on the experience of the Hong Kong Government in using risk analysis techniques in capital cost estimating. In 1993 the Hong Kong Government implemented a methodology for capital cost estimating using risk analysis (ERA) in its public works planning. This calculated amount replaces the pre‐1993 contingency allowance, which was merely a percentage addition on top of the base estimate of a project. Adopts a team approach to identify, classify and cost the uncertainties associated with a project. The sum of the average risk allowance for the identified risk events thus becomes the contingency. A study of the effect of ERA was carried out to compare the variability and consistency of the contingency estimates between non‐ERA and ERA projects. The preliminary results of a survey showed a highly significant difference in variation and consistency between these groups. This analysis indicates the successful use of the ERA method for public works projects to reduce unnecessary and exaggerated allowance for risk. However, the contingency allowance for ERA projects was also considered high. Adds data from the UK with descriptions of 41 private sector projects which fall into the non‐ERA category and reflect better performance in the determining of contingency allowances.

Most organisations do not have established guidelines for the estimation and management of contingency funds. The purpose of this paper is to identify the risk factors at the construction phase causing project cost overruns, and a reliable method for the estimation of contingency sum is established.

Combined qualitative–quantitative exploratory methods were used. Qualitative interviews were conducted with five expert practitioners working in a Public Works Department in Zambia to determine how contingency sum is estimated and to explore what risk factors should be considered. Quantitative regression used cost and risk data collected from 30 recently completed building and refurbishment projects.

The qualitative study indicated that the project budget overruns constitute a major issue. This finding is in line with the paired-samples t-test results which show that the difference between the total variations and the initial contingency sum tends to be significant. The regression analysis proved that the contingency sum was positively correlated to the estimated contract sum. The qualitative interview results and Pearson correlation analysis also showed that contingency sum and project complexity tend to have a significant correlation. The research also demonstrates that the type of works is not a direct significant factor.

Because the projects used for the study were relatively short, duration of the project and economic factor of tax rate, exchange rate and inflation rate were not examined in the multiple regression analysis. Further studies should be conducted on longer projects to test out whether these risk factors are significant in influencing the project contingency.

The results demonstrate that the multiple regression method can be applied as a reliable tool to predict contingency sums. Accurate contingency sums and project budget estimates benefit construction clients and their project managers. Individual project conditions should be carefully examined when assessing the contingency.

This research establishes a reliable regression method for the assessment of the contingency for the pre-tender estimate which has significant impact on the project feasibility and cost control, using related risk factors involved in construction contingency and client’s contingency.

The purpose of this paper is to introduce a new general approach for estimating the maintenance cost of constructed facilities. The proposed approach consists of four components, including: facility work breakdown structure; historical maintenance cost and cost contingency data of actual completed projects; feedback obtained from the post-occupancy evaluation (POE); and fuzzy set theory (FST) to define the uncertainty associated with the maintenance cost and cost contingency as an alternative approach to simulation.

Literature review of the existing methods used for estimating maintenance cost of constructed facilities was conducted to highlight the limitations of the existing methods and models. The paper then introduced a new approach in which the results obtained from POE are integrated with the estimator’s judgment in estimating maintenance cost of constructed facility. As a proof of concept, the developed approach is tested on a private school facility in the city of Khobar, Saudi Arabia. The application of the proposed approach in this case project demonstrates its applicability and features in comparison with the existing practice.

The application of the developed approach on a school case project demonstrated that the developed approach can provide a reliable facility maintenance cost estimate, narrow the uncertainties and vagueness associated with the estimated cost, and provide the estimator with the necessary information to conduct risk analysis with less effort, less computations and less complexity comparing with that provided by complex simulation. The results also showed that integrating POE in the estimating process can provide more accurate cost estimate with high level of confidence.

The paper presents a new approach for estimating facility maintenance cost. The developed approach introduced a new concept that assists maintenance contractors in preparing facility maintenance estimate with improved accuracy while satisfying the facility user’s needs. The proposed approach integrates the estimator’s judgment with POE to model the uncertainties associated with cost using FST as an alternative approach for complex simulation.

The purpose of this paper is to present a newly developed fuzzy-set based model for estimating, allocating, depleting, and managing contingency fund over the life cycle of construction projects.

Fuzzy set theory is utilized in the design and development of proposed contingency modelling framework to incorporate uncertainties associated with the development phases of construction projects. A set of developed indices, measures, and ratios are introduced to quantify and characterize these uncertainties. The developed framework is designed to incorporate expert opinion and provide user-system interaction.

The results obtained from the application of the developed framework on actual project case not only illustrate its accuracy, but also demonstrate its capabilities for contingency management over life cycle of construction projects. Unlike other methods, the framework provides project managers with structured method for contingency depletion utilizing a set of depletion curves and selection factors.

The novelty of the developed framework lies not only in its new developments for contingency estimating but also its modelling for contingency allocation and depletion. It is expected to be of direct value to industry professionals and academics interested in contingency management over the entire life cycle of construction projects. The proposed framework provides management functions and features beyond those generated through Monte Carlo simulation and even those developed using fuzzy set theory.

Risk analysis plays a vital role in controlling and managing cost overruns in complex construction projects, particularly where uncertainty is high. This study attempts to address an important issue of cost overrun that encountered by metropolitan rapid transit projects in relation to the significance of risk involved under high uncertainty.

In order to solve cost overrun problems in metropolitan transit projects and facilitate the decision-makers for effective future budgeting, a cost-risk contingency framework has been designed using fuzzy logic, analytical hierarchy process and Monte Carlo simulation.

Initially, a hierarchical breakdown structure of important complexity-driven risk factors has been conceptualized herein using relative importance index. Later, a proposed cost-risk contingency framework has investigated the expected total construction cost in order to consider the additional budgeted cost required to mitigate the risk consequences for particular project activity. The results of cost-risk analysis imply that poor design issues, an increase in material prices and delays in relocating facilities show higher dependency and increase the risk of cost overrun in metropolitan transit projects.

The findings and implication for project managers could possibly be achieved by assuming the proposed cost-risk contingency framework under high uncertainty of cost found in this research. Furthermore, this procedure may be used by experts from other engineering domains by replacing and considering the complex relationship between complexity-risk factors.

This study contributes to the body of knowledge by providing a practical contingency model to identify and evaluate the additional risk cost required to compute total construction cost for getting stability in future budgeting.

It is conventional for a manufacturing company to equip itself to cope with a demand greater than that considered most likely to arise. Often the costs associated with excess capacity are not high, and so little energy is expended on determining least‐cost solutions and options close to them. Increases in machinery costs in the mid 1970s necessitated one cigarette manufacturer to rethink its policy towards machinery purchase; in particular that governing the size of its machinery contingency allowance—the machinery to hold over and above that required to meet the most likely forecast of demand. This article describes the background to the reframing of this policy on machinery acquisition, including an analysis of the structure of demand for cigarettes and ways of achieving an appropriate level of supply.

The purpose of this paper is to optimally locate and size the FACTS device, namely, interline power flow controller in order to minimize the total cost and relieve congestion in a power system. This security analysis helps independent system operator (ISO) to have a better planning and market clearing criteria during any operating state of the system.

A multi-objective optimization problem has been developed including real power performance index (RPPI) and expected security cost (ESC). A security constrained optimal power flow has been developed as expected security cost optimal power flow problem which gives the probabilities of operating the system in all possible pre-contingency and post-contingency states subjected to various equality and inequality constraints. Maximizing social welfare is the objective function considered for normal state, while minimizing compensations for generations rescheduling and maximizing social welfare are the objectives in case of contingency states. The proposed work is viewed as a two level problem wherein the upper-level problem is to optimally locate IPFC using RPPI and the lower-level problem is to minimize the ESC subjected to various system constraints. Both upper-level and lower-level problem are solved using particle swarm optimization and The performance of the proposed algorithm is tested under severe line outages and has been validated using IEEE 30 bus system.

The proposed methodology shows that IPFC controls the power flows in the network without generation rescheduling or topological changes and thus improves the performance of the system. It is found that the benefit achieved in the ESC due to the installation of IPFC is greater than the annual investment cost of the device. ISO cannot achieve minimum total system cost by merely rescheduling generators. Instead of rescheduling, FACTS devices can be used for compensation by achieving minimum cost. IPFC can be used to compensate the congested lines and transfer cheaper power from generators to consumers.

Operational reliability, financial profitability and efficient utilization of the existing transmission system infrastructure has been achieved using single FACTS device. Instead of using multiple FATCS devices, if a single FACTS device like IPFC which itself can compensate several transmission lines is used, then in addition to the facility for independently controlled reactive (series) compensation of each individual line, it provides a capability to directly transfer real power between the compensated lines. Hence an attempt has been made in this paper to incorporate IPFC for relieving congestion in a deregulated environment. However, no previous researches have considered incorporating compensation of multi-transmission line using single IPFC in minimizing ESC. Thus, in this paper, the authors indicate how much the ESC is reduced by installing IPFC.

The purpose of this paper is to reengineer the process of cost management in large projects.

Considering the fact most large projects overrun their budgets because of the long time period needed to completion, it was decided to reengineer the cost management. Accordingly costs allocated to packages were reviewed and changed on a dynamic basis. Different types of contingencies were provided. Concepts of package contingency and project contingency were introduced. These were based on the project buffer and feeding buffer concepts popularised by Eliyahu Goldratt.

The re-engineered method of cost control worked well and yielded better than expected results, leading to the setting up of a new world record in the completion time for setting up a million tonnes per annum continuous, tandem cold rolling mill to roll steel sheets.

In view of the total success of the reengineered approach, which was tested out on a large project over three years, it is felt that other projects could also try out this technique, especially since it is along the lines proposed by Eliyahu Goldratt who is an authority on project management. However the success can be better understood if the results of the testing become available. To that extent the contents of the present paper have limitations.

Large projects can deploy the methodology and complete their projects on time and under budget.

The reengineering of the cost management was done primarily with a view to complete projects under budget. Since many governments spend many billions of dollars on publicly funded projects for the welfare of citizens, the use of this technique could have a salutary effect on the cost.

The method was innovated in the company by the author’s team and deployed in a live project over four years for the first time to achieve world-class results.