Types Of Contingencies, Designing A Contingency, And Owner 's Contingency

912 Words4 Pages
According to Gunhan and Arditi (2007), there were three types of contingencies, namely designer’s contingency, contractor’s contingency, and owner’s contingency. They claimed that the best method to predict contingency was to use previous experiences. They mentioned that a detailed study of four factors, namely site conditions, schedule constraints, project scope, and constructability issues could play an important role either in preventing the CO or reducing the chances of needing a big contingency money. Smith et al. (1999) stated that the wise decision on the amount of contingency used while bidding could have effects on whether wining of the contract. They interviewed 12 contractors on the contingency calculation method and found that among these contractors, nobody was aware of any kind of estimation method for the contingency amount. Whenever, these contractors used contingency, they simply followed the traditional approach of adding some percentages to the base cost as contingencies. Mac and Picken (2000) conducted a study on two types of projects, namely estimating using risk analysis (ERA) and non-ERA projects. They made comparison between 45 ERA projects with 287 non-ERA projects and found that ERA method helped to reduce the unnecessary risk allowances in projects. According to the authors, Hong Kong government was implementing this ERA technique in public construction projects. In the ERA method, they described that the cost determined for fixed and variable
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