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

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

592 Week 1 DQ 1 WBS Construction PROJ 592 Week 1 DQ 2 Project Cost Estimates and Assumptions PROJ 592 Week 2 DQ 1 Cost Components PROJ 592 Week 2 DQ 2 Estimating Processes PROJ 592 Week 3 DQ 1 Project Schedules PROJ 592 Week 3 DQ 2 Sensitivity Analysis PROJ 592 Week 4 DQ 1 Resource Allocation and Leveling PROJ 592 Week 4 DQ 2 Advanced Schedule Techniques PROJ 592 Week 5 DQ 1 Earned Value Calculation PROJ 592 Week 5 DQ 2 Project Monitoring and Control & EV PROJ 592 Week 6 DQ 1 Forecasting Project Completion Cost PROJ 592 Week 6 DQ 2 Project Control PROJ 592

The quantitative tool that might help in using the averages of other similar projects risk is forecasting.

2. In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be what? Page 933

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

The identification of risk normally starts before the project is initiated, and the number of risks increase as the project matures through the lifecycle. When a risk is identified, it is first assessed to ascertain the probability of occurring, the degree of impact to the schedule, scope, cost, and quality, and then prioritized. A risk’s probability of occurrence, number of categories impacted and the degree (high, medium, low) to

During an engineering project life cycle, the common risk management process (risk identification, risk impact assessment, risk prioritization analysis, risk tracking, and risk mitigation planning implementation) meet the required protocols for early and continuous risk identification. The first step, risk identification, brainstorms potential risks that may develop during the engineering system to include environmental or human hazards. The second step, risk impact assessment, clarifies and details the damage of the risk. The third step, risk prioritization analysis, creates a hierarchy of the risks and determines which risk needs to be addressed first then so on. The follow-on steps have two different paths, one path is risk tracking and the other is risk mitigation

Lai and Lam noted that construction projects require concise planning, and are divided between the consultant and the contractor. However, each party plays a significant part in the projects’ success. The difference between the client and the contractor; the client usually push for timely completion and would offer an incentive bonus for timely completion, however, the contractor would prefer a reasonable duration of time, therefore to avoid penalities to the contractor.

Contingency funds are funds set aside by the project team to address unforeseen events that cause the project costs to increase. Projects with a high-risk profile will typically have a large contingency budget. Although the amount of contingency allocated in this project budget is a function of the risks identified in the risk analysis process, contingency will be managed as one line item in the project budget. Some project managers allocate the contingency budget to the items in the budget that have high risk rather than developing one line item in the budget for contingencies. This approach will allow the project team to track the use of contingency against the risk plan. This approach also allocates the responsibility to manage the risk budget to the managers responsible for those line items. The availability of contingency funds in the line item budget may also increase the use of contingency funds to solve problems rather than finding alternative, less costly solutions. The project manager, will manage contingency funds at the project level, with approval of the project manager required before contingency funds can be

Founded May 6th 1902, the Turner Construction Company is known as a company that builds non-residential buildings but it is self described as a risk management company. Their success is accredited to their project management tool called the Indicated Outcome Report (IOR) system that was implemented into the company’s management methods in the 1920s. It is with the IOR system that the company is able to assess risk effectively as the program is designed to help identify the anticipated financial and operational problems within any one of their projects at any level. This report is produced on a quarterly basis with 6-week updates and is reviewed in quarterly team meetings where team member participation is critical so that no unexpected costs

Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success. Risk is inherent on construction projects and disputes frequently arise. One in four construction projects results in a dispute that leads to arbitration or litigation. With large scale, complex projects the likelihood of serious, time-consuming and expensive claims increases.

In order to perform project risk management effectively, the organization or the department must know the meaning of the risk clearly. With regards to a project, the management must focus on the potential effects on the objectives of the project, for example, cost and time (Loosemore, Raftery and Reilly, 2006). Risk is a vulnerability that really matters; it can influence the objectives of the project

Risk is not a problem; risk is an issue that could possibly develop and affect the outcome of a project (Risk Management Plan, 1997). The cost of the project, quality, scope, and schedule could all be affected if a risk surfaces. This does not necessarily mean that the risk is negative; risks can create a positive opportunity (Project Management Institute, 2013). For example the vendor informs us that the specified wood flooring is no longer available; as a result he will be substituting a better product for less cost. The sour lemons have now been turned into sweet lemonade. In this paper risk will be analyzed as it applies to project management. The project manager’s role in managing risks concerning

CONTINGENCY THEORY IS A CLASS OF BEHAVIORAL THEORY THAT CLAIMS THAT THERE IS NO BEST WAY TO ORGANIZE A CORPORATION, TO LEAD A COMPANY OR TO MAKE DECISIONS.

To begin this paper, it is important to understand the meaning of project risk management and the various concepts that are involved in this knowledge area. The first part that companies should understand is the definition of the word risk. The term risk is defined as the potential of causing a negative effect on projects and cause delays. However,