Scientifically Derive Project Contingency
Updated: Apr 25, 2021
According to the academic researches led by Dr. Flyvbjerg, "cost escalation appears a global phenomenon. Estimates have not improved, and cost escalation not decreased over the past 70 years; Estimates used in decision-making are misleading … but such financial risks are typically ignored".
“Success" in megaproject management is typically defined as projects being delivered on budget, time, and benefits. Often than not, megaprojects tend to have cost overruns and schedule delays. Science Direct (2015) pointed out that one of the key factors was "an unrealistic time and cost budget without risk reserves for contingency".
Is contingency important in megaprojects? How is contingency determined? Who owns project contingency?
"Without simulation technique, it is impossible to determine contingency scientifically at any given confidence / probability". Riscor Model uses Monte Carlo simulation technique to derive project contingency, escalation, strategic, textual and management risk reserves in a robust and systematic approach.
I am honored to have virtually delivered to AACEi Seattle (USA) and Edmonton (Canada) Sections the presentations of "Is it Important to scientifically derive Project Contingency?" in September and October 2020.