top of page
  • Writer's pictureJohn Zhao

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.

8 views0 comments

Recent Posts

See All

Major capital projects have a long tendency of cost overruns and schedule delays, based on abundance of research and historical cost data. Cost estimates, particularly the cost reimbursable and unit p

Brainstorming technique for risk identification is one of the most commonly used methods and it applies to traditional settings where SMEs are physically present at a conference room to debate about t

bottom of page