Dynamic Management of Risk Contingency in Complex Design-Build Projects
Publication: Journal of Construction Engineering and Management
Volume 142, Issue 2
Abstract
Contingency budgets are commonly used by managers to respond to uncertainty and control the project within the original cost and schedule targets. However, a variety of project participants with conflicting interests creates tensions when it comes to managing the risk contingency escrow account during the project development, and divergences often arise over the need for either retaining the unspent contingencies (for future risk and improved facility) or releasing it as a profit. With the purpose of studying the dynamics and main influences involved in the risk contingency management process of a design-build (DB) project, a system dynamics (SD) contingency management model is proposed to simulate the decision-making scenarios, under different project conditions and behavioral pressures of senior managers and owners. The model suggests that an aggressive proactive risk management practice might be an effective policy for managing the contingency budget in a complex engineering, procurement, and construction (EPC) project.
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Acknowledgments
The authors are grateful to the anonymous company for availability and support to this study. The authors wish also to thank Mr. Luca Morra, graduate student from the M.Sc. Program in Engineering & Management at Politecnico di Torino for effective and passionate contribution to this work.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 142 • Issue 2 • February 2016
Copyright
© 2015 American Society of Civil Engineers.
History
Received: Oct 6, 2014
Accepted: Jul 7, 2015
Published online: Oct 5, 2015
Published in print: Feb 1, 2016
Discussion open until: Mar 5, 2016
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