Achieving Multiple Project Objectives through Contingency Management
Publication: Journal of Construction Engineering and Management
Volume 128, Issue 1
Abstract
Project managers use budgets to satisfy multiple objectives such as cost control, short durations, and high quality. Contingency funds are included in project budgets to manage risk and achieve project goals. Understanding how managers use budget contingencies requires a dynamic information processing model of how managers bridge the gap between high project complexity and limited managerial capacity. The results of collecting contingency management practices of real estate development project managers is reported and a dynamic simulation model of contingency management described. The model is used to test hypotheses of the effectiveness of aggressive and passive management strategies on cost, timeliness, and facility value. Managers were found to pursue general project objectives in their management of contingency. An aggressive strategy was found to be more robust but performed poorer than a passive strategy. Conclusions include the prevalence of trade-offs between robust and high-performance contingency management policies in construction projects and the importance of incorporating uncertainty into project planning and management.
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Published In
Journal of Construction Engineering and Management
Volume 128 • Issue 1 • February 2002
Pages: 30 - 39
Copyright
Copyright © 2002 American Society of Civil Engineers.
History
Accepted: Feb 27, 2001
Received: Jun 25, 2001
Published online: Feb 1, 2002
Published in print: Feb 2002
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