Estimation of Cost Contingency for Air Force Construction Projects
Publication: Journal of Construction Engineering and Management
Volume 136, Issue 11
Abstract
Risk and associated cost overruns are critical problems for construction projects, yet the most common practice for dealing with them is the assignment of an arbitrary flat percentage of the construction budget as a contingency fund. Therefore, our goal was to identify significant variables that may influence, or serve as indicators of, potential cost overruns. We analyzed data from 203 Air Force construction projects over a full range of project types and scopes using multiple linear regression to develop a model to predict the amount of required contingency funds. The proposed model uses only data that would be available prior to the award of a construction contract. The variables in the model were categorized as project characteristics, design performance metrics, and contract award process influences. Based on the performance metric used, the model captures 44% of actual cost overruns versus the 20% captured by the current practice. Furthermore, application of the model reduces the average contingency budgeting error from 11.2 to only 0.3%.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 136 • Issue 11 • November 2010
Pages: 1181 - 1188
Copyright
© 2010 ASCE.
History
Received: May 7, 2009
Accepted: Apr 22, 2010
Published online: Oct 15, 2010
Published in print: Nov 2010
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