Project Controls International

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Basis of Estimate

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Que$tor Estimates

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Interesting Stuff

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How much contingency should a project carry to adequately cover project risks?


The answer is it depends. The amount of risk present in a project varies according to a number of factors, but primarily it's a result of uncertainty, which is driven by the level of project definition.


Other considerations to be taken into account while evaluating the appropriate level of contingency necessary are the complexity of the project and how much experience does the company have with the project at hand.


For example, if a given company is tendering for the construction of a road for a particular client, say the Texas Department of Transportation (DOT), for which this company in question has a long term relationship with dozens of successfully completed projects, all or most completed on time and on budget with few setbacks, then the company can quite comfortably tender with a high level of confidence and therefore a low percentage of contingency versus total project price.


On the other hand, if this same company is now for the first time considering tendering for a road project for a new client, say the California DOT, and the project is substantially more complex involving a number of flyovers and bridges which the company has no previous experience with, then contingency should be much higher to account for the increased uncertainties.


The contingency guidelines adopted by the Department of Energy (DOE) are as follows:


- Preliminary estimate, upper limit 50%, lower limit 30%

- Budget estimate, upper limit 40%, lower limit 25%

- Final design estimate, upper limit 15%, lower limit 5%

- Actual, upper limit 0%, lower limit 0%

Project Risk Contingency


Love them or hate them. How to conduct successful productive meetings.

Funny, but true. Video on the functions of Project Controls.


Settings do matter: pick the wrong settings and your schedule’s output will be meaningless.

What the text books didn’t tell you
Primavera P6 Settings
Video - Project Controls

Selected Articles

Tips on Scheduling

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