Contingency Estimation for Construction Projects Through Risk Analysis

Panthi, Kamalesh; Ahmed, Syed M.; Ogunlana, Stephen O.

doi:10.1080/15578770902952181

Cited by 25 publications

(21 citation statements)

References 8 publications

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“…Peleskei et al (2015) say that German authors Girmscheid and Busch (2007) recommend the Monte Carlo simulation tool for quantifying risk. In using the Monte Carlo simulation tool each risk has a minimum, maximum, and the most reliable outcome (Panthi et al, 2009). Below are some examples of this approach in construction:…”

Section: Methodsmentioning

confidence: 99%

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Establishing a Link between Contractor Selection Strategy and Project Outcomes: Simulation Study

Eke¹,

Elgy

Wedawatta

2019

J. Constr. Eng. Manage.

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Perceived benefits of the best value strategy and the problems the lowest price strategy has caused in the construction industry; has led to the increase in the use of the best value strategy in selecting contractors. Whilst there is research that have tried to establish a direct relationship between a contractor selection strategy and the project outcomes, there are hardly any empirical research that tries to establish this relationship. This paper presents a quantifiable method of assessing the risk of selecting different contractor selection strategies using educational facilities projects in the UK. A Monte-Carlo simulation study was conducted to assess how the lowest priced contractor would have fared against the best value contractor had it been awarded the contract instead. It was concluded that selecting the best value contractor in educational facilities projects is not necessary in terms of cost. Furthermore, though the results are limited to educational facilities project, the method can be adapted to other sectors.

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Section: Methodsmentioning

confidence: 99%

“…• Panthi et al, (2009) study combined Monte Carlo with Analytical Hierarchy Process (AHP) to combine the risk distributions of various Bill of quantities items in hydropower construction projects. This resulted in a risk adjusted cost from which the contingency was determined.…”

Section: Methodsmentioning

confidence: 99%

Establishing a Link between Contractor Selection Strategy and Project Outcomes: Simulation Study

Eke¹,

Elgy

Wedawatta

2019

J. Constr. Eng. Manage.

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“…Many studies seek to estimate contingency in construction. Panthi et al [40] suggested a contingency estimation method through the relation between project risk and bill of quantity (BOQ) items. Elbarkouky et al [41] developed a contingency estimate model based on project risk with fuzzy arithmetic analysis.…”

Section: Relation Between Contingency and Returnmentioning

confidence: 99%

What Enables a High-Risk Project to Yield High Return from a Construction Contractor’s Perspective?

et al. 2019

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“High risk high return” is a general rule in the overall industry; however, high-risk projects in the construction industry frequently fail to yield a high return. In order to achieve a sustainable business in the international construction market, contractors require an average to high return yield under high-risk conditions. This study aims to reveal what risk factors and risk management performance enables high-risk projects to yield high returns. The study investigated 124 international construction projects by Korean contractors and classified them into four groups: high-risk high-return (HH), high-risk low-return (HL), low-risk high-return (LH), and low-risk low-return (LL). The study found that risk assessment accuracy was the most important trigger in discriminating between high return projects (HH, LH) and low return projects (HL, LL), whereas risk mitigation performance showed little difference between high return and low return projects. In addition, the contingency amount did not significantly affect project return in HL, LH, and LL projects, but HH projects showed a positive relation between contingency and predicted risk amount. This article contributes to recognizing the differences between high return and low return projects and provides insights for practitioners into the relation between risk management performance and high returns in different risk conditions.

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“…Construction is one of the most risky, difficult and dynamic industries (Hwang et al, 2017) as, due to its financial intensity, complex procedures, long project durations, risky environment and partner relationships, this industry is prone to a variety of risks (Panthi et al, 2009). There are also vast variations in the risks that exist in in construction industries in different countries and cultures (Al-Yahya, 2009;Assaf & Al-Hejji, 2006;Deloitte, 2016;El-Sayegh, 2008;Odongo et al, 2012;Randeree and Chaudhry, 2012).…”

Section: Introductionmentioning

confidence: 99%

Impacts of cultural risk factors on project success in the UAE construction industry

Hasani¹,

Tularam²,

Regan³

2017

Syme, G., Hatton MacDonald, D., Fulton, B. And Piantadosi, J. (Eds) MODSIM2017, 22nd International Congress on Modelling and Si

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Industrial risk management is an area of interest in business and management research. Construction is a risky and dynamic industry that is particularly prone to a variety of risks and uncertainties. The nature of these risks may depend on particular projects and can significantly vary from country to country. Therefore, the essential goal of research in identifying and characterising risks in construction is twofold , involving (1) the identification and characterisation of any general trends, risks and mitigating strategies that are common in different countries and extend over a variety of construction projects in one or more countries; and (2) the identification and characterisation of any particular construction risk in a given country or even for a given project and understanding any variability of risks for different projects or countries. The detailed analysis of risks and risk factors associated with both these aims is essential for the successful development of the construction industries that constitute a significant part of the world economy. The major focus of this paper is the analysis and characterization of cultural risks in the construction industry in the United Arab Emirates (UAE). The unprecedented construction boom in the UAE since 1971 has caused rapid and extensive growth in its construction industry. However, this rapid growth and its sustainability are threatened by a variety of factors including significant cultural issues associated with the traditional Arabic culture and the unprecedented diversity of the workforce in the UAE, as more than 80% of workers are expatriates from different parts of the world. This creates a unique business environment in the country whose successful development largely underpins the economic progress in the Middle East and elsewhere. The analysis of cultural risks in the UAE construction industry was conducted using a specially designed and validated survey instrument. There were 237 participants of the study, all holding senior engineering or managerial positions in companies associated with the construction industry in the UAE. The analysis was based on the identification and quantitative characterization of the constructs associated with the cultural risk factors and generalized structural equation modelling to characterize the direct and indirect effects of these constructs on the success of construction projects. All outcomes were adjusted to socioeconomic and company variables. Among the mediating constructs, External Risks (involving corruption, government regulations, market demand and differences between stakeholders) and Communication (involving communication issues between the parties to the contract, employers and employees) dominated Internal Risks, which were generally perceived as less important. The cultural factors produced significant impacts on these mediating constructs that, in turn, affected project success. Only two UAE cultural aspects were found to have positive impact on project success. These were differences in educational backgr...

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Contingency Estimation for Construction Projects Through Risk Analysis

Cited by 25 publications

References 8 publications

Establishing a Link between Contractor Selection Strategy and Project Outcomes: Simulation Study

Establishing a Link between Contractor Selection Strategy and Project Outcomes: Simulation Study

What Enables a High-Risk Project to Yield High Return from a Construction Contractor’s Perspective?

Impacts of cultural risk factors on project success in the UAE construction industry

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