De Marco, A; Rafele, C and Thaheem, M J (2016) Dynamic management of risk contingency in complex design-build projects. Journal of Construction Engineering and Management, 142(2): 04015080, ISSN 0733-9364
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.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | budgeting; contingency; cost control; project planning and design |
| Index terms: | escrow, dynamics, risk management, decision-making, project development, system dynamics, budgeting, manager, profit, cost control, owner, project planning |
| Subjects: | project delivery, financial and cost management, systems engineering, computing systems, financial management, practitioner, risk assessment, decision analysis, sociology, economic analysis, financial risk, control systems |
| Topics: | Roles and Professions, Digital Applications, Engineering Principles, Risk Management, Stakeholder Management, Business Strategy, Project Management, Cost Management |
| Descriptive scope: | 3 PCT |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here