Evaluation of risk perception and its influence in project cost contingency decision

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University of Dar es Salaam
Traditionally, contingencies are often calculated as an across-the-board percentage addition on the base estimate, typically derived from intuition, past experience and historical data. This judgmental and arbitrary method of contingency calculation is difficult for the estimator to justify or defend. Therefore the influence of risks factors to the estimation of construction project cost contingency need to be evaluated. The objective of this research was to establish the generic risks that will be used for decisions of construction projects cost contingency estimates during tender preparation. Through the literature review and unstructured interviews, twenty two factors were identified to be the generic risks mostly affecting building projects cost overruns in Tanzania. Relative Significance Index Scores (RSISs) for each generic risk identified was established. Using the established critical risk factors from this dissertation such as construction risk, financial risk, design related risk, political risk and natural risk can be used to estimate the contingency level from the contingency level and project risk level relationship established in this dissertation. A perceived project risk-contingency relationship was developed to predict an appropriate perceived contingency percentage based on the project's level of risk. The equation obtain was Y = 0.037e^0.022x.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF TH437.H64)
Engineering, Estimates and costs, Constraction project, Risk assessment
Holela, P. Z (2014) Evaluation of risk perception and its influence in project cost contingency decision, Master dissertation, University of Dar es Salaam. Dar es Salaam.