The navigation of complexities to compute contingency cost is presenting significant challenges, particularly for medium-scale contractors in construction projects. Therefore, this research aims to explore the balance between achieving profit objectives and maintaining project quality through accurate cost estimations that include risk considerations and mitigation strategies. The prevalent practice of favoring the lowest bid in the tender process is critically examined to assess the potential benefits and limitations, as well as determine a feasible contingency amount.
A quantitative methodology, integrating the Delphi and Monte Carlo simulation, is used to gather and analyze perspectives from 13 experienced professionals in medium-scale contracting. The research shows the advantages and disadvantages of incorporating contingency costs, evaluates the impact on project value and establishes a spectrum of minimum and maximum contingency figures.
The results show inconsistencies in risk management practices and emphasize the necessity for a systematic method over-reliance on personal experience with a competitive contingency of 4.58%.
The contribution lies in the innovative integration of the Delphi method and Monte Carlo simulation to address the specific challenges faced by mid-scale contractors in managing contingency costs. This integrated method, with the focused application and detailed analysis, provides new insights and practical recommendations related to the needs of mid-scale contractors in the construction industry. Additionally, the use of the Relative Importance Index (RII) enhances the novelty by offering a structured method to rank and address the factors influencing contingency cost.
