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The framework of contingency cost determination in the construction execution
Latupeirissa J.E.a, Marzuki P.F.b, Wirahadikusumah R.D.b
a Department of Civil Engineering, Paulus Christian Indonesian University, Indonesia
b Department of Civil Engineering, Bandung Technology Institute, Indonesia
[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_separator css=”.vc_custom_1624529070653{padding-top: 30px !important;padding-bottom: 30px !important;}”][/vc_column_inner][/vc_row_inner][vc_row_inner layout=”boxed”][vc_column_inner width=”3/4″ css=”.vc_custom_1624695412187{border-right-width: 1px !important;border-right-color: #dddddd !important;border-right-style: solid !important;border-radius: 1px !important;}”][vc_empty_space][megatron_heading title=”Abstract” size=”size-sm” text_align=”text-left”][vc_column_text]The uncertain events in a construction project are inevitable and quite significant compared with manufacture activities. The uncertain events are involved in the whole series of activities in a construction project, from the planning phase to the execution phase. The uncertain events derive from either internal or external environment of the projects. They interact and affect the system of planned execution. This results in the risks of rising cost of construction execution. In the lump-sum-fixed-price projects, the contractor is the one who is responsible for the majority of construction execution risks. To anticipate the effects of the uncertain events, the contractor allocates a reserve cost called contingency cost. Practically, the contractors in Indonesia determine the contingency cost by intuition, based on the experience, and it can reach 10 – 15%. The allocation of contingency cost should be determined by more analytical calculation. Therefore, a systematic model should be developed to determine the contingency cost allocated in the proposed cost of construction execution, based on the analysis of the uncertain events and the interaction between uncertain events. In this study a framework of contingency cost determination in construction projects was developed. It involved the identification of various relevant uncertain events. The mapping of interaction uncertainty events that cause risks on the execution cost of projects used the influence diagram while the existing interaction was analyzed by using Cross Impact Analysis (CIA). The method of CIA includes the determination of prior probability of the uncertain events and the interactions. This was conducted by obtaining the subjective judgment of the contractors or construction practices. The application of CIA method will then produce posterior probability of each uncertain event and the posterior probability of rising cost risks of project execution. The result of the study showed that the framework of cost contingency determination of this study was flexible accordance with dynamic construction project characteristics. Thus, the determination of contingency cost can be conducted more accurately, and the decision making can be more reliable.[/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Author keywords” size=”size-sm” text_align=”text-left”][vc_column_text]Analytical calculation,Construction practice,Construction projects,Cost contingency,Cross-impact analysis,Dynamic construction,Execution phase,External environments,Framework,Indonesia,Influence diagram,Planning phase,Posterior probability,Prior probability,Project,Project execution,Systematic models,Uncertain events[/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Indexed keywords” size=”size-sm” text_align=”text-left”][vc_column_text]Construction,Contingency cost,Contractors,Framework,Project,Risks,Uncertain events[/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”Funding details” size=”size-sm” text_align=”text-left”][vc_column_text][/vc_column_text][vc_empty_space][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][vc_empty_space][megatron_heading title=”DOI” size=”size-sm” text_align=”text-left”][vc_column_text][/vc_column_text][/vc_column_inner][vc_column_inner width=”1/4″][vc_column_text]Widget Plumx[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row][vc_column][vc_separator css=”.vc_custom_1624528584150{padding-top: 25px !important;padding-bottom: 25px !important;}”][/vc_column][/vc_row]