DEVELOPING A TOOL FOR PROJECT CONTINGENCY ESTIMATION IN A LARGE PORTFOLIO OF CONSTRUCTION PROJECTS

Authors

  • Mariette van Niekerk Eskom Holdings SOC Ltd
  • James Bekker Stellenbosch University

DOI:

https://doi.org/10.7166/25-3-905

Keywords:

project management, contingency, project risk, neural network

Abstract

To enable the management of project-related risk on a portfolio level in an owner organisation, project contingency estimation should be performed consistently and objectively. This article discusses the development of a contingency estimation tool for a large portfolio that contains similar construction projects. The purpose of developing this tool is to decrease the influence of subjectivity on contingency estimation methods throughout the project life cycle, thereby enabling consistent reflection on project risk at the portfolio level. Our research contribution is the delivery of a hybrid tool that incorporates both neural network modelling of systemic risks and expected value analysis of project-specific risks. The neural network is trained using historical project data, supported by data obtained from interviews with project managers. Expected value analysis is achieved in a risk register format employing a binomial distribution to estimate the number of risks expected. By following this approach, the contingency estimation tool can be used without expert knowledge of project risk management. In addition, this approach can provide contingency cost and duration output on a project level, and it contains both systemic and project-specific risks in a single tool. 

Author Biography

James Bekker, Stellenbosch University

Industrial Engineering

Senior Lecturer

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Published

2014-11-10

How to Cite

van Niekerk, M., & Bekker, J. (2014). DEVELOPING A TOOL FOR PROJECT CONTINGENCY ESTIMATION IN A LARGE PORTFOLIO OF CONSTRUCTION PROJECTS. The South African Journal of Industrial Engineering, 25(3), 96–111. https://doi.org/10.7166/25-3-905

Issue

Section

General Articles