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How can you develop a contingency plan for unexpected expenses in civil engineering projects?

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Civil engineering projects often involve complex and uncertain factors that can lead to unexpected expenses, such as design changes, site conditions, material availability, weather, and regulatory compliance. These expenses can jeopardize the project's feasibility, quality, and profitability if not properly planned and managed. Therefore, developing a contingency plan is a crucial skill for engineering managers who want to deliver successful and sustainable civil engineering projects. In this article, you will learn how to develop a contingency plan for unexpected expenses in civil engineering projects using a four-step process.

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Gohar Zaman, PMP?

Project Management Professional (PMP), Mechanical Project Engineer - Project Management, Engineering Design Management,…
Edward Brouch

Officer, Engineer, USAF

1 Identify the sources of uncertainty

The first step in developing a contingency plan is to identify the sources of uncertainty that can affect the project's cost and schedule. You can use various tools and techniques to do this, such as risk analysis, sensitivity analysis, scenario planning, and historical data. The goal is to determine the likelihood and impact of each potential source of uncertainty and rank them according to their priority. You should also consider the interdependencies and correlations between different sources of uncertainty and how they can amplify or mitigate each other.

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2 Estimate the contingency amount

The second step in developing a contingency plan is to estimate the contingency amount, which is the additional budget or time that you need to cover the unexpected expenses. You can use different methods to calculate the contingency amount, such as percentage-based, factor-based, simulation-based, or expert judgment. The method you choose should depend on the level of detail, accuracy, and reliability that you need for your project. You should also review and update the contingency amount regularly throughout the project life cycle to reflect any changes in the project scope, schedule, or risks.

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Edward Brouch

Officer, Engineer, USAF
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Risk Management: It seems simple but include contingency fees in your estimates based on your perceived risk. Budgeting and estimating project costs is all about risk management..similar to buying a house. Once you know your price range, you plan within that. The closer you are to your max, the more risk you take should something go wrong.

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3 Allocate the contingency resources

The third step in developing a contingency plan is to allocate the contingency resources, which are the funds or time that you set aside for the contingency amount. You can use different strategies to allocate the contingency resources, such as centralized, decentralized, or hybrid. The strategy you choose should depend on the level of control, flexibility, and accountability that you want for your project. You should also establish clear criteria and procedures for accessing and using the contingency resources, such as approval levels, reporting requirements, and documentation standards.

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4 Monitor and control the contingency plan

The fourth and final step in developing a contingency plan is to monitor and control the contingency plan, which is the process of tracking and managing the actual use of the contingency resources. You can use various tools and techniques to do this, such as variance analysis, earned value analysis, change management, and performance measurement. The goal is to ensure that the contingency resources are used effectively and efficiently to address the unexpected expenses and maintain the project objectives. You should also communicate and report the contingency plan status and performance to the relevant stakeholders and adjust the plan as needed.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Gohar Zaman, PMP?

Project Management Professional (PMP), Mechanical Project Engineer - Project Management, Engineering Design Management, Procurement and Construction.
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Contigency is one of the most critical thing for any project. Particularly talking about civil projects, the contigency plan shall be data driven and will vary from project to project considering many factors like: 1. Location/geography 2. Nature of construction / complexity 3. Clients expectation and past trends 4. External factors including political scenario around the project. So its important to consider the past data of variations for similiar project before considering an estimate for contigency in cost and schedule.

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How can you develop a contingency plan for unexpected expenses in civil engineering projects?

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1 Identify the sources of uncertainty

2 Estimate the contingency amount

3 Allocate the contingency resources

4 Monitor and control the contingency plan

5 Here’s what else to consider

Engineering Management

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How can you develop a contingency plan for unexpected expenses in civil engineering projects?

1

2

3

4

5

1 Identify the sources of uncertainty

2 Estimate the contingency amount

3 Allocate the contingency resources

4 Monitor and control the contingency plan

5 Here’s what else to consider

Engineering Management

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