Contingency Budget of a Construction Project

Running head: CONTINGENCY BUDGET IN A CONSTRUCTION BASED PROJECT
Contingency Budget of a Construction Project
Student’s Name
Institution’s Affiliation

CONTIGENCY BUDGET OF A CONSTUCTION PROJECT
Contingency budget
Contingency budget is the fund that is set aside to cover an expected cost that may occur
in the running of the project. This is reserve money and is acts as an insurance against other cost.
Most construction companies mainly use 5%-10% of their total budget to determine their
contingent reserve. This may cover most of the costs that may arise during the running of the
project. Its however not advisable to use a lesser rate than that percentage and setting a higher
rate can impend the project as it means more money will be set aside than necessary (Shane,
Molenaar, Anderson and Schexnayder 2009), When budget contingency is not done issues that
may arise it may cause delay in the completion of the project. For example a contingency budget
of $15,000 but only$7,000 is set aside for specific risk that may arise $8,000 is added to cover
unpredicted costs example $2,000 scheduling risk, weather risk $5,000 and other risks$8,000 the
total contingency budget is$15,000. The most critical step of development and coordination of
construction related plans is to consider and review the current technologies, procedures, process
that apply to a particular organization in order to establish a proper contingent plan
Establish contingency plan task
Review existing technologies process standards and procedure
This includes, process, standards and procedures should be assessed in order to understand all
the items that needs budget contingency plan, the process of contingency development involves
proper knowledge of risks that are available in the current technologies process.
Standards, procedure, and identifying ways that this risk can be controlled and managed in order
to control contingency plan objectives are the outcomes that are expected from contingency plan
in case of major risk or disaster.
Clarify Contingency objectives and scope with client:

CONTIGENCY BUDGET OF A CONSTUCTION PROJECT
Every organization has a different objective, these objectives are supposed to be in line with the
contingency planned the client expectations. Contingency planning objectives includes planning
of evacuation services in case of any eventuality and the documents containing the organization
information are not tempered with or destroyed. All the organization assets are properly
protected, case of any disaster occurring organization information can be retrieved in case of any
risks that may occur due to human error either deliberately or otherwise, organization is able to
prepare for a major disaster or catastrophe and thee organization will continue with its operation
despite the disasters occurring.
Establish contingency planning team if required and assign responsibilities with the team:
This entails, Personnel and resources allocation, this refers to a group of selected team of
members who are selected and allocated their jobs according to the skills that have, knowledge
and their understanding on the organization needs .they include, human resources management
media and communication the management and the technical management.
Conduct Impact assessment:
Prepare comprehensive list of potential incidences:
These can be identified through proper assessment of the concept, environment,
procedures, and the materials used in the running of the project. They include both the minor and
major incidents that occur such as, terrorist activities, fires, natural calamity, damages of the
properties belonging to the organization whether the destruction was done intentionally or not, in
case of a death or arrest of an employee(Bakhshi and Touran 2014).
Rate each potential incident for impact severity level:
Rating of these incidents can be based according consequences .areas of impact when