COST CONTINGENCY ESTIMATION: A NEW METHOD FOR QUANTITATIVE RISK ANALYSIS APPLIED TO A REAL CONSTRUCTION PROJECT

Abstract

The main objective of this work is to propose a method based on 
Monte Carlo simulation (MCS) to estimate the allocation of project 
cost contingency reserves in the planning phase, incorporating the 
different types of uncertainty described in the literature, associating 
them to each of the risks identified in the project. The method was 
applied to validate our proposal on an actual construction project 
carried out by the University of Valladolid (Spain).
Applying the proposed method has allowed us to obtain a more 
accurate estimate of cost contingencies than the method 
traditionally used by the company, which consisted of reserving a 
fixed and arbitrary percentage of the total project execution 
budget.