Estimating post- and pre-mitigation contingency in construction

Contingency is necessary to mitigate and control risk associated with construction projects. Successful contingency estimation and risk mitigation strategies can help project managers to effectively control cost and schedule. Some practitioners mitigate risk by transferring it to another party with less effort and minimum cost. However, this may lead to undesirable results such as; useless depletion of contingency, cost overrun, and project delay. This paper differentiates between two types of project contingency; pre-mitigation, and post-mitigation. It also proposes a new estimation method for pre-mitigation and post mitigation contingencies using fuzzy set theory. The proposed pre-mitigation contingency estimation makes use of qualitative and quantitative assessment of risks associated with projects. Post mitigation contingency (POSTMC) estimation makes use of newly introduced planned efficiency factor (PEF). That factor is calculated using mitigation strategy cost, pre-mitigation contingency (PREMC) and several sub-factors such as; mitigation efficiency on probability (MEFP), mitigation efficiency on consequences (MEFC), and mitigation efficiency (MEF). This paper provides a decision support tool; expected to help project managers in estimating and evaluating pre-mitigation and post mitigation contingencies using a set of strategies during project life cycle. The evaluation of post mitigation efficiency allows user to update the risk mitigation plan (i.e. risk response plan) for future projects. In addition to that, it allows users to maximize profit and minimize cost without compromising the efficiency of the selected risk mitigation strategies. Numerical example is presented to illustrate the application and capabilities of proposed method in estimation the pre-mitigation and post mitigation contingency. It also