Publications / CCC 2025 - Zadar, Croatia
Cost contingency is typically defined as an amount added to the base cost estimate to cover uncertainty and risk exposure. Contingency is included in the client's project budget. To decide on the contingency amount, clients refer to experience (recorded in a manner specific to the business entity) and analysis of risk related with a project (initial - based on information available at the moment of defining the budget). The literature argues that progress in data analysis techniques will enhance predictive powers of cost planners. However, the plausibility of predictions depends on the reliability of input, and the accuracy is the effect of a particular project team's ability to react to an individual combination of "problems" encountered in the course of works under constraints of a particular contract. This paper investigates into recent developments in contingency planning focusing on the assumptions behind the tools and methods. On the basis of a sample of recent research papers (2021-2025) the authors conclude there is no paradigm shift in the general approach to risk-aware budgeting of projects. However, the analyses behind this process have a great potential of being integrated and accelerated with machine learning and artificial intelligence.