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Development of Contingency Value Analysis Model Using Cost-Time Risk Integration and WBS-Pareto Hybrid in Construction Projects


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DOI: https://doi.org/10.15866/irea.v11i2.23235

Abstract


The construction project stage generally consists of Preparation, Design, Pre-construction, Implementation, and Use. The main performance aspects at the implementation stage are cost, time, and quality. Cost and time planning is very important priority. Construction project implementation can be controlled so that it is efficient and effective without neglecting the quality specifications of construction project contract. Implementation costs and time of construction projects are affected by many variables, such as human resources, finance, materials, equipment, methods, and environment. These variables contain uncertainties that pose risks. The risks that arise can be managed through the stages of risk analysis, namely risk identification, assesment, mitigation and control. The impact of risk can be analysed in monetary units by using Expected Monetary Value (EMV) method. However, the EMV method has not been used to integrate Cost and Time risks in order to determine contingency values in the implementation of construction projects. Thus, research related to EMV needs to be studied further and in detail. The EMV method uses a probability (P) and impact (I) matrix risk analysis, called the PI matrixes. Risk identification and estimation is developed using a hybrid model between the Work Breakdown Structure (WBS) and the 80/20 (Pareto) principle. The monetary unit of time risk impact is developed based on the daily late fee, referring to the contract. This hybrid WBS-Pareto model has been applied to the implementation of the Regency Road Improvement project in the Province of Bali – Indonesia, and it has been found out that the Contingency Value reached 6.7% of the project cost. This result is still within the contingency value interval, which generally ranges from 5% to 10%. Therefore, the EMV method by using Cost-Time Risks integration and the engagement of WBS-Pareto hybrid can be used to develop a Contingency Value Analysis Model for identification and estimate contingencies as an easier and faster analysis among project teams during the implementation of construction projects.
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Keywords


Construction Project; Contingency Value; Cost-Time Risk; Implementation Stage; WBS-Pareto Hybrid

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References


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