Contingency
fund is allowed in the cost estimate to cater for risks which always lead to
additional cost. The study used archival data to assess the accuracy of
contingency sum and utilization among various types of claims. Data collected
were analysed using percentile and Pearson’s coefficient of correlation. The
study reveals that the current allowance as contingency is 5% of
the base line estimates while additional cost is 18% which implies a shortfall
of 13%. Furthermore, the study shows that the relationship among contingencies, base line estimates and final cost is statistically significant at 0.01. The study
concludes that using percentage in allocating contingency
based on subjective approach or at the discretion of the consultants is grossly
inadequate. The study recommends that allocation of contingency sum should be based
on cost analysis of similar completed projects and that a realistic contingency
sum should be about 20% of the base line estimate.
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