The Contingencies Allowances in Project Budgeting
Gwaya Abednego1, Wanyona Githae2, Masu, Sylvester Munguti3
1Gwaya Abednego, Lecturer- Construction Management, Jomo Kenyatta University of Agriculture and Technology (JKUAT) NAIROBI, KENYA.
2Wanyona Githae, Senior Lecturer- Construction Management, Jomo Kenyatta University of Agriculture and Technology (JKUAT).
3Sylvester Munguti Masu, Senior Lecturer- Real Estate and Construction Management, University of Nairobi (UON).
Manuscript received on December 08, 2014. | Revised Manuscript received on December 15, 2014. | Manuscript published on January 05, 2014. | PP: 17-23 | Volume-3 Issue-6, January 2014. | Retrieval Number: F1963013614/2014©BEIESP
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© The Authors. Published By: Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Contingency allowances have been used as a tool in project management. However, project sponsors and financiers are not convinced with this type of budget arrangement. The utilization and dissatisfaction with the allowances lies at the discretion of the project team because these reserves are used to pay for changes in a project but at times they are seen as free floating project funds. The study aimed at establishing an empirical approach into the use of contingency allowances focused on substituting it with a more comfortable budget structure that was suitable to financials of projects. Adhering to a budget estimates and managing costs is arguably the most critical measure of a construction project success and as such there should be a more objective method of estimating the contingency funding required not the arbitrary percentage of the basic construction cost. The study undertook an exploratory investigation to establish objective data on use of contingency allowances in project. A questionnaire survey on the experiences and opinions of industry practitioners that is contractors, MOPW (Ministry of Public Works) and consultants on project budgets was circulated. Case interviews on budget checks to form insights, experiences and challenges from projects cost success were carried out and budgets interrogated for exposures and expectations of practitioners.
Keywords: Budget allowances contingency allowances, construction funds, project management, models.