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(RISK-2555) Contingency Cage Match: Simultaneous Contingency Assessment Methods, A Case Study

Level: Intermediate
Author(s): Matthew Schoenhardt, P.Eng.; Vachel Pardais
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: Of the four main methods of contingency assessments support by AACE, two offer reasonable sophistication and detail: recommended practice 41R-08 Range estimating (Monte Carlo simulation); and, 42R-08 Parametric estimating (systemic analysis). Both offer probabilistic results, risk register integration and leverage project team’s knowledge and expertise. There are proponents within AACE of both methods who expound their favored approach (this Author being no exception). The ideal rapprochement is to use both methods simultaneously to offer two sets of “data points” on possible project cost outcomes. In the real world, budgets and project team availability, preclude this contingency Utopia.

In 2012, the Author had the opportunity to simultaneously complete both methods on a large, now substantially complete, project. This paper will review the project’s post mortem implementation of the two contingency approaches; their predictive results against actual results; and, consultant and project team hours expended for each method.

Who will win this Contingency Cage Match? Will there be a clear winner? This paper will review the effort – accuracy relationship between the two approaches along with other time saving methods.