Factors affecting cost contingency in the construction industry – Contractors' perspective

Abstract

The main objectives of this paper are to identify the major factors affecting cost contingency amount, evaluate their impact on cost contingency and their degree of consideration in bid estimates by construction contractors in the Gaza Strip. A questionnaire was developed to identify contractors' viewpoints regarding the impact of the identified 61 factors on cost contingency amount and their degree of consideration in bid estimation. These factors were categorized into 12 groups. Border and tunnels closure was ranked as the most important factor that impacts the cost contingency amount; it was also ranked by the respondents in the first position that is considered by local contractor in bid estimation process. The findings of this research will help the contractors in pricing cost contingency more efficiently by realizing the top most factors that impact the cost contingency amount. It will also help the donors and clients in identifying the base reasons of increasing contractor bid estimate and taking the required procedures to avoid it. Contractors should identify and evaluate the reasons for using cost contingency amount during the estimate process. Contractors are advised to prepare a method statement and work plan for each project taking into consideration its reality, complexity and type. Project resources such as materials and equipment should be assessed and planned throughout estimate preparation process.