Contingency Reserve Research Articles

A simheuristic for project portfolio optimization combining individual project risk, scheduling effects, interruptions, and project risk correlations

This paper introduces a simheuristic method to the Project Portfolio Selection Problem, designed to maximize the net present value of the portfolio while considering uncertain costs, schedules, interruptions, and inter-project risk correlations. The novel approach combines techniques from Monte Carlo simulation, critical path analysis, queuing theory, and optimization, integrating baseline schedules, project-level uncertainties, budgetary constraints, and risk correlations in a single model. A computational experiment is conducted on a realistic set of ten candidate projects and validated respect to the deterministic version of the problem, demonstrating its ability to select near optimal portfolio proposals with varying combinations of risk and net present value. The findings highlight the significant impact of factors such as contingency reserve allocation policies, operational interruptions, and project risk correlations on portfolio decisions, constituting a helpful framework for the decision-makers at portfolio level.

Brazil and BRICS Plus in the new phase of multipolar (de) globalization

This article analyzes the geopolitical and economic transformation driven by the BRICS and its expansion into BRICS+. The BRICS, composed of emerging economies and influenced by the Goldman Sachs report, established the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) as alternatives to the World Bank and IMF. Cooperation between Russia and China intensified following Western sanctions and the war in Ukraine. The article also discusses social inequality within BRICS+ and the bloc's limitations in confronting the New World Order and imperialism. It concludes that BRICS+ still operates within the confines of global capitalism, offering few substantial solutions to the challenges of labor and environmental exploitation.

Dynamical Analysis and Sliding Mode Controller for the New 4D Chaotic Supply Chain Model Based on the Product Received by the Customer

Supply chains comprise various interconnected components like suppliers, manufacturers, distributors, retailers, and customers, each with unique variables and interactions. Managing dynamic supply chains is highly challenging, particularly when considering various sources of risk factors. This paper extensively explores dynamical analysis and multistability analysis to understand nonlinear behaviors and pinpoint potential risks within supply chains. Different phase portraits are used to demonstrate the impact of various factors such as transportation risk, quality risk, distortion, contingency reserves, and safety stock on both customers and retailers. We introduced a sliding mode control method that computes the sliding surface and its derivative by considering the error and its derivative. The equivalent control law based on the sliding surface and its derivative is derived and validated for control purposes. Our results show that the controller SMC can significantly enhance supply chain stability and efficiency. This research provides a robust framework for understanding complex supply chain dynamics and offers practical solutions to enhance supply chain resilience and flexibility.

Analysis of Barrier and Driver Factors to Risk Monitoring and Control Implementation in Construction Projects

Construction projects inherently involve risks. If proper risk management practices are not employed, the likelihood of cost overruns can reach more than 80%. Risk monitoring and control are essential processes in risk management; however, their implementation is inadequate in construction projects. This research analyzed the main barriers and drivers for implementing risk monitoring and control in construction projects. A questionnaire survey was conducted using a Likert scale to measure respondents' perceptions. Data were collected from 71 respondents: top management, project managers, project risk managers, and risk officers. This study employs descriptive analysis and factor analysis to achieve the objectives. The results indicate that the 19 identified barriers to risk monitoring and control were categorized into 4 main factors: lack of practice, lack of risk awareness, lack of incentives and having difficulty finding methods, and misperceptions about risk monitoring and control. Meanwhile, the 21 drivers were categorized into 5 main factors: management support, tools and information technology, organizational structure and communication, external environment, assigning responsibility, and contingency reserve.

BRICS expansion: new geographies and spheres of cooperation. Editorial for special Issue

Starting from January 1, 2024 the ranks of the BRICS grouping expanded to include new regional powers from the Global South. The paper aims to explore the implications of the new composition of the BRICS grouping for the vectors of its economic cooperation. The conclusion reached in the paper is that the widening of the ranks of the BRICS raises the importance of coordinating policies in the economic sphere, macroeconomic policy specifically, with particular attention to reforming the BRICS Contingent Reserve Arrangement (BRICS CRA). To estimate the prospects of the BRICS development after the expansion is to assist the group’s financial institutions, including the New Development Bank and the BRICS CRA, in the creation of a diversified array of policy instruments aimed at providing support for economic development of the expanded BRICS association members.

Risk Perception-Based Project Contingency Management Framework

Project risk management (PRM) involves identifying risks, assessing their impact, and developing a contingency plan. A structured contingency management (CM) approach prevents subjective biases in analyzing risks and developing responses. Previous studies have either focused on improving the accuracy of risk estimates or analyzed, from a qualitative perspective, the relationships between perceived risk and project performance. This study aimed to improve PRM by providing a risk-perception-based contingency management framework (CMF). The CMF guides contingency depletion based on two short- and long-term cost overrun indicators and their respective thresholds. Thresholds and the initial contingency reserve amount are determined by applying the Monte Carlo method to a stochastic, discrete-event, finite-horizon, dynamic project simulation model. The study developed the CMF through a structured approach, validating the simulation model on eight specific project configurations. The results prove that the framework can be applied to any project, shaping the risk response strategy. This study contributes to PRM by explaining the relationships between risk perception and risk responses and providing a prescriptive CM tool.

A descaracterização da política de financiamento da CT&I: uma análise do FNDCT

Abstract This study aims to critically analyze the mechanisms that depletethe Brazilian fund for the development of science and technology (FNDCT), jeopardizing its ability to promote economic and social development. Data were extracted from the integrated budget and planning system (SIOP) bases and the budget execution report between 2012 and 2021, made available by the Brazilian funding agency FINEP. The quantitative results indicate a process of “dehydration” due to changes such as the regulation that allows the executive to redirect resources previously earmarked for the fund (called DRU), the formulation of the legislation on the annual budget (PLOA) and the contingency reserves. The qualitative analysis shows a mismatch between the promise of a bold and innovative science and technology policy and a centralized and bureaucratic governance structure. Sectoral funds do not face, on average, problems in raising resources. However, the centralized management subservient to fiscal austerity policies leads to quantitative insufficient budget execution and qualitatively poor diversification. As outcomes, this situation mischaracterizes the ST&I funding policy, failing to comply with the promise of development through innovation.

Temporal-Aware Deep Reinforcement Learning for Energy Storage Bidding in Energy and Contingency Reserve Markets

Temporal-Aware Deep Reinforcement Learning for Energy Storage Bidding in Energy and Contingency Reserve Markets

Analyzing the Global Dynamics: Brics Navigating Uncertainty and Challenging U.S. Hegemony

This article delves into the transformative role of the BRICS alliance comprising Brazil, Russia, India, China, and South Africa in the context of a dynamically evolving global landscape and the challenges presented by traditional U.S. hegemony. An interweaving theoretical framework, incorporating concepts of multipolarity, economic interdependence, and strategic alliances, provides a comprehensive lens for understanding BRICS' endeavors in navigating contemporary uncertainties. Economically, BRICS demonstrates a steadfast commitment to restructuring the global economic landscape through innovative initiatives such as the New Development Bank and the Contingent Reserve Arrangement, aiming to reduce reliance on established Western dominated financial systems. Diplomatically, BRICS positions itself as a cohesive entity on the global stage, advocating for a multipolar world order while challenging the unilateralism often associated with U.S. hegemony. Despite challenges like divergent economic structures and the imperative for institutional reforms, the way forward for BRICS involves intensified economic integration, strategic diplomacy, adaptive institutional frameworks, and proactive project implementation. This abstract underscores BRICS as a pivotal player in the paradigm shift of the international system, exemplifying the rising influence of emerging economies and their collective resolve to shape a more equitable and multipolar global order

The COVID-19 Response of BRICS and Multilateral Development Banks

This article conducts an analysis of the BRICS member countries in terms of their national and international institutions, with a special emphasis on how these institutions affect the stability of the global financial system and the promotion of development. To this end, the work was guided by the attributions of national central banks and the role played by the G20 in maintaining international financial stabilization. Additionally, the analysis examines the activities of national development banks and their institutions established within the BRICS nations, such as the Contingent Reserve Arrangement and the New Development Bank. The descriptive method was used to interpret the dynamics of international political and legal relations. The article concludes by recognizing the decreasing significance of multilateral solutions and highlighting the need for the national central and development banks of the BRICS countries to engage in communication with international organizations of financial cooperation.

BRICS as New Alternatives in Reforming International Financial Institutions and Economic Partnerships

The article aims to examine the role of the combined economies of Brazil, Russia, India, China and South Africa (BRICS) in reforming the international financial institutions and economic partnerships. BRICS offers new values and serves as alternatives for both its current and prospective members in having an equal access to source international investments.. The arguments revolve around BRICS’ strategies to create an effective development program that not only revolves around their own growth agendas. In addition, BRICS have greater goals on establishing global trade relations and economic partnerships through the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) among many others. The discussion also focuses on other several key research areas related to BRICS’ efforts in promoting economic partnerships and the overall impacts of the partnerships. By emphasizing the shared interests of developing nations and emerging markets, giving high-quality economic and trade development priority, promoting true multilateralism, and highlighting opportunities in emerging fields to contribute more to an open global economy, this paper offers recommendations for BRICS’ future development. This study uses qualitative method to achieve the objectives of this study. The most fundamental characteristic of qualitative research is seeing the problems studied from the perspective of the subjects studied.

Exchange Rate Fluctuation and Management of Foreign Donor-Funded Program Budget

The study was about the effect of exchange rate fluctuation on the management of foreign donor-funded program budgets. Humanitarian and development agencies receive funding from foreign donors, who require the program budgets and financial reports in their respective country currencies although the actual utilization of the budget in the host country’s local currency during the program implementation. The study explored currency conversion methods and identified the best principles for effective management of the effect of exchange rate fluctuation. The research design used was both quantitative and qualitative where relevant literature related to exchange methods, donor requirements, and average monthly exchange rate data were reviewed. The sampling year used in this study is 3 years, 2021 to 2023 and the currency sample selected was Uganda Shillings (UGX) and United States Dollars (USD). First In and First Out (FIFO), Weighted average exchange rate methods, and daily spot rate methods were the most common currency conversion methods identified during the study. The study further noted the currency conversion method chosen should be documented in the written financial manual of the grant holder for reference. The study identified budget monitoring, requests for budget amendment, effective planning, provision for contingency reserves in the budget, and constant communication with the donors among the best ways to manage the effect of exchange rate fluctuation. The Study, therefore concluded that exchange rate fluctuation has either adverse or favorable effects on foreign donor-funded program budget and needed to be closely monitored and communicated to the donor for further guidance. Keywords: Exchange rate, Fluctuation, Foreign Donor- funded, Program and Budget.

Influence of cost contingency management on project estimates at completion

The Earned Value Management (EVM) methodology provides an index-based Estimate at Completion (EAC) formula to forecast the final cost of an ongoing project. However, neither the EVM methodology nor the literature in cost forecasting considers the occurrence of risks and how the cost contingency reserve (CC) is used to mitigate them. This study proposes a risk-adjusted cost EAC methodology based on nonlinear regression that captures the CC spending profile and exploits it to improve the EAC forecasting performance. The CC spending profile reflects the preventive, neutral, or reactive risk management strategy (RMS) adopted, which dictates how the CC reserve is depleted throughout the project execution. The framework was tested on a dataset comprising 79 constructions and engineering projects to evaluate its performance across the projects’ early, mid, and late stages. Results show that the proposed methodology provides timely forecasts—mean absolute percentage error (MAPE) improves as the project progresses—and that a proactive RMS is the most reliable one in all stages, with MAPE values of 14.57%, 12.28%, and 11.42%, respectively.

Appropriate budget contingency determination for construction projects: State-of-the-art

Contingency is a critical component in the cost estimation process for any construction project. The contingency reserve considers potential costs related to risks and uncertainties associated with construction projects. It is usually assumed to damp any resulting uncertain monetary impact and to prevent project cost overrun. Many contingency calculation methods for construction projects proposed in literature ranged from simple percentage to complex mathematical methods. Deciding the optimum contingency method for a given project at a given phase represents the main challenge in cost estimation process. This study presents a comprehensive compilation of all contingency calculation methods and divided them into three main groups: deterministic, probabilistic, and modern mathematical methods which have been discussed in details. Appropriate method for estimating contingency amount depends on many criteria such as project peculiarity, complexity, ease of method used, and the accuracy level of the estimates. This study proposed a practical guidance approach for construction agencies to choose their appropriate cost contingency method.This research is expected to help agencies/owners in the budget development stage to allocate a contingency budget for their construction projects.

BRICS Countries’ Increasing Role in the world economy, Including Institutional Innovation

This paper seeks to determine whether the BRICS group has lived up to the expectations that their influence in international economic governance will increase. Stellar economic performance and the resulting well-being are important factors that may cause this influence to grow. However, there has been increasing recognition that welfare does not depend merely on income but on a broader set of indicators as exemplified by the Millennium Development Goals (MDGs) or the Sustainable Development Goals (SDGs). BRICS may increase their influence through their achievements on the social front and their soft power. Using simple statistical methods to examine their macroeconomic performance the paper found that only China and India had done well and lived up to the initial expectations. The social achievements of the BRICS have also been limited. The BRICS have sought to translate their dissatisfaction with the IMF and the World Bank into establishment of the New Development Bank (NDB) to provide loans for infrastructure projects and the Contingent Reserve Arrangement (CRA) to cover the needs for financing balance of payments deficits. The paper examines the working of these organizations to find out if they have been successful in meeting their objectives. The results of the analysis allows us to conclude that the NDB has been successful, unlike CRA, which proved to be ineffective.

Hybrid fuzzy arithmetic-based model for determining contingency reserve

Calculating an accurate contingency reserve amount is vital to managing construction project costs and risks. Current methods for determining contingency have limitations in incorporating risk response actions (RRAs), accounting for insufficient quantitative historical data, considering time-dependent variables, and capturing cause-and-effect interactions between risk events (REs) together and with RRAs. This paper presents a hybrid fuzzy arithmetic-based contingency reserve model (HFACRM) that addresses these limitations by 1) considering time-dependent probability and impact values of risk events and RRAs, 2) modeling causal relationships among variables affecting contingency, and 3) addressing subjective uncertainty of linguistic evaluations in risk management. HFACRM considers more realistic complexities and characteristics of projects compared to other models, resulting in a significant improvement in the accuracy and effectiveness of determining contingency reserve. A wind farm power generation project was used as a case study to demonstrate and validate HFACRM.

Developing a progressive model for managing project Contingency reserve

Developing a progressive model for managing project Contingency reserve

Simulating the GB power system frequency during underfrequency events 2018–19

AbstractLightning hit a transmission power line outside London, England on 9 August 2019. There followed a loss of power from a cascade of generator outages that exceeded contingency reserves, leading to an exceptional fall in grid frequency causing widespread transport disruptions and the disconnection of over 1 m households. Simulating such events typically involves a system of differential equations representing the overall generation and load present at the time. A standard model based on the swing equation assumes unlimited capacity in aggregated resources, and the availability of these services throughout the duration of the frequency deviation. In simulating the effect of outages on the GB Grid frequency on 2019/8/9, the effect of limiting these services to the capacity of resources engaged during the event is examined. It is shown that by taking these refinements into account the timing and extent of the frequency nadir can be successfully estimated. Insight is gained into the responses of various grid characteristics and how they interact with unplanned generation imbalances. Using this adapted model, further events on the GB grid are examined to validate the influence of these features. With the model’s effectiveness validated, novel mitigating measures to preserve the stability of a low-inertia grid can be evaluated.

Stochastic Security-Constrained Economic Dispatch of Load-Following and Contingency Reserves Ancillary Service Using a Grid-Connected Microgrid during Uncertainty

In the context of the growing penetration of renewable power sources in power systems causing probabilistic contingency conditions, a suitable economic dispatch model is decisively needed. There is a lack of research in the field of probabilistic mathematical formulation considering the uncertainties due to the stochastic nature of renewables and contingency occurrence, as it is a very complex problem to be solved. The most appropriate model is the stochastic security-constrained economic dispatch (SSCED) model for optimized economic dispatch decisions during uncertainty. However, because of its complexity, it is rarely employed. This paper attempts to solve the complex SSCED problem in the presence of the uncertainty of resources and probabilistic contingency conditions, which is a novel effort in this regard. The SSCED is carried out over multiple periods to provide the load-following or contingency reserves. In the proposed SSCED, the uncertainty problem is addressed by modeling the stochastic wind energy power source by using “probability transition scenarios”. The uncertainty caused by probabilistic contingency conditions in the dispatch schedule is approximated using a “state-specific transition matrix”. The frequency control reserves in contingency conditions are co-optimized with energy, and stochastic security-constrained economic dispatch is achieved. The efforts are put forward to suggest a new market model in the presence of the uncertainty of renewable energy availability. Case studies are examined to show the potential technical and financial advantages of the proposed SSCED through co-optimization. Grid-connected microgrid owners offer frequency control ancillary services by providing load-following ramping reserves in the normal state and contingency reserves in the state of contingency. The probabilistic contingencies considered are generator failure and an underloading condition. A modified “IEEE 30 bus system” is considered a grid-connected microgrid for testing the proposed SSCED. The results show that the greater the flexibility of the resources, the greater the technical and economic benefits. The increase in ramping flexibility of a wind source results in almost an 8.1% reduction in operational costs compared to the base case. The contingency condition analysis shows that the presence of ramping reserves in the system enhances the power system performance, avoiding the cascading effects that ultimately cause a power system failure.

Optimal coordination of spinning and standing reserve with energy payback of thermostatically controlled loads

Thermostatic loads are expected to support the transition to low-carbon systems by providing an array of ancillary services. The delivery of energy-intensive services requires the thermostatic appliances to payback the deployed thermal energy via extra power consumption at a later time. This is made available by conventional generators providing contingency reserve. Previous works acknowledged the interplay between secondary response and contingency reserve. However, the structure of the payback period was fixed and did not fully consider the capabilities of generators providing contingency reserve, e.g., modelling only spinning generators while neglecting standing units. This paper introduces a novel methodology that allows to optimally coordinate the energy recovery of thermostatic loads and the allocation of contingency reserve among spinning and standing units. To do so, the commitment times and structures of secondary response and contingency reserve can be optimally chosen depending on system needs and current availabilities at each time step. The model is applied to the Great Britain network, which is connected to the power system in Continental Europe via a high-voltage direct-current link. Results illustrate the techno-economic advantages stemming from the proposed methodology.