I was in a budget review meeting today. As we started talking through contingency and escalation the conversation landed where it typically does: Do we have too much money in contingencies? Can we make a cut now?
The estimate in review is to establish the full funding request for a $3B+ project. I have the same conversations on $8M projects. Contingency is an easy cut to “get to budget”. Fortunately, on this project, the Owner is well informed and understood the risks of changing contingency as well as the need to have it in the budget.
As we talked through this I was struck by a comment that a reduction in contingency at this point is “buying hope”. They went on to explain that buying hope is cutting contingency on the premise you will do better than last time; that this job won’t be like the others so you reduce contingency based on hope that this job won’t need as much as historical data tells you.
I don’t have a concise closing statement, but I did like this comment and wanted to share with you.
douglas adams 