TITLE:
Evaluation of the Adequacy and Utilization of Contingency Fund in Building Projects in Nigeria
AUTHORS:
O. F. Akinradewo, O. A. Awodele
KEYWORDS:
Additional Cost, Base Line Estimate, Contingency Fund, Final Cost and Nigeria
JOURNAL NAME:
Open Access Library Journal,
Vol.3 No.9,
September
28,
2016
ABSTRACT: Contingency fund is allowed in the cost estimate to cater for risks which always lead to additional cost. The study used archival data to assess the accuracy of contingency sum and utilization among various types of claims. Data collected were analysed using percentile and Pearson’s coefficient of correlation. The study reveals that the current allowance as contingency is 5% of the base line estimates while additional cost is 18% which implies a shortfall of 13%. Furthermore, the study shows that the relationship among contingencies, base line estimates and final cost is statistically significant at 0.01. The study concludes that using percentage in allocating contingency based on subjective approach or at the discretion of the consultants is grossly inadequate. The study recommends that allocation of contingency sum should be based on cost analysis of similar completed projects and that a realistic contingency sum should be about 20% of the base line estimate.