Schedule Contingency Valuation Study

Please join us for an exciting technical session on a detailed look and analysis on how contingency can be optimized and valued on a CPM Schedule. As Construction Managers, we all want to finish a project on schedule, so please just us as the CMAA NCC partner with Prof Lucko and Prof Thompson from the CUA to look at this topic in detail and provide valuable information on contingency and schedule savings.

On a typical Critical Path Method (CPM) schedule for construction, there should be some amount of days of contingency included by the General Contractor. This contingency should be included in activities that are on the critical path in order to properly drive the end date. Each day of contingency has a dollar value that can be assigned to it. For every day that the project is late there are costs generated from assessed liquidated damages and from expenses due to extended general conditions. Conversely, there could be gains realized by savings generated from early delivery due to a reduction in expenses on general conditions or in earnings from an early completion bonus.

We are reaching out to Industry professionals and contractors in order to gauge the level of interest in such a study and would greatly appreciate your feedback and opinions. Starting with this as a baseline, and assuming that your work is on the critical path, our idea that this research tries to answer is:
"As a Subcontractor, would you pay a fee or premium to be able to add more days to the schedule for your work? This would allow you more time to accomplish your critical path work with less risk of running behind and delaying the project. You would be trading this fee for a portion of the reserved contingency. It could be thought of as a kind of insurance policy to help mitigate the risk of a late delivery and reduce the possibility of being assessed liquidated damages as well as incurring the extra expenses for extended general conditions. As a General Contractor, would you be willing to sell this contingency to the trades?"

About the Author:

Gunnar Lucko, Ph.D., M.ASCE is Ordinary Professor of Civil Engineering at Catholic University of America (CUA) and is Director of its Construction Engineering and Management Program, which is a specialization within the undergraduate and graduate studies in civil engineering. He has been a full-time faculty since 2005 and was promoted and tenured in 2011 and promoted in 2016.

He received his Doctor of Philosophy as a Vecellio Graduate Fellow from the Vecellio Construction Engineering and Management Program at Virginia Tech in 2003 and a Master of Science as a Fulbright Scholar in the same program in 1999. He also holds a diploma (Diploma-Engineer = Dipl.-Ing.) equivalent to a Master's degree with concentrations in structural and environmental engineering from Hamburg University of Technology in his native Germany.

His scholarship has been recognized with the 2017 Provost Award for Achievement in Research, the 2013 Daniel W. Halpin Award for Scholarship in Construction of ASCE, and the 2011 Thomas Fitch Rowland Prize of ASCE (which he shares with Dr. Rojas) for their journal paper on validation methods. The School of Engineering awarded him the 2013 Charles H. Kaman Award for Research Excellence and 2010 Burns Junior Faculty Fellowship. He has also received the 2009 Provost Award for Teaching Excellence in Early Career Faculty and the 2008 Kaman Award for Teaching Excellence.