Antonio LouroDirector Africa| Insight InternationalLuanda, Luanda, Angola
In big and complex projects a proper risk allowance (based on a PM risk analysis) should be included in the Contract. In my opinion this allowance should (could) be manage by an independent expert using simplified version of DRB and Adjudicators procedures! In my opinion this procedure could reduce claims and conflicts during the execution of the projects and will contribute towards the good completion and success of the project! Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
Let's work this out.
As you do your risk analysis, you will create contingency plans. The cost of implementing these contingency plans will become the contingency reserve. This reserve is managed within the project budget.
Senior management will also usually allocate an additional amount of money for unknown or unidentified risks. This is called the management reserve and is usually determined as a percentage of the project budget. The management reserve is NOT part of the project budget.
So the question becomes which of the reserve do you want to see independently controlled? Saving Changes...
Antonio LouroDirector Africa| Insight InternationalLuanda, Luanda, Angola
Stéphane thanks for your contribution.
In my opinion I would include both! As I have mention before risk management should be done on an open book basis! that would allow the Contractor to price the works without any risk factors and as such the cost is strictly to cover the work!
So at the end of the day you have a known cost for the works and your risk contingency allowances completely separated! It is then up to the contractor to notify the Client and independent risk certifier (let's call him that) any event that can be cover by the risk contingency / allowance! The independent risk certifier will assess the "claim" and decide if it is acceptable and how much should be paid (deducted form the allowance)! So the long and the short the Risk Management is pretty much in line with what contractors and project managers do with the diference that management is collaborative!
Best Saving Changes...
