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Choosing the right contract: probabilistic model.

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Title: Choosing the right contract: probabilistic model.
Authors: Stovin, Virginia1, Eccles, Stephen2, O'Reilly, Michael3
Source: Proceedings of the Institution of Civil Engineers. Civil Engineering. 2004, Vol. 157 Issue 2, p86-90. 5p.
Subjects: Civil engineering contracts, Cost, Contractors, Monte Carlo method, Estimation theory, Civil engineering
Abstract: The inherent risks of civil engineering projects mean the choice of contract can have a significant impact on cost and duration. In the absence of any quantitative comparisons, the decision tends to be based on qualitative criteria or personal preference — which may not result in the best solution either for the client or contractor Help is now at hand in the form of a spreadsheet-based, probabilistic model which uses a Monte Carlo simulation to plot the possible range of costs and durations associated with each type of contract. This paper shows how the model can be applied to a small tunnelling project making a comparison between fixed-priced and cost- plus-fixed-fee arrangements. The results are quite striking, showing the substantial potential cost savings offered by the cost-plus route in this case. [ABSTRACT FROM AUTHOR]
Copyright of Proceedings of the Institution of Civil Engineers. Civil Engineering is the property of Thomas Telford Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Database: Engineering Source
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PubType: Conference
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  Data: The inherent risks of civil engineering projects mean the choice of contract can have a significant impact on cost and duration. In the absence of any quantitative comparisons, the decision tends to be based on qualitative criteria or personal preference — which may not result in the best solution either for the client or contractor Help is now at hand in the form of a spreadsheet-based, probabilistic model which uses a Monte Carlo simulation to plot the possible range of costs and durations associated with each type of contract. This paper shows how the model can be applied to a small tunnelling project making a comparison between fixed-priced and cost- plus-fixed-fee arrangements. The results are quite striking, showing the substantial potential cost savings offered by the cost-plus route in this case. [ABSTRACT FROM AUTHOR]
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  Data: <i>Copyright of Proceedings of the Institution of Civil Engineers. Civil Engineering is the property of Thomas Telford Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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RecordInfo BibRecord:
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        Value: 10.1680/cien.2004.157.2.86
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        Text: English
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        PageCount: 5
        StartPage: 86
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      – SubjectFull: Civil engineering contracts
        Type: general
      – SubjectFull: Cost
        Type: general
      – SubjectFull: Contractors
        Type: general
      – SubjectFull: Monte Carlo method
        Type: general
      – SubjectFull: Estimation theory
        Type: general
      – SubjectFull: Civil engineering
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      – TitleFull: Choosing the right contract: probabilistic model.
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