Budgeting

Abstract- Contingency allowances have been used as a tool in project management. However, project sponsors and financiers are not convinced with this type of budget arrangement. The utilization and dissatisfaction with the allowances lies at the discretion of the project team because these reserves are used to pay for changes in a project but at times they are seen as free floating project funds. The study aimed at establishing an empirical approach into the use of contingency allowances focused on substituting it with a more comfortable budget structure that was suitable to financials of projects. Adhering to a budget estimates and managing costs is arguably the most critical measure of a construction project success and as such there should be a more objective method of estimating the contingency funding required not the arbitrary percentage of the basic construction cost. The study undertook an exploratory investigation to establish objective data on use of contingency allowances in project. A questionnaire survey on the experiences and opinions of industry practitioners that is contractors, MOPW (Ministry of Public Works) and consultants on project budgets was circulated. Case interviews on budget checks to form insights, experiences and challenges from projects cost success were carried out and budgets interrogated for exposures and expectations of practitioners. Key words- Budget allowances contingency allowances, construction funds, project management, models. I