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Recently we have been asked to review a risk assessment that shored a probabilistic contingencies (cost and schedule) analysis, such as, for example, the AACE International Recommended Practice No. 57R-09, Integrated Cost and Schedule Risk Analysis Using Monte Carlo Simulation of a Critical Path Method (CPM) Model.
The client realized that common approaches such as:
are misleading and would leave them (their contract) vulnerable with severe “misunderstood” overexposures. The point was they were “suspecting” the above, but coud not find concrete answers to their questions.
Here are a few points we identified and reported to the client:
With that knowledge clients considerably strengthen their position, increase their overall understanding, and are guided toward beneficial contracts.
Indeed, Riskope has often been asked to review Projects‘ risk assessments and Projects’ time & cost estimates. In some cases we have supported the formulation of complex and rather large construction contract clauses, including Force Majeure for which the parties had formulated a common practice project risk approach. A conceptually correct risk assessment ensures fair and competitive pricing or even a competitive leading edge, by giving the necessary base to a healthy cost & schedule contingency evaluation and solve the situations described above.