MGMT624_GDB_3_by_Moon

[Moosa]

Contingency cost is defined as "An amount added to an estimate to allow for items, conditions, or events for which the state, occurrence, or effect is uncertain and that experience shows will likely result, in aggregate, in additional costs. Typically estimated using statistical analysis or judgment based on past asset or project experience.
Contingency cost should be included in the project proposal, because there are several factor which cause hurdles in the projection completion. These factors are as bellow:

1. Major scope changes such as changes in end product specification, capacities, building sizes, and location of the asset or project;
2. Extraordinary events such as major strikes and natural disasters;
3. Management reserves
4. Escalation and currency effects.

So the contingency cost should be added in the project proposal. As risks occur on a project, and money is needed to pay for them.

Dear friend this is an idea solution. You are advised to prepare your own.