Contingency Cage Match: Simultaneous Contingency Assessment Methods, A Case Study

our main methods of contingency assessments supported by AACE, two offer reasonable sophistication and detail: recommended practice 41R-08 Range estimating (Monte Carlo simulation); and, 42R-08 Parametric estimating (systemic analysis). Both offer probabilistic results, risk register integration and leverage project team’s knowledge and expertise. There are proponents within AACE of both methods who expound their favored approach (this Author being no exception). The ideal rapprochement is to use both methods simultaneously to offer two sets of “data points” on possible project cost outcomes. In the real world, budgets and project team availability, preclude this contingency Utopia.
In 2012, the Author had the opportunity to simultaneously complete both methods on a large, now substantially complete, project. This paper will review the project’s post mortem implementation of the two contingency approaches; their predictive results against actual results; and, consultant and project team hours expended for each method.
Who will win this Contingency Cage Match? Will there be a clear winner? This paper will review the effort - accuracy relationship between the two approaches along with other time saving methods.
ABOUT THE SPEAKER
Matthew Schoenhardt, P.Eng, MBA, PMP, RMP
Matthew has over 20 years of project experience covering a broad range of industries including manufacturing, heavy industry, food processing, infrastructure with a particular focus on the oil and gas industry. A big picture thinker with an intrinsic desire for logical, efficient processes, Matthew approaches projects from a business perspective with a clear understanding of the profit motive. With the mantra “predictability is better than perfection” Matthew has streamlined processes and developed coherent stage-gate processes. His natural affinity for numbers has allowed the creation of world-class models. In these, Matthew’s curiosity naturally led to a desire for better uncertainty, risk and contingency assessments. After completing over $100B of assessments on hundreds of projects, Matthew is familiar with all methods of risk management. As an expert in the field, Matthew is one of North America’s foremost practitioners of the parametric/systemic approach and published several papers on capital project risk management. Despite his logical quantitative bent, Matthew is both effusive and engaging in demeanor and was ranked as the #1 overall speaker at AACE 2016.