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FACTORS AFFECTING THE CONTINGENCY BUDGET 
OF BRIDGE PROJECTS 
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y i t V E A S I T Y O F M O R A T U W A . S R I L A W K 
' *^-—«—- MORATUWA 
Niluksha Dushmanthi Madduma Liyanage 
09 8868 
Degree of Master of Science in Construction Project Management 
Department of Civil Engineering 
University of Moratuwa 
Sri Lanka 
November 2011 
University of Moratuwa 
102496 
102496 
D E C L A R A T I O N 
"I declare that this is m y o w n work and this dissertation does not incorporate without 
a c k n o w l e d g e m e n t any material previous ly submitted for a D e g r e e or D i p l o m a in any 
other Univers i ty or institute o f higher learning and to the best o f m y k n o w l e d g e and 
be l ie f it d o e s not contain any material prev ious ly publ ished or written by another 
person e x c e p t w h e r e the a c k n o w l e d g e m e n t is m a d e in the text. 
A l s o , I hereby grant to Univers i ty o f Moratuwa the non-exc lus ive right to reproduce 
and distribute m y thesis /dissertat ion, in w h o l e or in part in print, e lectronic or other 
m e d i u m . I retain the right to use this content in w h o l e or part in future works (such as 
articles or b o o k s ) . 
09 8 8 6 8 
N . D . M . L i y a n a g e 
Declarat ion . 
The a b o v e candidate has carried out research for the Dissertat ion under m y 
supervis ion . 
Date: So / M /2c\> Signature: 
Date 
Dr. L.L. Ekanayake 
MSc in Construction Project Management Dissertation 
DEDICATION 
Dedicated to 
My beloved parents, 
Sister, Brother and Husband. 
ii 
MSc in Construction Project Management Dissertation 
ABSTRACT 
Cost overrun in any sector brings bad image to the organisation and unrest to the 
professionals. The cost overrun can be resulted either due to risk events or non risk 
events. Possible non risk events in bridge projects are the scope changes, design 
changes, quantity increase and variations. However those non risk events produce a 
justification to the additional cost incurred and it enhance the value of the project 
adding more properties. 
On the other hand risk events take place unexpectedly and it wastes the project money 
and degrades the value of the project. Therefore in order to absorb this risk cost, 
without making any burden to the project, conventionally it is practicing to allocate 
contingency budget. 
However still the most road and bridge contracts do not meet set cost targets as a 
result of improper assessment of risk factors inherent in construction. The majority of 
time and cost overruns are attributable to either unforeseen or foreseen events for 
which uncertainties were not properly accommodated. The Sri Lankan practice is to 
add a 10% contingency sum in bill quantities to cover the risks or uncertainties. 
However, even with the presence of this contingency allocation, cost overruns still 
prevail in the industry. 
Identification of the root causes for the contingency budget overrun and presenting 
preventive strategies for the small bridge contracts cover the research topic. 
iii 
ACKNOWLEDGEMENT 
I must thank to many people who helped and supported me while engaging in this 
research. 
This research thesis could not have been prepared if not for the help and 
encouragement given by my research supervisor Dr.L.L.Ekanayake and I heartily 
thank him. 
Also I would like to extend my gratitude to Dr.Asoka Perera and Dr. Rangika 
Halwatura for the immense guidance and instructions given throughout the Msc. 
Course and research period. 
Further I extend my heartfelt thank to Mr. Sujeewa Wijewickrema for the courage 
given me at initial stage. 
Lastly, I offer my best regards and sincere appreciation to all of those who supported 
me in any respect during the completion of the research. 
N.D.M. Liyanage 
iv 
MSc in Construction Project Management Dissertation 
CONTENTS 
DECLARATION i 
DEDICATION ii 
ABSTRACT iii 
ACKNOWLEDGEMENT iv 
CHAPTER 1: INTRODUCTION 1 
1.1 Background 1 
1.2 Problem Definition 3 
1.3 Objectives 4 
1.4 Scope 4 
1.5 Methodology 4 
1.6 Main Findings 5 
1.7 Guide to the Report 5 
CHAPTER 2: LITERATURE REVIEW 7 
2.1 Background 7 
2.2 Risk Management 12 
2.3 Contingency Budget 13 
2.4 National Procurement Agency Guidelines 14 
2.5 National Procurement Agency Procurement Manual 15 
2.6 Practice of the Road Development Authority 16 
2.7 Variations 17 
2.8 Condition of Contract for Cost Control 18 
CHAPTER 3: METHODOLOGY 23 
3.1 Case Selection 24 
3.2 Evaluation of the Selected Methodology 25 
3.3 Methodology 25 
CHAPTER 4: CASE STUDIES 28 
4.1 Case 1 : Bridge No 31/4 on Galle Deniyaya Madampe Road 28 
4.2 Case 2 : Bridge No: 12/1 on Alawwa Dampellassa Road 31 
4.3 Case 3 : Bridge over Mahaweli Ganga on Balantota - Dekinda Road 36 
CHAPTER 5: ANALYSIS AND DISCUSSION OF RESULTS 43 
5.1 Analysis 43 
5.1.1 Case 1 : Bridge no : 31/4 on Galle Deniyaya Madampe Road 43 
5.1.2 Case 2 : Bridge no : 12/1 on Alawwa Dampellassa Road 47 
5.1.3 Case 3 : Bridge over Mahaweli ganga on Balantota - Dekinda Road 51 
5.1.4 Risk percentages 55 
MSc in Construction Project Management Dissertation 
5.2 Discussion 57 
5.2.1 Factors affecting the non contingency cost 57 
5.2.2 Factors affecting the price contingency cost 58 
5.2.3 Factors affecting the physical contingency cost 59 
CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS 62 
6.1 Conclusions 62 
6.2 Recommendations 63 
6.2.1 Recommendations for the non contingency cost 63 
6.2.2 Recommendations for the price contingency cost 63 
6.2.3 Recommendations for the physical contingency cost 64 
6.3 Recommendations for Future Research 65 
REFERENCES 66 
BIBLIOGRAPHY 68 
Appendices A: Data Gathered on Bridge Contracts 69 
Appendices B: Particulars of Galle-Deniyaya-Madampe Bridge 78 
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MSc in Construction Project Management Dissertation 
LIST OF FIGURES 
Figure 1 : Flow chart 25 
Figure 2 : Bridge No 31/4 on Galle Deniyaya Madampe Road 46 
Figure 3 : Bridge No 12/1 on Alawwa Dampellassa Road 49 
Figure 4 : Bridge over Mahaweli ganga on Balantota - Dekinda Road 53 
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MSc in Construction Project Management Dissertation 
LIST OF TABLES 
Table 1 : D o m e s t i c and fore ign funds rece ived to the R D A 2 
Table 2 : C o n t i n g e n c y percentages for different procurement m e t h o d 9 
Table 3 : R e c o r d s o f smal l bridge projects o f G O S L funding 2 6 
Table 4 : Se l ec ted critical bridge projects 2 8 
Table 5: Particulars o f Br idge 3 1 / 4 o n Gal le D e n i y a y a M a d a m p e R o a d 3 0 
Table 6: Particulars o f E x t e n s i o n o f T i m e for Gal le D e n i y a y a M a d a m p e Br idge 31 
Table 7: Particulars o f B r i d g e 1 2 / I o n A l l a w w a D a m p e l e s s a R o a d 3 2 
Table 8: Extra w o r k detai ls o f A l l a w w a D a m p e l e s s a R o a d 33 
Table 9 : Quanti ty Increase detai ls o f A l l a w w a D a m p e l e s s a R o a d 3 4 
Table 10 : Quantity Increase detai ls o f A l l a w w a D a m p e l e s s a R o a d 3 4 
Table 11 : Quanti ty Increase detai ls o f A l l a w w a D a m p e l e s s a R o a d 35 
Table 12: E x t e n s i o n o f T i m e particulars o f A l l a w w a D a m p e l e s s a R o a d 3 6 
Table 13: Particulars o f Balanthota Br idge 38 
Table 14: Extra W o r k Particulars o f Balanthota Br idge 3 9 
Table 15: Quantity Increase Particulars o f Balanthota B r i d g e 4 0 
Table 16: E x t e n s i o n o f T i m e particulars o f Balanthota Br idge 4 2 
Table 17: B r i d g e N o 3 1 / 4 o n Gal le D e n i y a y a M a d a m p e R o a d 4 3 
Table 18 : B r i d g e N o 3 1 / 4 o n Gal le D e n i y a y a M a d a m p e R o a d 4 4 
Table 19 : B r i d g e N o 3 1 / 4 o n Gal le D e n i y a y a M a d a m p e R o a d 4 4 
Table 2 0 : B r i d g e N o 3 1 / 4 o n Gal le D e n i y a y a M a d a m p e R o a d 45 
Table 21 : B r i d g e N o 12/1 o n A l a w w a D a m p e l l a s s a R o a d 4 7 
Table 2 2 : B r i d g e N o 12/1 o n A l a w w a D a m p e l l a s s a R o a d 4 8 
Table 2 3 : B r i d g e N o 12/1 o n A l a w w a D a m p e l l a s s a R o a d 4 8 
Table 2 4 : B r i d g e N o 12/1 o n A l a w w a D a m p e l l a s s a R o a d 4 9 
Table 2 5 : B r i d g e over M a h a w e l i g a n g a o n Balantota - D e k i n d a R o a d 51 
Table 2 6 : B r i d g e o v e r M a h a w e l i g a n g a o n Balantota - D e k i n d a R o a d 5 2 
Table 2 7 : B r i d g e o v e r M a h a w e l i g a n g a o n Balantota - D e k i n d a R o a d 5 2 
Table 2 8 : B r i d g e o v e r M a h a w e l i ganga o n Balantota - D e k i n d a R o a d 53 
Table 2 9 : S u m m a r y o f N o n Risk Cos t and Ri sk Cos t 55 
Table 3 0 : S u m m a r y o f Risk Percentages 5 6 
Table B . l : Quanti ty Increase o f Gal le D e n i y a y a M a d a m p e Br idge 7 9 
vi i i 
MSc in Construction Project Management Dissertation 
ABBREVIATIONS AND ACRONYMS 
BOQ - Bill of Quantities 
CAPC - Cabinet Appointed Procurement Committee 
CE - Chief Engineer 
DPC - Department Procurement Committee 
EE - Executive Engineer 
EOT - Extension of Time 
GOSL - Government of Sri Lanka 
HD - Head of the Department 
ICTAD - Institute of Construction Training and Development 
MOU - Memorandum of Understanding 
MPC - ' Ministry Procurement Committee 
PD - Provincial Director / Project Director 
PMBOK - Project Management Body of Knowledge 
RDA - Road Development Authority 
SBD - Standard Bidding document 
TEC - Technical Evaluation Committee 
VO - Variation Orders 
ix