The Influence of Project Risk on Building Construction Cost Contingency

Contingency costs estimation plays a crucial role in construction project management, as inaccurate allocation of contingency allowance can lead to significant cost overruns. However, in practice, the determination of contingency cost often relies on subjective judgment rather than empirical analysis. This study aims to examine the relationship between project risk and contingency cost using data from six high-rise building projects. The level of risk was evaluated based on the risk events that occurred during the construction phase, while contingency cost data were obtained from the company’s operational records. A simple linear regression analysis was employed to quantify the relationship between project risk and contingency cost. The results reveal a positive correlation, indicating that higher risk levels are associated with higher contingency costs. The regression equation, y = -0.692 + 0.092x, suggests that for every one unit increase in risk, the contingency cost increases by 0.092 units. These findings highlight the importance of systematic risk assessment in developing more objective and data-driven contingency cost estimation frameworks.