Dave Arquati wrote:


I doubt it. The £5.7m may well include a large contingency figure (+40%
is common).

Contingency for what exactly and why 40%. Notice how estimates for
anything these days are bumped up out of all proportion by addding all
kinds of non essential guff into it.
So now we have "regeneration costs" escalating the Olympics.
What are regeneration costs and I strongly suspect that the lottery
fund will pay for what should probably be Government expenditure.
If I submitted an estimate for anything and it contained contingency my
arse would be kicked out of the door.

Kevin

"Kev" wrote in message
ups.com...

I doubt it. The £5.7m may well include a large contingency figure (+40%
is common).

Contingency for what exactly and why 40%.

Is it just possible that the treasury keep a running total of previous
project overruns? I think they call it 'optimism bias' or some such.

Paul

Paul Scott wrote:
"Kev" wrote in message
ups.com...

I doubt it. The £5.7m may well include a large contingency figure (+40%
is common).

Contingency for what exactly and why 40%.

Is it just possible that the treasury keep a running total of previous
project overruns? I think they call it 'optimism bias' or some such.

Basically, yes. The Treasury has evidence that estimates are routinely
biased (optimistically) by people appraising projects, so they have a
set of optimism bias figures that they require to be built into projects
that they fund. The figure varies depending upon the type of project.

http://www.hm-treasury.gov.uk./media...imism_bias.pdf

For public works not directly funded by the Treasury, various standards
exist, and can vary from small figures like 5% for small, fairly
predictable works like road resurfacing, to larger figures like 40% for
big construction projects.

--
Dave Arquati
www.alwaystouchout.com - Transport projects in London

Kev wrote:
Dave Arquati wrote:


I doubt it. The £5.7m may well include a large contingency figure (+40%
is common).

Contingency for what exactly and why 40%. Notice how estimates for
anything these days are bumped up out of all proportion by addding all
kinds of non essential guff into it.
So now we have "regeneration costs" escalating the Olympics.
What are regeneration costs and I strongly suspect that the lottery
fund will pay for what should probably be Government expenditure.
If I submitted an estimate for anything and it contained contingency my
arse would be kicked out of the door.

If they knew what they were making contingencies for, they wouldn't have
to make contingencies...

Estimates for public works are rarely accurate - there are so many risks
involved. 40% is considered an appropriate amount to mitigate against
these risks. It would be more irresponsible *not* to budget for risks in
these works - if something unforeseen then came up, everyone would
complain that the public body should have considered such difficulties
before budgeting!

I'm not sure what you submit estimates for, but I suspect the risks are
largely in your control. That cannot be said for public works.

Besides, if you ever use insurance, that's a contingency fund.

--
Dave Arquati
www.alwaystouchout.com - Transport projects in London