Stakeholder impact on cost contingency model (SICC)

Abstract

Effective management of projects has been a major research subject in the last century due to the increase of projects in all industries and fields, and the amount of money it attracts. The major problem facing project managers is the inefficient cost control procedures and the lack of management for the main cause behind the cost overrun, the stakeholders. This research develops the Stakeholder Impact on Cost Contingency (SICC) model. The SICC model is used to estimate the cost contingency of a project. The model takes into account five main stakeholders of the project: the project manager, the client/owner, the engineer, the contractor, and the government. Furthermore, the developed model analyzes the complete project life cycle: the conceptual phase, the design phase and the construction phase. The SICC model uses the Analytic Hierarchy Process (AHP) in order to determine the power weights of the stakeholders, the Multi Attribute Utility Theory (MAUT) in order to assess the impact level of the stakeholders on the project and finally the Fuzzy Set Theory (FST) to evaluate the likelihood of interference of the stakeholders during the three project phases. Finally, a Stakeholder Cost Contingency (SCC) is estimated. Data was collected from experts through interviews and questionnaires. The interviewees were sample experts in the field of management and engineering. Statistical and sensitivity analysis were performed on the collected power weights. The analyses show that the client has the highest power weight in the conceptual phase (33%), and that the Stakeholder Cost Contingency (SCC) values are sensitive to the client change in power weights, again during the conceptual phase. The developed model is applied to 35 projects. The results show that most values of the Stakeholder Cost Contingency (SCC) range between 8 to 14%. This research is relevant to engineering management practitioners and researchers, since it develops a tool for evaluating the cost contingency of projects due to stakeholders influence.