Expecting the Unexpected: How Contingency Planning can Save Your Build Project (2024)

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By Mike Niezer, RARon Dick, AIA, LEED AP

May 1, 2024

Starting a build project can be intimidating, even if you’ve had experience with it before.

There are so many factors that go into a successful project, so where do you even begin? We sat down with two experts in the design field, Ron Dick (Founding Partner and Architect) and Mike Niezer (COO and Architect), to talk about everything you need to know about the entire process. They discussed what to do before you start a project, the three essential parts of a project, developing a contingency plan, and how to set a realistic schedule for your project.

Expecting the Unexpected: How Contingency Planning can Save Your Build Project (1)

Expecting the Unexpected: How Contingency Planning can Save Your Build Project (2)

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Follow along with this series to hear what they have to say about each step in the process.

In our first post, (Before you Start: Setting your Project up for Success) we began with why it’s critical for architecture and design teams to ask questions and really listen to the answers BEFORE getting started. We then reviewed the three essential parts of an overall project (Understanding the Three Essentials of a Successful Build Project: Quality, Cost, and Size).

In this segment, we look at the importance of developing a contingency plan for your project.

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Mike Niezer: We know project cost is always important, every project has a budget.

There are all kinds of different alternatives for decision points in the project, and our job is to help advise the client on good, better, and best options for as many of those decision points as possible. We spend a lot of time and effort in the design phases to make sure this all lines up, but there are all kinds of variables that impact cost, and sometimes those are things we can’t control. Market conditions, inflation, material escalation, labor shortages, exorbitant lead times, product discontinuation, and inclement weather, are some examples. The reality is, there is a change management component of design and construction that is just a part of the process. The expectation going into any project is that you’re going to run into a few of those.

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Ron Dick: So with that said, how can we anticipate these changes and manage them in a good way?

This is where we really advocate for establishing a contingency for the project, to protect the client from unexpected costs that may arise during the process. It’s really smart to budget for this in the design phase, and adjust that contingency as the design progresses and those early assumptions are confirmed into project criteria. Through the design process, you’re really trying to make those unknowns known, but even then there will always be surprises in the construction phase. If it’s a renovation project, for example, you may find something behind a wall that you didn’t know was going to be there. That’s why we advise clients include contingency costs in any project budget, to accommodate the unexpected. A contingency schedule isn’t a bad idea, either.

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Mike Niezer: That’s exactly right.

Big picture, we don’t know with certainty what those change factors will be, but contingency planning is one of the best ways to protect against unexpected changes, and still maintain the other non-cost related project goals as well. We don’t ever want our clients to feel like they have to sacrifice quality or program with an unexpected change – unfortunately sometimes that is the reality – but if we can help guard against that, the project is ultimately better for it. Bottom line is, it’s always wise to have a contingency plan.

The shift in the interior design approach in healthcare facilities is allowing what used to be a typically sterile and clinical environment to move into warm, inviting, and enjoyable spaces for providers and patients. An efficient and durable healthcare design should be equal t

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Ron Dick: There’s this whole other side of soft costs, too.

Furniture, fixtures, and equipment (FFE), A/V, artwork, and signage are some examples of things that sometimes get overlooked, but are obviously important to plan around. Some project types in particular can run pretty high with soft costs – healthcare, for instance, can have significant budgets for major medical equipment, technology, etc.

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Mike Niezer: These soft cost examples should be budgeted for, but they’re usually a separate bucket from other “hard” construction costs that are included by the General Contractor.

This isn’t to say that the Contractor won’t or doesn’t still coordinate their work around these other areas of work, but the responsibility to procure those elements and perform their installation is normally done by the Owner or delegated elsewhere. We’ve seen soft costs comprise anywhere from 15% to 30% of total construction cost, and it really just varies based on the type of project and specific requirements. Selecting the right design and construction partners can definitely help plan for these things in the budgeting phase to make sure the budget is inclusive of everything, not just construction costs.

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Stay tuned for our next conversation on the design process, when we dig into setting realistic project schedules.

o a healing and personable design. So, when you think of fun and funky interior design, you may not be far off these days applying that to healthcare design. Changing the way these spaces feel through interior elements can help medical professionals provide the best possible care for patients.

Post Tagged in

Architecture, Engineering, Interior Design

  • Author

    Mike Niezer, RA

    Partner,Director of Operations,

    Mike Niezer is a registered architect at Design Collaborative and serves as Healthcare Studio leader and Project Manager. Mike’s experience in healthcare ranges across various project types, including hospitals, outpatient clinical settings, and medical office buildings. He is the recent president of the Fort Wayne American Institute of Architects and is actively involved in the…

    Read Full Bio

  • Author

    Ron Dick, AIA, LEED AP

    Partner,Senior Architect,

    Ron is a founding partner of Design Collaborative and leads our workplace and financial studio. He has over 30 years of professional experience as an architect. He has a passion for finding efficient and effective solutions and driving projects forward while building consensus among stakeholders. He is the ultimate point of accountability for our team’s…

    Read Full Bio

Expecting the Unexpected: How Contingency Planning can Save Your Build Project (2024)

FAQs

Expecting the Unexpected: How Contingency Planning can Save Your Build Project? ›

Building a contingency fund into your initial budget helps you avoid being stung by unexpected costs. If your build goes smoothly and no problems come up, all that happens is you have some extra cash in hand.

How will the contingency planning process help you? ›

Contingency planning gives employees and stakeholders clear directions to follow, allowing everyone involved to move together towards the right solution. When disruptions occur, organizations face the possibility of reputational damage that comes from being unable to meet expectations.

How do you manage contingencies and unexpected events? ›

To get started with contingency planning, businesses must first conduct a risk assessment in which they identify and analyze their potential risks. Then, keeping their strategic objectives in view, they should prioritize them in order to determine which events they need to plan for.

Are contingency plans made when something unexpected happens or when something needs to be changed? ›

Contingency planning refers to the process of creating a proactive strategy in case of unforeseen circ*mstances or a disruptive event. A contingency plan outlines the course of action that a business's management and staff should take in response to a future event.

What are the key benefits of contingency planning? ›

The benefits of a Contingency Plan are that it:
  • Considers risks and actions that should be taken when risks materialise.
  • Enables the early execution of a controlled plan.
  • Increases the chance of the best possible outcome being achieved and.
  • Helps a business avoid crisis management.
Aug 1, 2023

What is a contingency plan for unforeseen circ*mstances? ›

A business contingency plan is a backup strategy for your team or organization. It lays out how you'll respond if unforeseen events knock your plans off track—like how you'll pivot if you lose a key client, or what you'll do if your software service goes down for more than three hours.

What is an unexpected event in project management? ›

In projects arena, projects' plans build future expectations and following managers' actions today (Söderholm, 2008) , so projects activities are directed through the expectations to achieve a predetermined goal; but when the outcome is beyond the domain consequent of the activities, unexpected event is occurred (Note ...

What is an example of a successful contingency plan? ›

A simple example of a contingency plan is to back up all your website data. That way, if your website gets hacked, it will be easy to restore the data after regaining access and changing passwords. Without that backup, the team might have to recreate the entire website from memory or build a website from scratch.

How do you manage unplanned events? ›

The Importance of Having a Contingency Plan

A robust contingency plan helps event organisers anticipate and prepare for potential challenges. It also empowers them to respond quickly and effectively when managing the unexpected at an event.

What happens if you don't have a contingency plan? ›

Contingency plans are used by smart managers who are aware that there are always risks that can sideline any project or business. Without having a contingency plan in place, your organization won't be well prepared for risk management.

What are the four major components of contingency planning? ›

Contingency planning consists of four major components: The Business Impact Analysis, the Incident Response Plan, the Disaster Recovery Plan, and the Business Continuity Plan.

How to anticipate potential problems and develop contingencies to overcome them? ›

Five steps to build a strong contingency plan
  1. Make a list of risks and prioritize them according to likelihood and severity. ...
  2. Create a business impact analysis (BIA) report. ...
  3. Make a plan. ...
  4. Get buy-in from the entire organization—and be realistic about cost. ...
  5. Test and reassess your plans regularly.
Jul 12, 2023

What are the 5 steps of contingency planning? ›

Looking at each phase and actions of the contingency planning process (Prepare, Analyse, Develop, Implement, Review) identify how you want to conduct the activities. For each phase, try to set a methodological approach, quantifying the amount of work, who should lead the process and what are the resources needed.

What are the key principles of contingency planning? ›

The key principles to bear in mind are that contingency planning should be: • practical • simple and easy to do • realistic and feasible • needs based and efficient, ensuring fair use of resources • process driven for effective operationalization • regularly tested through exercises • monitored and updated.

What are the 7 steps in contingency planning? ›

NIST's 7-Step Contingency Planning Process
  • Develop the contingency planning policy statement. ...
  • Conduct the business impact analysis (BIA). ...
  • Identify preventive controls. ...
  • Create contingency strategies. ...
  • Develop an information system contingency plan. ...
  • Ensure plan testing, training, and exercises. ...
  • Ensure plan maintenance.

What is contingency approach and how will it help them? ›

The contingency approach to management, also known as the situational approach, holds that there is no single, textbook rule for the best way to manage an organization. 1. In each company's case, the “best” approach will be contingent upon the company's internal and external needs.

What is the purpose of a contingency operation plan? ›

Contingency planning is about identifying what might go wrong (e.g. equipment failures, supply shortages, cost increases, software malfunctions etc.) and planning for it.

How does contingency planning contribute to effective change management? ›

First, it will help you define the goal of either your contingency or change management plans. Second, it will help you to objectively assess situations and their potential impact. Finally, it provides the framework for developing and prioritizing the actions required to address a given situation.

What is a contingency plan and why is it important to managing risks? ›

A contingency plan is a backup plan designed to address unexpected events or risks that could impact the project's timeline, budget, or quality. A contingency plan is typically implemented when a specific risk event occurs, and it outlines a series of actions to be taken to mitigate the impact of the event.

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