London super sewer costs under pressure

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  1. I’m a bit confused when you say “…raid the contingency fund”?

    Project contingency is there to be spent. The idea is that when planning all you know is some things wont go to plan, but you don’t know exactly which things. So you allow contingency. It acts to aggregate allowances of money and time to protect against risk and uncertainties, and is vital on projects.

    If contingency is largely unspent, or if projects claim they don’t have any, something is wrong.

    You also say most of the work is now well underway. If this means that most of the potential risks have emerged, then having spent 80% of the contingency is not a problem. The problem arises when contingency is used very early, and none remains to protect the later stages of the project.

    The key piece of information is how much contingency remains unallocated to protect the remaining 4-5 years.

    Also the actions you mention to do with not wasting money, should really have been happening anyway. Is the project saying they have only implemented cost-improvement activities when they noticed the funds running out, and not as a matter of course?

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