What is the basic reserve in project cost estimation?
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I would like to ask everyone: what is the basic reserve in the total project investment during the project feasibility study phase? How much is usually withdrawn? In economic analysis, since it is an investment, what type of asset does it belong to? Should depreciation be deducted?
Basic contingency fund = (Cost of purchasing equipment and other tools) + (Cost of additional construction work) + (Other costs related to project construction) * Basic contingency fund rate.
3.12.1 Main uses of the basic contingency fund: (1) During the design and construction phases, within the scope of the approved preliminary design, any additional work that is necessary, as well as costs that must be incurred according to regulations (including the corresponding price differences and taxes). This fee does not include the additional costs arising from Category I design changes. (2) Losses incurred by the project due to ordinary natural disasters during the construction process, as well as the costs of measures taken to prevent such natural disasters. (3) When the superior competent authority organizes the construction inspection, the inspection committee (or team), in order to assess the quality of the work, must bear the costs of excavating and repairing the concealed works. (4) Work that has to be discarded due to design changes, but does not include the costs associated with rework or discarded work resulting from construction quality not meeting the design requirements ； (5) Price difference for land expropriation and demolition. 3.12.2 Calculation standard for basic contingency reserve: The basic contingency reserve is calculated as 5% of the total cost amount covered in Chapters 1 to 11. This expense is under the overall control of the project owner.
Correction to the calculation formula for Building 2#: Basic contingency fund = (Cost of equipment and tools + Cost of construction work + Other costs related to project construction) × Basic contingency rate
Basic contingency reserve = Unforeseeable costs
It refers to the works and costs that are difficult to predict when preparing the budget documents during the basic design phase (preliminary design). These generally include: (1) the additional works and costs that arise during the detailed design and construction processes within the scope of the approved basic design and budget (such as design changes, partial foundation treatment, etc.); (2) losses caused by natural disasters and the costs of measures taken to prevent such disasters; (3) the costs associated with necessary excavations of concealed works for assessing the quality of the work at the time of completion inspection.
In addition to the basic contingency fund, which covers those project costs that are difficult to predict during the preliminary design and cost estimation phase, there is also an inflation contingency fund. This refers to the amount set aside as a precaution against changes in prices and other factors that could affect the cost of a construction project during its implementation