How to Calculate P80 Contingency

P80 means there's an 80% probability your project will complete at or below this cost. Here's how to calculate it.

Step 1: Define Three-Point Estimates

For each cost item, estimate:

• Optimistic: Best case (everything goes right)
• Most Likely: Expected value
• Pessimistic: Worst case (things go wrong)

Step 2: Add Risk Events

Identify discrete risks with probability and impact. These are events that may or may not happen.

Step 3: Run Simulation

Monte Carlo runs thousands of iterations, sampling from your distributions and randomly triggering risk events based on their probability.

Step 4: Read the P80

The P80 is the cost value where 80% of simulation results fall at or below. Your contingency is P80 minus your baseline estimate.