What Is Contingency Used For

In the case of an owner’s budget for a collaborative delivery project, the purpose of a contingency is to incorporate an additional allotment of funds within the final approved budget that can be used when and if the scope of a project changes with an associated cost increase in the delivered project.

What is the purpose of a contingency markup?

In many projects, especially public projects, a contingency can be added in an amount of anywhere between 2% and 10% by the public entity for remodel or renovation work. This is added to cover any non-contractor caused delays or minor non-scope changes without interrupting the flow of the work.

Is contingency an expense?

Contingency Amount: Contingency amount refers to the money set aside to cover any unforeseen expenses of the organization or the project. Contingency expenses are required because any organization or a project can face an uncertainty because of which certain costs are incurred.