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Contingency Allowance

Contingency allowance supports a project's overall risk management strategy by accounting for potential cost changes. It serves three main purposes: to account for errors and omissions in construction documents, to modify or change the project scope for quality purposes, and to pay for unknown conditions. Typically 20% of the estimated total project cost is allocated for contingencies at the completion of the study and report phase, reducing to 10% after final design and 5% when construction bids are received, with larger or more complex projects requiring higher contingency amounts.

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Melesa Siman
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184 views3 pages

Contingency Allowance

Contingency allowance supports a project's overall risk management strategy by accounting for potential cost changes. It serves three main purposes: to account for errors and omissions in construction documents, to modify or change the project scope for quality purposes, and to pay for unknown conditions. Typically 20% of the estimated total project cost is allocated for contingencies at the completion of the study and report phase, reducing to 10% after final design and 5% when construction bids are received, with larger or more complex projects requiring higher contingency amounts.

Uploaded by

Melesa Siman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Contingency Allowance

Contingency allowance supports a project’s overall risk


management strategy by making an allowance for any
cost changes.
The contingency allowance serves three main purposes:
1. To account for errors and omissions in the
construction documents
2. To modify or change the scope for quality of the
project
3. To pay for unknown conditions.
To provide for intangible cost, contingencies should
routinely be added to the basic cost estimate. It is
common practice to add 20% or more to the estimated
probable total project cost at the completion of the study
and report phase, reducing this to perhaps 10% at the
completion of final design and perhaps to 5% when the
construction bids become unknown. Larger or more
complex project may require higher contingencies.
Good day everyone, my name is Melesa Siman and I’m
gonna report Contingency Allowance.

Contingency allowance supports a project’s overall risk


management strategy by making an allowance for any
cost changes.
There are three main purposes of contingency allowance.
First
1. To account for errors and omissions in the
construction documents
Then
2. To modify or change the scope for quality of the
project
And lastly,
3. To pay for unknown conditions.

To provide for intangible cost, kanang mga naooverlook


or mga unexpected cost… should be routinely included in
the cost estimate to allow for unpredictable changes in
the project.
Common is 20% to the estimated probable total project
cost at the completion of the study and report phase.
And then if final design na pwede na 10% nalang and
then if construction bids na pwede ra 5% nalang.
Why? Kay mas specific na sila. Kay while nagkaanam
anam man gd ug kadetailed ang plano sa project mas
specific na or mas dali na makita ang mga loopholes or
katung mga dapat pangandaman.
Larger or more complex projects may require higher
contingencies.

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