Contingency in Cost Estimates

Description:Contingency refers to "costs that are not known exactly at the time of the estimate but which will occur on a statistical basis based on past experience, but with some uncertainty regarding the amount." However, even though contingency is included in all cost estimates as a necessary line item to account for unknown cost elements, expectations on what level of contingency is necessary is highly variable and can create confusion. Insufficient contingency early in project planning results in insufficient budgets and difficulties with cost overruns. This presentation investigates use contingency in the industry and provides examples and suggestions on consistent use of contingency for project cost estimating.

Authors: Timothy Phelan

Subjects:

Tags:2014 Annual Conference,AC14,AC2014

Citation:Stream C. 3.3.

Publication Date:May 5th, 2014 Upload Date:Jun 30th, 2014

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