When it comes to construction projects, one common question that arises is whether contingency is included in the contract sum. It`s important to understand what contingency means in this context and how it affects the overall cost of the project.
Contingency is basically an allowance or buffer amount that is included in the contract sum to account for unexpected expenses that may arise during the construction process. These expenses may include unforeseen site conditions, changes in design, or other unexpected costs that were not accounted for in the original estimate.
So, is contingency included in the contract sum? The answer is that it depends on the contract itself. Different contracts may have different provisions regarding contingency. Some contracts may specifically include a contingency allowance in the contract sum, while others may not. It`s important to carefully review the contract documents to determine if contingency is included and if so, how it is defined and allocated.
If contingency is not explicitly included in the contract sum, it may still be possible to include it through change orders or other contract amendments. However, this can be a complex process and may require negotations between the parties involved.
Another important consideration is how contingency is managed and used during the construction process. It`s crucial to have a well-defined process for managing contingency to ensure that it is used effectively and efficiently. This may involve setting aside a specific amount of the contingency allowance for specific purposes or designating a contingency fund to cover unexpected expenses.
In summary, contingency is an important consideration in construction contracts, and it`s important to understand whether it is included in the contract sum and how it will be managed throughout the project. By carefully reviewing the contract documents and having clear protocols for managing contingency, construction projects can be better positioned for success.