Contingency Costs

Contingency costs in the construction industry refer to funds set aside to cover unforeseen expenses during a project. These costs are an essential part of project budgeting, providing a financial cushion for unexpected events such as design changes, material price increases, or delays. The size of the contingency fund typically depends on the project’s complexity and risk factors, aiming to ensure that the project can proceed smoothly despite uncertainties. Effective management of contingency costs is crucial for maintaining project viability and preventing budget overruns.