A Contingency is for the unknown or unpredictable know-unknown events that may possibly happen in the future, usually potential risks or causing problems. The Contingency is to cover the currently unforeseen cost element of time and material within the specified scope of works and services such as cost overruns, currency fluctuations, unexpected re-do works, and contractual warranty and guarantees, but the Contingency will not cover any additional scope of works and any unknow-unknow events. The Contingency is in addition to any allowances included in the estimate. The Contingency is estimated based on the previous experiences by the expert or risk simulation analysis results, and company procedures and rules.
Related Definitions in the Project: The Project Cost; Cost Estimate (Estimation); Project Controls; Project Management
