Build a solid safety net into your estimates with contingencies.
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- Contingency = money added to an estimate to cover a potential risk
- We often see allowances in contracts – contingencies are a little different
- They cover potential risks that may or may not occur like unsuitable materials
- I put them in all my estimates
- It’s a great way to create solid estimating data and cover potential risks
- We often see allowances in contracts – contingencies are a little different
- Make them part of your sound estimating practices
- How do you cover the potential risks encountered when working in a new area?
- I used to adjust my actual estimate – maybe add some time to the crew to cover potential costs
- That doesn’t produce a good solid estimate or good historical data
- Price each job properly based on the project itself and not the incidental risks
- Cover the incidental risks using contingencies
- How do you cover the potential risks encountered when working in a new area?
- Make them a standard item in your estimates
- Price your projects as you should
- Add your standard markups
- Add contingencies – there are many things that you might add them for like:
- Travel / New Owner / Hard Owner / A/E Team / Weather / Location / Inspectors / etc.