How a Contingency Budget Protects Project Finances
Contingency budgets safeguard project finances by addressing issues such as material price fluctuations, design changes, or unexpected delays. By having a contingency fund in place, contractors can prevent budget overruns and ensure the project continues without major financial disruptions. Without a contingency, unforeseen costs can eat into profits or delay project completion.Best Practices for Managing a Contingency Budget
Contractors should allocate 5-10% of the project’s total budget as a contingency. Regularly monitor the use of the contingency fund, and only use it for genuine unplanned expenses. Keep a record of all contingency fund usage to ensure transparency and accurate cost tracking.Related Terms: Subcontract, Contingency Budget