BidMagic Construction estimating program-- Contingencies

Estimating Contingencies

NOTE-- We retired the BidMagic construction estimating software program in 2001. It has been replaced by Goldenseal construction estimating software.

We still include this BidMagic estimating software program manual as a convenience for users of our older program. Many features are similar, in Goldenseal estimating.

Contingencies

In the BidMagic estimating software program, the Contingencies percentage is a 'slush fund' that covers mistakes, accidents and disasters of all kinds. It covers normal problems such as:

Things that you forget in the estimate.
Things that go wrong on the project.
Cost overruns that you have to absorb.
Any other losses that you incur accidentally.

If you have tracked contingency expenses for your past jobs, calculate the contingency percentage as a percentage of hard costs, just as you did for overhead (see page 150).

If you have no records of contingency expenses, use an estimate. In our experience, 3% is a reasonable amount for new construction, 5% works well for additions or simple remodeling, and 8-10% is a reasonable sum for rehab work in older buildings, or extremely complex projects.

HINT: Whether or not you include a contingency percentage, it's a good idea to include protective clauses in your construction contracts to guard yourself against toxic materials, deficient framing and other potential problems.