Contingencies are an essential aspect of client contracts. It’s a part of a project's budget put aside to cover any unforeseen costs, risks, events, or changes in scope that may affect the project's cost over the course of its life. Here's how they work:
Setting Up Contingencies: GCs can opt to add contingencies to a contract. This choice is reflected in the "Do you want to add Contingencies?" field.
Configuration Options: When setting up contingencies, GCs can choose between percentage or fixed amount values. This provides flexibility in deciding the contingency amount.
Contract Amount Adjustment: If a contingency is added, the "Original Contract Amount" is adjusted to include the contingency value.
Billing Schedule Calculation: Billing Schedule does NOT consider contingency for SOV calculations.
Payment Ledger: Contingency amounts are not included in the Payment Ledger. Contingencies serve as a buffer, reserved for unforeseen circumstances or change orders.
Contingency Usage: Contingency amounts are only consumed when designated as the funding source for a change order. This ensures they are available for unexpected situations.
In summary, contingencies allow GCs to prepare for uncertainties in client contracts, without impacting payment schedules or financial records.