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Construction glossary
Construction Glossary •
Contingency
What is a Contingency?
In the realm of construction, a contingency refers to a certain amount of money set aside to cover unexpected costs that might arise during the project’s execution. This allocation, usually accounting for an estimated 5-10% of the total project cost, acts as a financial cushion, providing security against unforeseen circumstances such as construction delays, changes in building codes, design modifications, or a surge in material prices. Additionally, it could also account for potential legal issues such as disputes over contracts. Overall, a contingency is an essential risk mitigation element for construction projects to ensure a smooth transition even in the face of unpredicted challenges.
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Other construction terms
Enterprise Resource Planning (ERP)
What is Enterprise Resource Planning (ERP)?
Enterprise Resource Planning (ERP) in the construction industry refers to a suite of integrated software applications designed to automate and control the core processes of a construction company. It ...
Material Overhead
What is Material Overhead?
Material Overhead in the construction industry refers to the indirect costs associated with handling and storing materials used for construction projects. This can encompass a wide range of expenses, ...
Liabilities
What are Liabilities?
In the construction industry, liabilities refer to the financial obligations the company owes to external entities, often as a result of past transactions or activities. These include payments to supp...
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