Contingency is not padding and it is not profit. It is the named dollars for known unknowns—design gaps, long-lead risk, site conditions you cannot fully survey yet, or coordination that always shows up between trades.
Owners do not hate contingency. They hate surprise. Buried contingency looks like gamesmanship. Named contingency with a clear purpose looks like someone who has built this before.
Contingency is not profit
Profit is what you keep if the job goes roughly as planned. Contingency is what you spend when the plan was incomplete. If you fold contingency into fee and never say so, two bad things happen: you look expensive on day one, and you still fight over extras when the unknown shows up.
Price fee as fee. Price contingency as contingency. Your future self will thank you on the change-order call.
Named vs buried
“We put 5% in the number” with no line item teaches the buyer to negotiate your entire total. “Contingency — design completion / unforeseen MEP conflicts — 5%, released only for documented conditions” teaches them how decisions will work after award.
Specificity is not weakness. It is how owner’s-side reviewers stop objecting—because they can see the rule.
Where it belongs on a commercial proposal
Put contingency where it can be seen next to exclusions and schedule assumptions—not in a cell named “misc.” On tenant improvement and light commercial work, contingency often sits after direct cost and before fee, labeled in plain English.
If the drawings are incomplete, say what the contingency is for. If the site has access limits or after-hours risk, say that too. Silence invites assumption.
A simple release rule owners respect
Pick a rule you can live with: contingency moves only with a written change, photo, or RFI reference; unused contingency returns or credits at closeout per the contract. Write the rule once. Reuse it.
Contingency vs allowance vs fee
- Allowance — a budget for a defined selection not chosen yet (finish, fixture).
- Contingency — dollars for uncertainty in scope or conditions.
- Fee / profit — compensation for doing the work well.
Mixing the three is how proposals get picked apart.
See cost transparency on a finished commercial proposal: Sample commercial construction proposal. Related: Markup is not margin.
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