Planning & EstimatingQuestion 620 of 700
How do an 'allowance' and a 'contingency' differ in a bid?
a.They are identical; both simply cover the contractor's profit.
b.An allowance covers unknown emergencies, while a contingency is a firm price for a selected finish.
c.An allowance is a placeholder dollar amount for a specified item not yet selected (e.g., light fixtures or tile), while a contingency is a reserve for unforeseen conditions or scope uncertainty.
d.A contingency is used only on public works and an allowance only on private jobs.
Explanation
Correct: an allowance budgets a set dollar amount for an item whose exact product is not yet chosen, and the price is later reconciled to the actual selection; a contingency is a reserve for risks and unknowns that may or may not occur. Neither is 'just profit,' so the first option is wrong. The second option swaps the two definitions. Both tools appear on public and private work, so the last option is wrong.
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