Contracts & ExecutionQuestion 159 of 1605
A contractor adds a 5% contingency to a job estimated at $200,000 in direct costs. How much money does the contingency add to the estimate?
a.$1,000
b.$10,000
c.$20,000
d.$50,000
Explanation
A contingency is a percentage of estimated cost set aside for unforeseen conditions: 5% x $200,000 = $10,000. It cushions the budget against surprises without inflating the base estimate.
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