Business FinancesQuestion 1129 of 1605
A good estimate should include a contingency allowance primarily to:
a.Increase the contractor's guaranteed profit
b.Reduce the sales tax on materials
c.Cover unforeseen conditions and estimating uncertainty
d.Pay the CSLB renewal fee
Explanation
A contingency is money added to the estimate to absorb unforeseen conditions, minor scope changes, and normal estimating uncertainty. It protects the contractor from small surprises without renegotiating the contract; it is not extra profit.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)