When preparing a bid, which approach helps manage unforeseen costs?

When preparing a bid, which approach helps manage unforeseen costs?

• A. Include a contingency for unexpected costs
• B. Exclude contingency entirely
• C. Base on minimal labor assumptions
• D. Delay bidding to gather more data

Answer: (A)

When you prepare a bid, manage unknowns by including a contingency—a cushion in the budget set aside for unexpected costs. This contingency covers surprises like harder-than-expected site conditions, hidden utilities, design changes, weather-related delays, or fluctuations in material and subcontractor prices. Having this reserve helps protect your profitability and keeps the project on track if something unplanned occurs. It’s best used as a defined percentage of the total estimate, chosen based on project risk, complexity, and past experience, and should be applied only with proper approvals. Excluding contingency leaves you vulnerable to overruns, basing the bid on minimal labor underestimates the work, and delaying bidding in hopes of more data doesn’t solve the risk and can cost opportunities.