What percentage contingency is typically recommended for a well-defined commercial construction project?
Correct Answer
B) 5-10%
For well-defined commercial projects with complete drawings and specifications, a 5-10% contingency is standard practice to cover unforeseen conditions and minor changes.
Why This Is the Correct Answer
A 5-10% contingency is the industry standard for well-defined commercial construction projects because it provides adequate coverage for unforeseen conditions, minor design changes, and field adjustments without being excessive. This percentage reflects the balance between protecting against cost overruns while maintaining competitive pricing. Well-defined projects with complete drawings and specifications have fewer unknowns, so the contingency can be lower than projects with incomplete documentation. This range is widely accepted by owners, lenders, and construction professionals as reasonable and necessary.
Why the Other Options Are Wrong
Option A: 2-3%
2-3% contingency is too low for commercial construction projects and would not provide adequate protection against typical unforeseen conditions, material price fluctuations, or minor scope changes that commonly occur even in well-defined projects.
Option C: 15-20%
15-20% contingency is excessive for well-defined commercial projects and would typically only be used for projects with incomplete designs, high uncertainty, or complex renovation work where many unknowns exist.
Option D: 25-30%
25-30% contingency is extremely high and would only be appropriate for highly speculative projects, early design phases, or projects with significant unknowns such as major renovations or hazardous material remediation.
Memory Technique
Think 'Well-defined = 5-10' - the better defined the project, the lower the contingency needed, with 5-10% being the sweet spot for commercial work.
Reference Hint
Look up contingency allowances in construction estimating references or project management sections of contractor exam prep materials
More Contract Admin Questions
A project experiences a 30-day delay due to unusually severe weather. The contract includes a liquidated damages clause of $1,000 per day for delays. If the weather delay is excusable but not compensable, what liquidated damages apply?
A commercial project requires a total of 12 inspections. The building department charges $85 per inspection for the first 5 inspections, $65 for inspections 6-10, and $45 for any additional inspections. What is the total inspection fee?
What document must be posted at the job site before a Certificate of Occupancy can be issued for a commercial building?
A mixed-use development requires a variance for reduced setbacks. The property is located within 500 feet of a hospital. What additional consideration must be addressed?
A LEED project requires tracking of regional materials. Materials are considered regional if they are extracted, harvested, or recovered, as well as manufactured within what distance of the project site?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Project Management
60 questions · 70% to pass
Previous Question
For a 50,000 square foot warehouse project, using the square foot estimating method with a base cost of $85 per square foot, what adjustments should be made for a project in Miami versus rural Florida?
Next Question
During contract closeout, what document formally indicates that the work is substantially complete and the owner can occupy or use the project for its intended purpose?