When preparing a bid for a California public works project subject to California Labor Code Section 1720 et seq., what is the maximum percentage contingency allowance typically permitted by most public agencies?
Correct Answer
A) 3-5%
California public works projects typically limit contingency allowances to 3-5% of the total bid amount. Higher contingency percentages may be viewed as excessive padding and could result in bid rejection. This conservative approach reflects the detailed specifications and reduced risk typically associated with public works projects under California Labor Code Section 1720 et seq.
Why This Is the Correct Answer
California public agencies typically cap contingency allowances at 3–5% of the total bid. Public works projects are governed by detailed plans and specifications that reduce uncertainty, so agencies expect tight estimates. A low contingency also reflects fiscal accountability to taxpayers. Bids with higher contingencies may be flagged as padded and rejected.
Why the Other Options Are Wrong
Option B: 18-20%
An 18–20% contingency is appropriate for highly uncertain or exploratory projects (e.g., hazardous materials remediation, underground utility work). For standard public works covered by California Labor Code §1720, this range far exceeds agency expectations and would likely disqualify a bid.
Option C: 8-10%
8–10% is more typical of private commercial construction with moderate uncertainty. It is too high for most California public works bids, where detailed specs and site data are provided in advance, keeping risk — and therefore contingency — low.
Option D: 12-15%
12–15% contingency is associated with design-build or early conceptual estimates where scope is not fully defined. It is excessive for a formal public works bid under §1720, where full plans and specifications are provided to all bidders.
Memory Technique
Public works = 'precise and public' — because specs are detailed and money is taxpayer-funded, the contingency stays small: 3–5%. Think 'public = precise = 3–5%.'
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