Living With Uncertainty – Allowances, Cost Contingency, and Dispute Resolution
Allowance and contingency provisions are widely included in construction contracts to account for uncertainty and to allocate risk between parties. Effectively managing these mechanisms can present significant challenges that, if not properly addressed, may lead to dispute. This paper will discuss the role that allowances and contingency play in construction contracts and address considerations when managing projects and resolving construction disputes. It will also provide a case study to demonstrate how a forensic analyst’s understanding of contingencies and allowances is critical for accurately quantifying damages.