Contingency and allowances
No job is fully known when you bid it. Two tools let you price the unknown honestly instead of gambling on it.
In this series
Pricing what you can't see yet
No estimate is perfect, because no job is fully known when you bid it. There are two honest ways to put a number on that.
Contingency is a small percentage added to cover the surprises you know happen but can't predict: a bit of rot behind the siding, a bad measurement, a price bump between bid and buy. Often a few percent of cost. It isn't padding, it's realism.
Allowances are a set dollar amount for a choice the client hasn't made yet, as in "$8,000 tile allowance." You bid a placeholder now and true it up when they pick. It keeps the bid moving without you eating the difference.
The difference in one line
Contingency covers what you don't know. An allowance covers what the client hasn't decided. Mixing them up is how a bid ends up absorbing a client's upgrade.
