What does design contingency mean

Question

What would be an appropriate contract amendment to a standard form for a design and build contract (JCT 2016 e.g) procured on a two-stage method of procurement that adequately defines what is meant by and how each issue is to be expended for "Design Contingency" and "Construction Contingency" when those two issues are included in the Contract Sum Analysis?

Tom Spilsted · Answer

Contingencies when negotiating two stage contracts are always a difficult topic as the use of "unspecific" percentages are an easy target for being reduced. It is in my view better to allocate contingency to specific potential risks on the project for example

1. Allocating contingency to design development from stage 3 to 4.

2. Calculating the percentage addition to the contract sum using a trade by trade approach for example contingency for design development on MEPH would be considerably higher than for decorating.

3. Construction contingency for me is about the potential construction risks such as logistics, subcontractor management and sequencing. Programme risks are often included here however a detailed well constructed programme will contain delay allowances for items not covered by relevant events.

Definitions can then be specifically written based on the above and appropriate risk allocation.

What does design contingency mean

Contingency

Andrew Crawford

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