Contingency Management in Construction Projectsconstruction project software

4castplus provides built-in contingency management so you can allocate a reserve of funds intended to help manage the risky (known and unknown risk) elements of construction projects. In this brief article I’m going to discuss how to use this contingency feature.


Management Reserve

Also known as “Management Reserve”, allocating contingency is a commonly used strategy to cover off any project costs that were unanticipated or unknown at the time of project planning. This reserve of funds will appear as a separate item from the project estimate; and added together with the project estimate will result in the Total Project Budget. So,


Total Project Budget = Project Estimate + Contingency


The contingency reserve is automatically calculated along with the project estimate; and then displayed in various reports and dashboards. The management of that contingency is also cared for automatically by 4castplus as project tasks are completed. I’ll talk more about how all this works in the rest of this article.


Project Default and Task Override

You can set the overall default contingency factor – as a percent – at the project level and then override that factor at the task level – also as a percent. So, in other words, if you want to set a default contingency as 15% for the whole project, and then go on to identify certain tasks that require a different contingency; you can override that 15% to be higher or lower for those tasks. Any tasks that you don’t override, will take their contingency from the default set at the project.  Click on the two screenshots below.

Contingency and Risk Management in Construction Projects

Screenshot 1: Set default contingency at the project


Manage risk in construction projects

Screenshot 2: Override default project contingency on the task


How Project Contingency is Calculated

The contingency reserve is calculated as a percentage of the project estimate. It’s automatically added to the project estimate to achieve the Total Project Budget. As mentioned above, for any tasks that have been given a different contingency than the project default, 4castplus will multiply those task budgets by their unique contingency % factor to apply their amount to the total pool. Click on the screenshot below to see the estimate screen’s header profile information.

Project estimating software



Auto Draw-Down, Auto Contribute

4castplus will automatically manage the contingency reserve as project tasks reach completion. Any task that is set to complete – by marking its percent-complete to 100% – will either draw down from, or contribute to, the reserve if there is any cost variance on the task.

I’ll put that another way. If a task estimated at $10,000 completes at $11,000 total actual cost; $1,000 will be drawn down from the contingency reserve. This contingency transaction will be recorded for reporting and auditing purposes.

Similarly, if another task that was also estimated at $10,000,  completes at $9,000 total actual cost; $1,000 will be contributed to the contingency reserve.

By the end of a project, potentially many contingency transactions will take place with the total project contingency.

There are numerous built-in reports that detail these contingency transactions in real time as the project progresses. The available reserve can also be monitored in the estimate/forecast screens of 4castplus. Click on the example report below.


Project Cost Control Software