Is Contingency Counted as Part of the Total Cost?



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    Rebekka O'Melia

    Hi Yizhou,

    I think the contingency should be part of the estimate, and the funds for it should be available.  Sometimes they cannot be financed until they arise too.

    The contingency may or may not wind up being part of the total construction cost in the end though.  I think technically contingency costs could be 'hard costs' or 'soft costs'.  Hard would be those for unforeseen construction materials and labor; soft costs would be unforeseen expenses for legal fees, extra consultant fees, or permit fees.

    Hope this helps!

    Rebekka O'Melia, Registered Architect, NCARB, NOMA, B. Arch, M. Ed, Step UP ARE 5.0 Courses

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    Yizhou Wang

    Thanks, Rebekka! I think it will be part of the hard cost and part of the total cost, but not counted as part of the construction cost. That's what I read from the Architects Handbook of Professional Practice. Thanks for your answer!

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    Michael Ermann

    You are correct, Yizhou, as far as the contracts are concerned, contingency does not count as a part of the "cost". . . to geek out, this issue was long a point of confusion, until the 2017 version of the contracts cleared this up by changing the language of the AIA Documents from “Cost of the Work” to “Owner’s budget for the Cost of the Work.” So, as design progresses, the Owner's budget for the Cost of the Work reflects the fluid nature of construction costs by basing the "cost" on the right-now owner’s budget. Contingency is not part of this calculation (unless/until a portion of the contingency is actually needed to finish the project). If an exam question asks you to calculate the "cost" or wants you to base the architect's fee as a percentage of the "cost," you should assume that this "cost" does not include contingency. Good luck. --Michael Ermann, Amber Book creator.

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