What does a contingency in a contract help protect against?

A contingency in a contract serves as a key mechanism to account for unforeseen circumstances that may arise during the course of a project. When a contingency is included, it specifically addresses potential events or situations that were not anticipated at the time of contract formation. This can encompass a wide range of issues, such as unexpected site conditions, sudden regulatory changes, or other unpredicted challenges that could impede project progress or increase costs.

By having a contingency in place, parties involved can allocate resources or funds to address these unpredictable problems, thus minimizing disruptions and maintaining project viability. This proactive approach allows for better management of risks and uncertainties, ensuring that there are mechanisms in place to handle issues without derailing the project timeline or budget.

While increased labor costs, project completion delays, or liabilities are important considerations within a contract, the primary focus of a contingency is to safeguard against those unanticipated problems or conditions that could otherwise significantly impact the project's execution.