What are contingency costs intended to cover?

Contingency costs are specifically designed to address unforeseen project delays and unexpected expenses that may arise during the execution of a project. These costs act as a financial buffer, allowing project managers to handle risks that were not initially anticipated at the planning stage. The rationale for including contingency costs is to promote project success by preparing for potential challenges such as changes in scope, unexpected technical difficulties, or other uncertainties that could impact the timeline or budget. By having these costs set aside, organizations can respond more flexibly to issues as they arise, ensuring that projects remain on track. This highlights the importance of proactive risk management in project planning and execution.