contingency

Allowances vs. Contingencies in GMP Contracts: Two Different Buckets, Two Different Rules

In a guaranteed maximum price (GMP) contract, allowances and contingencies look similar — both hold money for things not yet fully priced — but they serve different purposes and follow different rules. Allowances cover specific scope items still being finalized. Contingency covers unforeseen conditions and risk. Confusing them leads to closeout disputes about what comes back to whom.