ASTM E2168-01

NOTICE: This standard has either been superseded and replaced by a new version or withdrawn. Contact ASTM
International (www.astm.org) for the latest information.
Designation: E 2168 – 01
Standard Classification for
Allowance, Contingency and Reserve Sums in Building
Construction Estimating
This standard is issued under the fixed designation E 2168; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
In building construction estimating the terms allowance, contingency and reserve are often used
almost interchangeably and are assumed to be universally understood, yet they often mean different
things to different people. Consequently they can be ambiguous in meaning and intent.
Applying these terms, as classified herein, adds a needed precision and rigour in their use as each
term is held to be specific in its meaning, intent, and use.
1. Scope 4.2 Such allowance, contingency or reserve sums are em-
ployed by many persons engaged in the planning, delivery, and
1.1 This standard establishes a classification for allowance,
financing of construction work.
contingency, and reserve sums used in construction, project,
4.3 These users include owners, developers, facilities pro-
and program estimating.
grammers, cost planners, estimators, schedulers, architects and
1.2 This classification applies to all construction work.
engineers, specification writers, operating and maintenance
1.3 This classification is not based on permanent physical
staff, manufacturers, educators, financial managers, and comp-
elements of construction (as defined and classified in Classifi-
trollers.
cation E 1557. Rather, the classification items are cost compo-
4.4 Usage:
nents common to construction, project, and program estimates.
4.4.1 These sums are especially appropriate when perform-
2. Referenced Documents
ing the following activities:
Cost budgeting,
2.1 ASTM Standards:
Conceptual, design and construction cost estimating,
E 833 Terminology of Building Economics
Preparing complete forecast cost for economic evaluation, invest-
E 1557 Classification for Building Elements and Related
ment analysis and approval,
Controlling cost during planning, design and construction.
Sitework UNIFORMAT II
E 1804 Practice for Performing and Reporting Cost Analy-
4.4.2 In any of these activities a needed requirement, or
sis During the Design Phase of a Project
component, of the planned construction can be known while
E 1946 Practice for Measuring Cost Risk of Buildings and
the defined solution, design or specification, for providing this
Building Systems
may not. The usual, and appropriate, response in these situa-
tions, is the inclusion of a monetary sum, within an estimate, to
3. Terminology
provide for this (these) requirement(s).
3.1 Definitions—For definitions of terms used in this clas-
4.4.3 Suchsumsmaybegeneralorspecificinscope,maybe
sification, refer to Terminology E 833.
planned to be spent or may only be included as possible
mitigation for unplanned events and requirements.
4. Significance and Use
4.4.4 To distinguish between these sums, and in recognition
4.1 When preparing construction, project, and program cost
of their differing purpose, they are described, and classified
estimates, it is often necessary to make monetary provision for
here, using the terms allowance, contingency or reserve.
change and/or risk or other exigencies where information is
NOTE 1—Section 5 includes a generic statement of purpose for each of
incomplete.
the three terms and provides a sub-classification that distinguishes
between sums included for specific purposes and for non-specific i.e.
general purposes. In cost budgeting, conceptual and design estimating
This classification is under the jurisdiction of ASTM Committee E06 on
especially, an estimator may intuitively recognize the need for a general
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
purposesum.Thisrecognitioncomesintheabsenceofanyknownspecific
on Building Economics.
requirement other than the need to ensure the estimate total is a reasoned
Current edition approved Oct. 10, 2001. Published January 2002.
Annual ASTM Book of Standards,Vol forecast of a reasonable bid result.
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NOTICE: This standard has either been superseded and replaced by a new version or withdrawn. Contact ASTM
International (www.astm.org) for the latest information.
E2168–01
4.5 This classification defines allowance, contingency and 5.4.2 Table 1 is a tabulation of the basic properties, events
reserve sums as items common to construction, project, and and methods defined for allowances, contingencies and re-
program estimates through planning, design, construction, and serves as typically applied in the building construction indus-
completion. The terms are sufficiently generic to be applied in try. This table identifies the key differences, and some simi-
all forms of construction work. larities, makes for easy identification of the generic principles
drivingtheclassifications,andsoallowsconsistentapplication.
It also draws attention to the need for a subsidiary cost
5. Basis of Classification
classification that is typically part of a generic Work Break-
5.1 Classification Criteria:
down Structure.
5.1.1 The selected classification of terms is based on the
5.5 Subsidiary Classification:
following criteria. The terms shall:
5.5.1 Construction Estimate—An estimated cost for the
be readily distinguishable one from the other;
construction work including all trade costs and the prime
be simple and must identify their properties and usage directly;
be appropriate in all forms of construction financial activities, and;
contractors’ Field Requirements and Office Overhead & Profit:
allow a distinction between the environments (internal or external
i.e. an estimate of construction work intended to forecast the
within which they are applied.
amount of a reasonable bid figure.Aconstruction estimate may
5.2 Primary Classification:
include both specific and non-specific allowance(s).
5.2.1 Allowance—A sum of money that is planned to be
5.5.2 Project Estimate—An estimated cost that includes
spent. Used in the absence of precise knowledge, and esti-
Design and Project Management Fees & Disbursements, and
mated, to the best of one’s abilities, to ensure a full and
other costs, in addition to the Construction Estimate, that are
complete estimate.Allowances cover events and activities that
discretely packaged as a total project: i.e. a total estimate
are normally internal and so are directly controllable within the
includes acquisition costs, construction work, fees (profes-
project plan.
sional and legal), expenses, and any other disbursements. A
5.2.2 Contingency—A sum of money not intended to be
project estimate may include both specific and non-specific
spent. Used in the absence of precise knowledge, and esti-
contingency(s).
mated, to the best of one’s abilities. to ensure that a financial
5.5.3 Program Estimate—An estimated cost that includes
buffer is available within a budget. This buffer is intended to
all Client Costs in addition to the Project Estimate(s) that are
assist in mitigating the effects of unplanned events and other
collectively part of the main Program of Work i.e. an overall
risks that are normally exte
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