What is a common practice for managing contingencies in construction projects?

Budgeting a specific percentage of costs is a common and effective practice for managing contingencies in construction projects. This approach involves setting aside a certain portion of the project budget to account for unforeseen circumstances such as delays, cost overruns, or other unexpected issues that might arise during the construction process. This reserved amount serves as a financial buffer that can absorb shocks without jeopardizing the overall project budget, ensuring that the project can continue to move forward even when unexpected challenges occur.

Allocating a contingency fund promotes better financial planning and risk management, allowing project managers to handle uncertainties proactively rather than reactively. This practice is crucial because construction projects are often complex and subject to a variety of risks, thus a contingency budget helps mitigate those risks effectively.

Other options presented do not align with best practices in contingency management. Neglecting unexpected events undermines the essential nature of thorough planning, while relying solely on experience can lead to underestimating risks, as past experiences may not fully encapsulate future uncertainties. Ignoring market trends can also result in financial miscalculations and further difficulties, making it impossible to prepare adequately for potential cost escalations.