contingency is a potential negative event that may occur in the future, such as

an economic recession, natural disaster, fraudulent activity, or a terrorist attack.

Contingencies can be prepared for, but often the nature and scope of such
negative events are unknowable in advance. Companies and investors plan for
various contingencies through analysis and implementing protective measures.

In finance, managers often attempt to identify and plan–using predictive models–

for possible contingencies that they believe may occur. Financial managers tend
to err on the conservative side–to mitigate risk–assuming slightly worse-than-
expected outcomes. A contingency plan might include arranging a company's
affairs so that it can weather negative outcomes with the least distress possible.

To plan for contingencies, financial managers may often also recommend setting
aside significant reserves of cash so that the company has strong liquidity, even
if it meets with a period of poor sales or unexpected expenses.
A thorough contingency plan minimizes loss and damage caused by an
unforeseen negative event. For example, a brokerage company may have a
backup power generator to ensure that trades can be executed in the event of a
power failure, preventing possible financial loss. A contingency plan can also
reduce the risk of a public relations disaster. A company that effectively
communicates how negative events are to be navigated and responded to is less
likely to suffer reputation damage.

A contingency plan often allows a company affected by a negative event to keep

operating. For example, a company may have a provision in place for possible
industrial action, such as a strike, so obligations to customers are not
compromised. Companies that have a contingency plan in place may obtain
better insurance rates and credit availability because they are seen to have
reduced business risks.

The term “contingencies” indicates the incidental expenses of miscellaneous character which cannot
be classified under any distinct item sub-head, yet pertain to the work as a whole. To meet such
unforeseen expenses an additional amount of 3% to 5% of the estimated cost of the works is provided
in the total estimate. Miscellaneous incidental expenses which cannot be classified under any sub-
head or item, are met from the amount provided under contingencies.

For example, suppose there is an item in estimate for cement plastering 1:4 with neat cement finish,
but during execution, it is desired to provide nosing at the end of the steps. As there is no allocation
of funds for this small work, the cost of such work may be met up from the contingency fund. But in
case an expenditure is necessary due to change of design or due to increased volume of work, and
whose cost cannot be covered from the contingency fund, supplementary or revised estimate are
submitted for its sanction before taking up the work.

If there is any saving against the amount provided under contingencies, this amount my be utilised
with the sanction of the complement authority to meet the expenses of extra items of work.

The provisions for contingencies cannot be diverted to any new work or repair which is not provided
in the estimate and of which cost exceeds ₹ 2000/- without the sanction of superintending engineer.

Work charge establishment

The work changed establishment will include the temporary establishment as are employed for the
execution or the immediate technical supervision or departmental stores in connection with the
specific work.

Work charged staff may be technical person or an under staff of technical person to assist him at
work site, guard, etc. But work charged staff does not include non-industrial employees such as the
typist, draftsman, clerk, etc.

Every payment made to a member of the work charged establishment whether on account of his
wages or actual travelling expenses is charged to the work estimate on which they are employed. For
such work charged establishment an amount of 1.5% to 2% (according to P.W.D.) of the estimated
cost of the works is provided in the estimate.

Generally, the work charged persons are employed on monthly basis or temporary basis according to
the progress of work. Their services lasts for the sanctioned period but may be continued on fresh
sanction. Their services are terminable by one month’s notice for one year continuous service. But
for less than one year service, 14 days’ notice is required to terminate their services.