Allowance
An amount included in a Cost Estimate to cover known but undefined requirements and applied at the direct cost level to compensate for the degree of engineering that is incomplete. Allowances are considered a known “unknown” requirement when preparing the direct costs and more accurately reflect what the final design will require. Allowances reflect historical experience and will almost certainly be consumed. Allowances are included in the body of the estimate and are considered to be an integral part of the perceived final project scope, quantities and construction activities.

Contingency
An amount added to a Base Cost Estimate to allow for items, conditions, or events for which the state, occurrence, or effect is uncertain and that experience shows will likely result, in aggregate, in additional costs