Compare contingency economics without inventing a win-rate effect
Contingency and quote win rate answer different questions. Contingency models identified uncertainty in the project cost case. Win rate describes outcomes for a stated quote cohort. A higher quote price and a lower observed win rate can occur together without proving that one caused the other.
| Field | Base quote case | Risk-adjusted case | Control required |
|---|---|---|---|
| Scope and customer cohort | Same declared scope and eligible decided quotes | Same declared scope and eligible decided quotes | Report open, withdrawn and no-decision quotes separately |
| Price and contribution | Base user-entered values | Identified-risk allowance added once | Contingency remains separate from profit |
| Win probability / rate | User-entered or observed for the cohort | User-entered or observed for the cohort | No causal response is assumed |
| Pursuit cost | Same stated inclusion basis | Same stated inclusion basis | Do not hide selling effort outside the comparison |
Confirm the quote prerequisites
- Write the customer outcome and the deliverables that evidence completion.
- Define acceptance: who decides, what evidence they review and when approval occurs.
- List customer, supplier, access and information dependencies with named owners.
- State exclusions and the assumptions on which the estimate depends.
- Choose one time, currency and indirect-tax basis for every scenario.
- Record the estimate version so a later change does not overwrite the accepted baseline.
Separate known work from scope risk
Use evidence to describe each uncertainty and its possible effect. The table is a risk register for the quote, not a list of reasons to add an undisclosed buffer.
| Uncertainty | Evidence needed | Possible hours or cost effect | Owner or response |
|---|---|---|---|
| Source data quality | Sample files and validation result | Rework or manual preparation | Customer provides a sample before quote approval |
| Approval availability | Named approver and review window | Waiting time or remobilisation | Customer confirms the review timetable |
| External integration | Access, documentation and test environment | Additional delivery hours or supplier cost | Stage discovery or make it an explicit exclusion |
Build best, base and high delivery cases
Worked scenario: the same scope under two duration cases
This neutral scenario uses fictional user assumptions: 100 currency units per delivery hour and 500 currency units of direct cost. It is not a market rate, quote recommendation or contingency norm.
| Case | Delivery hours | Labour cost | Direct cost | Cost basis before price decisions |
|---|---|---|---|---|
| Base | 40 | 4,000 | 500 | 4,500 |
| High duration | 48 | 4,800 | 500 | 5,300 |
| Difference | 8 | 800 | 0 | 800 |
Scenario checkpoints
- Each case covers the same deliverables and acceptance basis. (not complete)
- Only the assumptions being tested change between cases. (not complete)
- Hours, rates and direct costs use the same units and tax basis. (not complete)
- The reason for the high case links back to the risk register. (not complete)
- No overhead, allowance or direct cost is counted twice. (not complete)
Choose the response before finalising the quote
| Response | Use when | Checkpoint before proceeding |
|---|---|---|
| Clarify the scope | Missing information can be obtained before commitment | The updated baseline is recorded and re-estimated |
| Stage discovery | A bounded investigation can resolve material uncertainty | Discovery has its own deliverable, limit and decision point |
| Change the commercial model | Duration or scope cannot be bounded credibly | Customer and provider understand how time, scope and capacity risk are allocated |
| Add a visible allowance | A defined, evidenced uncertainty remains | The allowance basis is explicit and not counted elsewhere |
| Decline | The work cannot be defined, delivered safely or accepted within the constraints | No price is presented as a cure for an unmanageable commitment |
Hand the scoped estimate into a governable quote
Once the cost and uncertainty scenarios are visible, check that the delivery promise can fit inside available productive capacity. Then transfer only the approved scope, price basis and commercial events into the quote. This handoff keeps the calculation record distinct from customer-facing terms and local legal review.
| Checkpoint | Record before issue | Stop or handoff boundary |
|---|---|---|
| Scope and acceptance | Deliverables, exclusions, dependencies, completion evidence and approver | Clarify or stage discovery when completion cannot be observed |
| Capacity | Required roles, delivery window, productive hours and conflicting commitments | Re-schedule, narrow or decline when the promise cannot fit available capacity |
| Cost and uncertainty response | Reconciled cost basis plus each clarify, stage, allowance or model decision | Return to the scenario when an allowance is unexplained or counted twice |
| Price and cash events | Price and indirect-tax basis, invoice trigger, expected receipt assumption and payment method | Model cash dates separately; an invoice date is not a promised receipt date |
| Acceptance and change control | Quote version, review or expiry trigger, acceptance record and change path | Obtain local review for wording, enforceability, required terms and remedies |
State the change trigger
Put these points beside the accepted baseline
- The event or evidence that makes an assumption no longer valid. (not complete)
- Who can request and who can approve changed work. (not complete)
- Whether work pauses while time, cost and schedule effects are assessed. (not complete)
- How the revised scope, price and delivery plan are recorded. (not complete)
- Which version becomes the new delivery baseline after approval. (not complete)
Use the scope-change quote checklist after the baseline exists. The checklist supports recording and commercial review; the agreement determines legal rights and required approval form.
Review estimate versus actual
- Reconcile actual labour and direct costs to the same categories used in the estimate.
- Separate approved scope changes from estimating error and delivery variance.
- Record which risk occurred, which response worked and which assumption lacked evidence.
- Update the next estimate only for repeatable evidence, not every one-off event.
Calculate and review with the registered tools
- Project Quote Builder
Turn scoped task rows and project costs into a transparent fixed quote
- Service Rate & Quote Planner
Set a viable rate and project quote
- Project Duration Risk Planner
Price best, base and worst project duration exposure
- Job Costing & Margin Planner
Compare quoted and actual job economics and identify overruns
Avoid the common mistakes and keep the boundary clear
- Do not prescribe a universal contingency percentage.
- Do not hide uncertainty inside an unexplained number.
- Do not count overhead or the same direct cost in more than one line.
- Do not assume a quote transfers every delivery, scope or customer-dependency risk.
- Do not interpret the commercial workflow as legal advice or a guaranteed margin.
Project quote and scope-risk questions
- Is a contingency allowance the same as profit?
- No. A visible allowance responds to a stated uncertainty. Profit or contribution is measured after the defined delivery cost boundary. An allowance can be consumed if the uncertainty occurs.
- Should I show a range instead of one quote?
- A range may communicate scenarios, but it still needs a clear scope, basis and decision rule. Do not use a range to avoid stating what is included or what triggers revision.
- What if the work cannot be estimated credibly yet?
- Clarify the request, offer a bounded discovery stage, narrow the promise, use a model that keeps the uncertainty visible or decline. A larger hidden buffer does not define the work.
- Does the checklist decide whether I can charge for a change?
- No. It supports a planning and approval record. The agreement and applicable requirements determine legal rights, obligations and approval form.
Approved process and calculation sources
- Prepare quotes — business.gov.au: Process support for written scope, itemised costs, dates, variations, payment terms and acceptance; Australian legal effect is not globalised.
- Cost Estimating and Assessment Guide — U.S. Government Accountability Office: Durable estimating-process support for scope, assumptions, sensitivity, risk and later actual-cost review; adapted cautiously for small-service planning.
- Project Quote Builder methodology — Margin101: Task labour, direct-cost, allowance, margin and tax-basis boundaries.
- Project Duration Risk methodology — Margin101: Best, base and high duration scenario definitions.