Risk Allowance in Construction: How to Measure, Pay, and Address It in Contract Amendme...

Understand how to estimate, measure, and pay risk allowance in construction, avoid double counting with contingency and insurance, and address the component in contract amendments.

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Risk allowance in construction is the price component intended to remunerate exposure to certain risks allocated to the contractor, according to the methodology adopted in the estimate and contract. It should not be confused with the Public Administration’s contingency, management reserve, insurance, profit, or compensation for an extraordinary event. The way risk is estimated also determines how it should be measured, paid, and addressed throughout execution.

When risk is continuous and embedded in BDI, remuneration normally follows the contract’s physical progress. When the model identifies a discrete or binary event, the logic may differ: economic treatment should be conditional on occurrence and on the rule established in the matrix. In both cases, the principle is the same: do not pay twice for the same risk and do not use an amendment, price adjustment, or revision to restore a component that was already adequately remunerated.

Risk allowance originates in the risk matrix

Risk allowance connects the risk matrix, BDI, measurement, and any subsequent amendment. To place this treatment within the complete procurement-control framework, see What the TCU Reviews in Construction and Engineering Services Procurement.

The risk matrix defines who bears the consequences of uncertain events. The estimate needs to reflect that allocation.

If the Public Administration transfers a particular risk to the contractor, the market tends to price that exposure. The component may appear in different forms, depending on the method:

risk percentage in BDI;
contingency calculated by risk;
parametric component;
specific provision;
insurance premium;
productivity adjustment;
price conditional on occurrence of an event, where the contractual design allows it.

The error is to treat all of these forms as independent additions. The Risk Allocation Matrix should be the origin of the calculation memorandum.

Risk in BDI is not generic contingency

TCU Decision 2,622/2013-Plenary consolidated the BDI rate with components such as head-office overhead, risks, insurance, guarantees, financial expenses, profit, and taxes.

The risk component exists to absorb exposures compatible with the ordinary uncertainty of execution and with the risks effectively assumed by the contractor.

This does not authorize insertion of an arbitrary “risk” percentage without a calculation memorandum.

A defensible rate needs to answer:

which risks are being remunerated;
why they belong to the contractor;
which method was used to quantify them;
whether insurance or contingencies already exist for the same exposure;
whether the risk is continuous or discrete;
how remuneration will be appropriated during execution.

Ordinary and extraordinary risk cannot be mixed

Ordinary risk is inherent to the activity and reasonably foreseeable within the procurement. Extraordinary risk arises from events that, according to legislation, the matrix, and the circumstances, may justify a specific compensation mechanism.

The BDI risk rate should not be used to absorb every future event, including those classified as extraordinary.

TCU case law itself distinguishes ordinary risks from extraordinary uncertainty and warns against overlap between price adjustment and compensation.

The article on Contract Revision, Price Adjustment, and Repactuation helps separate each mechanism.

The estimating methodology determines the payment criterion

The TCU’s 2026 Guide to Cost Engineering in Public Works makes an important point: the payment method cannot be defined first and the risk-estimating method chosen afterward.

The logic should be the reverse.

Continuous risk

This is risk whose exposure accompanies execution and can be distributed throughout the contract.

Examples may include ordinary productivity variations, small losses, and recurring uncertainties consistent with the matrix.

When the risk is incorporated into BDI, its remuneration follows the price of the measured services.

Discrete or binary risk

This is risk associated with an identifiable event that may or may not occur.

Conceptual example: the need for additional mobilization resulting from a specific condition mapped in advance.

In this case, the methodology may provide for treatment conditional on the event, provided the tender defines the trigger, evidence, and quantification method.

Risk embedded in BDI follows physical progress

When the risk component is included in BDI, it is applied to the services paid.

This means remuneration grows in the same proportion as measured physical execution.

As a rule, there is no separate “risk measurement” each month.

Simple example:

direct cost measured in the month: BRL 1,000,000;
contractual BDI: 25%;
risk component within BDI: 1%.

The risk component is embedded in the final price. It should not be charged again as a standalone item.

When the risk matrix, BDI, contingency, and insurance are calculated separately, the same risk may be remunerated more than once without the worksheet making this evident. Reconciliation should occur before the tender, with traceability among event, responsible party, quantification method, and economic component.

Engineering Risk Management to reconcile the matrix, contingency, insurance, and residual risk

The same risk cannot appear twice in the worksheet

Duplication may occur in several ways.

Risk in BDI and contingency

If an exposure has already been priced as a contractor risk in BDI, adding contingency for the same consequence creates overlap.

Risk in BDI and insurance

If the event has been transferred to an insurer and the premium is fully budgeted, the residual component needs to be identified before additional risk remuneration is maintained.

Risk in BDI and contract amendment

An event foreseen and assumed by the contractor should not automatically generate a contract increase when it materializes.

Risk in BDI and revision

If the exposure was already ordinary and remunerated, later treating it as an extraordinary event changes the original allocation.

The Contingency Reserve should be reconciled with the matrix and BDI.

Insurance reduces exposure but does not necessarily eliminate risk

An insurance policy has:

deductible;
limit;
sublimits;
exclusions;
term;
coverage conditions.

Therefore, residual risk may remain even when insurance exists.

The correct analysis does not ask only “is there insurance?” It asks what portion of the risk was transferred and what portion remained with the contractor.

The article on Public Works Insurance explores this integration in greater depth.

How to avoid duplication among risk, insurance, and contingency

An economic matrix can be structured as follows:

Event	Gross exposure	Insurance	Deductible/residual limit	Contingency	Risk allowance
Event A	100	70	30	0	30
Event B	100	0	100	60	40
Event C	100	100	0	0	0

The values are illustrative only. The purpose is to show reconciliation.

Each monetary amount should have only one economic function.

Risk that does not materialize may generate legitimate efficiency gain

An important characteristic of risk pricing is that the event may not occur.

If the contractor legitimately assumed a risk and priced that exposure, the absence of the event does not automatically mean the remuneration should be returned.

This is how risk works economically.

The report underlying TCU Decision 2,622/2013-Plenary recognizes that risk components may remain in the margin when the exposure does not materialize, provided there is no overpricing, duplication, or improper transfer.

This point is important because contracts that confiscate any legitimate gain discourage efficiency and make the risk matrix fictitious.

Efficiency gain is not payment for a nonexistent event

Two situations need to be distinguished.

In the first, risk was incorporated into the total price or BDI. The contractor bore the exposure throughout execution and may have gained when the event did not occur.

In the second, the contract created a specific payment conditional on a particular event. If the event did not occur, there is no basis for payment.

The difference lies in the contractual methodology.

For this reason, the tender needs to state which model it adopts.

Should the risk allowance be price-adjusted?

When risk is embedded in BDI and follows the services, it is part of the contract price and follows the general mechanism applicable to that price.

A separate price adjustment for the risk component should not be created as though it were an independent account.

If the Public Administration grants extraordinary revision for a specific event, it must also avoid overlap with price adjustment.

TCU Decision 1,431/2017-Plenary is an important reference for preventing bis in idem among compensation mechanisms.

Price adjustment does not replace revision, and revision does not replace price adjustment

Price adjustment restores ordinary inflationary loss according to the index and periodicity established in the contract.

Revision addresses extraordinary events under the statutory hypotheses.

If an extraordinary event increased cost and the same effect was later absorbed by the adjustment index, the compensation needs to be recalculated to prevent double coverage.

Likewise, revision should not be denied merely because a price-adjustment mechanism exists.

They are different instruments.

A contract amendment should not mechanically reapply the original risk rate. It is necessary to demonstrate whether the new scope preserves the previous exposure, creates new risks, eliminates risks already remunerated, or changes schedule, method, and interfaces. Without this analysis, the amendment may carry duplicate remuneration or leave a new exposure untreated.

Technical Analysis of Amendments, Scope Changes, and Claims

How to address risk allowance in contract amendments

A contract change may alter risk exposure.

Examples:

increase in quantities;
change in execution method;
extension of time;
introduction of a new interface;
change in geotechnical conditions;
change of location;
replacement of technology.

The amendment analysis needs to verify whether the risk originally priced remains proportional to the new scope.

Applying the same rate to every increase is not automatic.

Quantitative amendment

If there is an increase in the quantity of a service carrying the same risk profile, maintaining the original composition may be coherent.

But this depends on the matrix and on the nature of the item.

Qualitative amendment

A change in solution may create new risks, eliminate existing risks, or change probability and impact.

In that case, repeating the previous rate without analysis may create a distortion.

Extension of time

Additional time may increase exposure to some risks, but not necessarily to all of them.

Time-related risks need to be identified separately.

The article on Construction Supervision and the 25% limit shows why the passage of time alone does not automatically determine additional remuneration.

Extraordinary risk should follow the matrix

When the event occurs, the first question is not “what is the cost?” It is “who owned the risk?”

The matrix should guide:

responsibility;
notification obligation;
evidence;
notification deadline;
quantification method;
time treatment;
cost treatment;
applicable insurance;
need for revision.

Without this sequence, the discussion becomes an ex post negotiation.

Events outside the matrix require specific analysis

No matrix can anticipate every possible condition.

Unforeseen events need to be analyzed in light of:

the law;
the contract;
the nature of the event;
foreseeability;
causation;
the conduct of the parties;
mitigation capability;
materiality.

The absence of an explicit line does not automatically mean the risk belongs to the Public Administration or to the contractor.

A risk rate without a calculation memorandum does not demonstrate what is being paid or allow the value to be reviewed when design, method, or exposure changes. Cost Engineering should convert relevant events into assumptions, ranges, expected values, or distributions compatible with project maturity.

Cost Engineering to quantify risk, contingency, and BDI with traceability

How to quantify the risk allowance

The methodology should be proportional to project maturity and the data available.

Methods may include:

historical project data;
structured expert judgment;
parametric modeling;
stochastic simulation;
scenario analysis;
probability distributions;
market data;
a combination of methods.

The choice should be documented.

A simple percentage method requires justification

A single percentage may be adequate for simple, well-known scopes, but it should not be applied merely by tradition.

Minimum questions:

What historical basis supports the percentage?
Which risks are included?
Which project phase was considered?
Is there double counting?
Does the percentage remain valid for the current scope?

Without answers, the number is merely a convention.

Risk-by-risk modeling improves traceability

A more robust approach breaks each event down into probability and impact.

Example:

Risk	Probability	Impact	Expected value
A	20%	BRL 500 thousand	BRL 100 thousand
B	10%	BRL 2 million	BRL 200 thousand
C	50%	BRL 100 thousand	BRL 50 thousand

Expected value does not need to be the only measure used, but it demonstrates the connection between event and price.

In complex projects, distributions and correlations may require Monte Carlo simulation.

Correlation among risks may distort a simple sum

Rainfall, productivity, schedule, and indirect costs may be correlated.

Adding expected values without treating dependence may understate or overstate exposure.

The TCU’s 2026 Guide reinforces the need for methodological consistency in probabilistic analyses.

The allowance should reflect project maturity

An immature design has greater uncertainty.

This does not automatically mean applying a higher percentage without analysis.

Maturity influences:

number of risks;
width of ranges;
quality of quantities;
confidence in prices;
degree of geotechnical uncertainty;
need for contingency.

The iPMP helps assess this maturity.

The ABC Curve helps prioritize economically material risks

Not every risk deserves the same modeling effort.

Class A items in the ABC Curve tend to concentrate financial impact.

But low-value items may be critical to schedule or operations.

Prioritization should combine materiality and criticality.

Geological risk requires specific treatment

Subsurface conditions are an example where a generic percentage may be inadequate.

A GBR may define variation bands.

Within the band, risk may be priced.

Outside the band, the contract may provide for a specific mechanism.

This structure is superior to a generic rate for “geological unforeseen conditions.”

The measurement clause needs to state when risk is paid

A good clause should answer:

is the risk in BDI?
is it in a specific item?
does it depend on an event?
what is the trigger?
what evidence proves it?
how is it measured?
is there a limit?
how is the amount price-adjusted?
how does it interact with insurance?
how does it interact with an amendment?

Without these answers, inspection will improvise the criterion during execution.

Conceptual clause model for continuous risk

For continuous risk incorporated into BDI, the clause may establish that risk remuneration forms part of the service prices and will be appropriated proportionally to physical measurement.

This avoids a standalone item.

Conceptual model for discrete risk

When the contract adopts discrete risk, the clause should define the event, evidence, and financial treatment.

It is not enough to say “pay if it occurs.”

It is necessary to specify:

event;
threshold;
responsible party;
assessment method;
documents;
notification deadline;
financial limit.

Inspection should monitor exposure, not only payment

Risk exists before it becomes cost.

Inspection should maintain records of the main events, trends, and mitigation measures.

This makes it possible to anticipate impacts.

Claim Management organizes the event, evidence, causal nexus, and quantification.

Late notification increases uncertainty

The more time passes, the harder it becomes to reconstruct conditions, productivity, decisions, and impacts.

The contract should require contemporaneous communication of relevant events.

Failure to notify should not be treated mechanically without analyzing the specific case, but it is an important governance factor.

Risk allowance is not a margin for every loss

The company remains responsible for its productivity, management, strategy, procurement, and decisions within the risk it assumed.

It is not appropriate to turn the risk component into a mechanism for recovering every difference between forecast and actual cost.

The contract remunerates the scope, not inefficiency.

Risk and profit are different components

Profit remunerates capital and business activity.

Risk remunerates exposure.

Although they may interact economically, the BDI memorandum should keep them separate.

This improves transparency and makes it possible to assess whether the risk rate is inflated to compensate for margin, or vice versa.

Risk and financial expenses are also different

Financial expenses arise from cash flow and the cost of capital between disbursement and receipt.

Risk arises from uncertainty.

Payment delay may increase financial expenses; the risk of delay may require different contractual treatment.

Mixing the two makes auditing more difficult.

How to review risk allowance in a bid

A technical analysis can follow nine steps:

identify the risk matrix;
locate the risk component;
map insurance;
locate contingencies;
identify ordinary events;
identify extraordinary events;
verify the quantification method;
test for duplication;
verify the measurement criterion.

The result should be documented.

Warning signs in a risk composition

Some signs warrant investigation:

round percentage with no calculation memorandum;
same rate for very different projects;
risk included in BDI and in a separate item;
insurance required without reduction of exposure;
generic contingency;
ordinary event presented as extraordinary;
amendment that reapplies risk without reviewing the matrix;
full advance payment for continuous risk;
absence of a measurement criterion.

None of these signs proves an irregularity by itself. They indicate the need for analysis.

How Cost Engineering integrates risk into price

Cost Engineering connects quantities, productivity, BDI, contingency, insurance, and the matrix.

The deliverable should make it possible to trace:

risk → responsible party → method → value → payment method.

This traceability is more important than choosing an apparently precise rate.

How Owner’s Engineering uses risk allowance

In Owner’s Engineering, the objective is to preserve consistency among planning, procurement, and execution.

The work may include:

risk-matrix review;
insurability analysis;
BDI validation;
contingency analysis;
measurement criteria;
event governance;
support for amendments;
claims analysis.

Owner’s Engineering helps prevent risk from being priced one way and managed another way.

Checklist for the tender

Before publication, verify whether:

relevant risks are identified;
the matrix defines responsibility;
the estimate quantifies material risks;
BDI explains the risk component;
insurance has been reconciled;
contingency has been reconciled;
continuous and discrete risks have been separated;
measurement criteria are defined;
extraordinary events have contractual treatment;
inspection knows which evidence to record;
the price-adjustment rule is clear;
the revision rule is clear;
amendments require review of exposure;
there is no double remuneration.

How to turn the risk matrix into the contract’s economic memorandum

The risk matrix is a contractual document, but its economic usefulness depends on a second layer: the memorandum that links each relevant event to its price treatment. Without this bridge, the contract may state who bears a risk without explaining how that exposure was recognized in the estimate.

This connection should be made event by event. The starting point is risk management in public works, which organizes identification, analysis, response, and monitoring. From there, Cost Engineering defines whether the exposure will be absorbed in productivity, BDI, contingency, insurance, a specific item, or a conditional mechanism.

Traceability field	What should be recorded	Why it matters
Event	objective description of the risk	avoids a generic percentage
Responsible party	party bearing the consequence	connects matrix and price
Treatment	retain, mitigate, transfer, or share	defines the economic response
Method	percentage, expected value, simulation, or specific rule	allows the calculation to be reproduced
Component	BDI, contingency, insurance, direct cost, or conditional item	prevents double counting
Measurement	how and when remuneration is appropriated	guides inspection and payment
Revision	triggers for recalculating exposure	governs changes and amendments

This economic matrix is especially useful in audits and amendments. If the event is traceable to the price component, the team can demonstrate whether it has already been remunerated, whether insurance existed, which residual risk remained, and whether there is a basis for further compensation.

How to define a risk baseline before bidding

Risk allowance depends on the reference condition. Without a baseline, any future variation can be presented as a surprise. The baseline should record what was known, the project’s degree of maturity, field conditions, market data, and the assumptions used to build the estimate.

For geotechnical risks, for example, the baseline may be materialized through investigations and a GBR with variation bands. For price risks, the reference may combine base date, source, ABC Curve, and market research. For schedule, the reference depends on the schedule, critical path, and productivity assumptions.

The quality of the baseline defines the quality of allocation. The more vague the initial condition, the harder it becomes to distinguish ordinary risk, scope change, design error, supervening event, and contractor inefficiency.

How to inspect the risk component during execution

Inspection does not need to recalculate risk every month when the component is embedded in BDI. But it does need to monitor events that may alter exposure and preserve sufficient evidence for any future revision.

record of active and closed risks;
formal event notifications;
site diaries and contemporaneous evidence;
design and method changes;
schedule changes;
insurance endorsements;
measurements associated with conditional items;
mitigation decisions;
cost and schedule impacts;
calculation memoranda for claims and revisions.

Technical Support for Inspection of Construction and Engineering Contracts can structure this trail when the public agency’s team needs to control execution, the matrix, changes, and evidence simultaneously.

How to verify whether payment is consistent with the nature of the risk

The payment criterion should reproduce the logic used to form the price. If risk is continuous and part of BDI, its appropriation follows the services. If risk is discrete and the contract made remuneration conditional on occurrence, payment depends on the specified trigger.

Nature	Estimating method	Consistent payment method
continuous and ordinary	diluted rate or provision	follows measurement of services
discrete with trigger	specific value or contractual mechanism	conditional on demonstrated occurrence
insured	premium + residual risk	premium in BDI and residual according to matrix
extraordinary outside ordinary risk	should not be anticipated as a generic rate	treatment according to law, contract, and matrix

This consistency is an audit criterion. When method and payment do not match, there is a risk of remunerating nonexistent exposure, withholding an amount that is due, or creating disputes over events that should already have a defined rule.

An amendment should recalculate exposure when the nature of the scope changes

A simple quantitative increase and a qualitative change do not necessarily have the same effect on risk. The former may preserve the original method, productivity, and conditions. The latter may introduce technology, interfaces, schedule, or field conditions that did not exist in the baseline.

For this reason, the technical analysis of an amendment should include a specific risk section. In it, the team records which events remain, which were eliminated, which emerged, which had probability or impact changed, and how this affects BDI, contingency, and insurance.

The article on technical analysis of amendments in public works details the documentary substantiation of a contract change. Risk allowance enters this analysis as one of the components that need to be reconciled, not as an automatic rate applied to every added amount.

A claim for a materialized risk requires causation and proof of no duplication

When the contractor submits a claim related to a risk event, the first check is contractual: to whom was the event allocated? The second is economic: was it already remunerated? The third is causal: did the event actually produce the alleged cost or delay?

A consistent analysis should separate base cost, existing risk component, applicable insurance, mitigation measures, net impact, and any extraordinary component. Claim Management organizes chronology, event, responsibility, causation, quantum, and documentation.

This separation avoids two extremes: denying any impact because “there was risk in BDI,” or paying every consequence without investigating what was already covered by the original price.

How to procure a risk-allowance analysis

Specialized support should be structured as a technical engineering and cost service with a verifiable scope. The procurement should not merely request “define a risk percentage,” because that encourages a numerical answer without traceability.

Recommended scope

A technically adequate formulation is the analysis and quantification of risks with material economic impact, integration with the risk matrix, BDI, contingency, and insurance, definition of measurement criteria, and preparation of a calculation memorandum for procurement and management.

Required inputs

design and technical memoranda;
base estimate;
schedule;
risk matrix;
delivery model;
field surveys;
productivity assumptions;
planned insurance and guarantees;
history of comparable projects, when available.

Deliverables

economic-risk register;
classification among ordinary, residual, and extraordinary risk;
quantification method by risk or risk family;
calculation memorandum;
reconciliation with insurance and contingency;
proposed treatment in BDI or a specific mechanism;
measurement criteria;
revision triggers;
evidence matrix for inspection.

Acceptance criterion

The service should be accepted when the Public Administration can reproduce the calculation, trace each component to the corresponding risks, verify absence of duplication, and use the memorandum directly in the tender, bid analysis, and contract execution.

When independent support is especially advisable

The need increases in high-value contracts, geotechnically complex works, projects with a high degree of interfaces, designs still maturing, integrated procurement, contracts with substantial risk transfer, or situations in which the estimate uses probabilistic contingency.

Independent review is also warranted when the risk rate was inherited from another estimate, when different worksheets use divergent percentages, when insurance and contingency appear without reconciliation, or when an amendment seeks to automatically apply the original BDI to qualitatively new scope.

In these cases, the problem is not merely the value of the rate. It is decision governance. Cost Engineering and Estimating provides the methodological HUB for integrating cost, BDI, risk, reference, and evidence.

Final considerations

Risk allowance is not a convenience percentage. It is an economic consequence of contractual risk allocation.

When the matrix transfers risk to the contractor, the estimate needs to recognize that exposure. When the event is insured, the residual component needs to be identified. When contingency covers the same risk, reconciliation is required.

The estimating methodology defines the payment method. Continuous risk in BDI follows execution. A discrete event requires a trigger and evidence.

During execution, price adjustment, revision, and amendments cannot automatically reopen risks that have already been remunerated. Likewise, extraordinary risk should not be artificially pushed into the ordinary BDI risk component.

The best structure is one in which each risk component has a single, traceable, and verifiable function: who assumes it, how much it costs, how it is measured, and what happens when the event materializes.

Technical references

[1] BRASIL. Lei nº 14.133, de 1º de abril de 2021. Lei de Licitações e Contratos Administrativos. Available at: [Planalto — Lei nº 14.133/2021](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14133.htm).

[2] TRIBUNAL DE CONTAS DA UNIÃO. Engenharia de Custos em Obras Públicas — Um guia de perguntas e respostas. Brasília: TCU, 2026. Available at: [TCU — Infrastructure](https://portal.tcu.gov.br/infraestrutura).

[3] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.622/2013-TCU-Plenário. Reference BDI parameters for construction and engineering services. Available at: [TCU — Acórdão 2.622/2013](https://pesquisa.apps.tcu.gov.br/documento/acordao-completo/Acord%C3%A3o%202622%2F2013/%20/DTRELEVANCIA%20desc%2C%20NUMACORDAOINT%20desc/0).

[4] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 1.431/2017-TCU-Plenário. Economic-financial equilibrium, price adjustment, and prevention of overlapping components. Available at: [TCU — Case-law search](https://pesquisa.apps.tcu.gov.br/).

[5] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.191/2025-TCU-Plenário. Risks, contingencies, and probabilistic estimating in construction. Available at: [TCU — Case-law search](https://pesquisa.apps.tcu.gov.br/).

Frequently asked questions

What is risk allowance in construction?

It is the price component intended to remunerate risks allocated to the contractor according to the matrix and estimating methodology. It may be embedded in BDI or receive specific treatment.

Is risk allowance the same as contingency?

No. Contingency is a provision associated with identified risks; risk allowance is remuneration for assumed exposure. The methodology should prevent double counting.

How is risk allowance measured?

It depends on the method. If it is embedded in BDI, it follows measurement of the services. If the contract addresses a discrete risk, there may be a specific trigger conditional on the event.

Should remuneration for a risk that did not occur be returned?

Not automatically. If the risk was legitimately incorporated into the price and the contractor remained exposed during execution, non-occurrence may represent a legitimate efficiency gain. A payment explicitly conditional on an event that did not occur is different.

Can risk allowance be paid again in a contract amendment?

Not automatically. The amendment should verify whether it created new exposure, changed existing exposure, or merely increased quantities. Repeating the same rate without analysis may create duplication.

Does insurance eliminate risk allowance?

Not necessarily. A policy may include deductibles, limits, and exclusions. It is necessary to identify which portion was transferred and which remained as residual risk.

Does price adjustment cover extraordinary risks?

Price adjustment restores ordinary inflationary variation. Extraordinary events should be treated according to law, contract, and matrix, avoiding overlap between price adjustment and revision.

How can double remuneration for risk be avoided?

Reconcile the risk matrix, BDI, contingency, insurance, specific items, and revision mechanisms. Each risk should have a single, traceable economic treatment.

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