Utah Contractor Practice Exam 2025 – All-In-One Guide to Master Your Contractor Exam Success!

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How might a contractor use contingency in their bids?

To increase overhead rates

To account for unforeseen issues

A contractor uses contingency in their bids primarily to account for unforeseen issues that may arise during the course of a project. This approach allows builders to set aside a portion of the budget to cover unexpected costs, such as material price fluctuations, design changes, or unforeseen site conditions. Including a contingency amount in the bid ensures that the contractor can handle these potential risks without having to go back to the client for additional funds.

By incorporating contingency into a bid, the contractor maintains financial stability and project feasibility, building a buffer that helps safeguard against the uncertainties inherent in construction work. This practice not only protects the contractor's profit margin but also fosters trust with clients by providing a mechanism to deal with surprises in a transparent manner.

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To lower competitive pricing

To minimize tax liabilities

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