What is the term for the amount added to an estimate to cover risks associated with unknowns?

The term "contingency" specifically refers to the additional amount included in a budget or estimate to account for unforeseen events or uncertainties that may arise during a project. This amount acts as a financial cushion, allowing project teams to manage risks without needing to alter the overall project budget significantly. By allocating a contingency amount, project managers prepare for potential issues that could impact costs or timelines, ensuring that the project can proceed smoothly even when unexpected challenges occur.

Other terms like "margin of safety," "risk assessment," and "buffer" may relate to the concepts of risk management and project estimating, but they do not specifically denote the added funds set aside for unknown risks in the same way that "contingency" does. A margin of safety could refer more generally to the difference between actual performance and the minimum required performance. Risk assessment is the process of identifying and evaluating risks, while a buffer is often used more informally to describe any space or time added to account for variability in project execution. Thus, "contingency" is the term that precisely captures the intended meaning in the context of estimating project costs and managing risks.