Contingency Factor

Many assumptions have to be made and documented when constructing a Clinical Trials cost budget.  While the analysis completed in coming to these assumptions certainly helps reduce financial risk.  Not all variables can be completely defined and therefore it can be helpful to increase the Total Costs that are already adjusted for inflation to cover for some of the events that cannot be predicted or accurately quantified. 

This increase, or contingency factor, generally is relatively small.  It can be helpful to establish a standard percentage used to “uplift” the Total Costs already adjusted for inflation in your department.  To complete this calculation, the Total Costs already adjust for inflation are multiplied by this standard percentage.  The Contingency amount can then be added to the Total Costs Including Inflation Factor.   

To provide an example of this calculation, the bottom rows of the subject-related clinical trial cost budget is provided below.  The contingency rate used in this example 3%.  The actual calculation contained on the row entitled “Contingency Rate of 3%” is   = (the value in the cell directly above it, on the “Total Costs including Inflation Factor” line) * .03

The Contingency Amount can then be added to the Total Costs Including Inflation Factor to arrive at the amount that needs to be covered by contract budget.