Contingency fee is dependent on some specific conditions beyond normal, satisfactory performance in work.
• A client may hire a consultant engineer to find methods of cost saving on an ongoing project to save a minimum of 10%. If consultant saves 10%, he will get his fee; otherwise no fee will be paid. The fee can be either an agreed amount or a %age of savings.
• When the fee is a %age of saving, it becomes ‘contingency fee’. In many cases, consultants tend to be biased and in order to gain the fee, they may specify inferior design or process to cut costs.