How much contingency should you allow for building work?

Almost every building project meets something unexpected. Contingency is the money you set aside for it. The question homeowners ask us most is “how much?” — and the honest answer is that it depends on the project, how well it has been defined, and how much risk sits in the parts nobody can see yet.

You will find percentage rules of thumb quoted online. They can be a useful starting point, but a fixed figure applied to every job can leave you either over-cautious or badly exposed. It is better to understand what drives the risk on your project and set contingency accordingly.

What contingency is — and is not — for

Contingency is for genuine unknowns: things that could not reasonably have been foreseen or priced. Examples include poor ground found when digging foundations, rotten timbers behind plaster, drainage in a different place from the survey, or a structural issue revealed during strip-out.

It is not really for changes of mind or upgrades. If you decide mid-project to add underfloor heating or choose a more expensive kitchen, that is a variation — and it is better budgeted separately, so your contingency is still there when something unexpected happens.

What affects how much you need

Type of work

Refurbishing or altering an older property generally carries more hidden risk than building new. Once you open up walls, floors and roofs, you find what previous owners and builders left behind.

How well the project is defined

A project with full drawings, an engineer's design, a clear specification and surveys completed carries less uncertainty than one priced from sketches. The less defined the scope, the more contingency you need.

How much of the price is provisional

If a large share of the quotation is made up of provisional sums and allowances, the final cost is less certain. Contingency needs to reflect that.

Site and ground conditions

Trees, clay soils, sloping sites, restricted access, shared drainage and proximity to neighbours can all add risk. Surveys and investigations before tender reduce it.

Your own tolerance for risk

Some clients can absorb an overrun; others have a fixed ceiling. If your budget is tight, a larger contingency — and fewer optional extras — is the safer approach.

Setting a sensible figure

• Start from the most reliable price you have, ideally from a well-defined tender.
• Look at each area of risk — ground, existing structure, services, allowances — and consider what could reasonably go wrong.
• Hold contingency as a separate line in your budget, not buried in the builder's price.
• Keep a separate figure for anything you might choose to add or upgrade.
• Remember fees, VAT and costs outside the building contract, such as surveys, building control and furniture.

Managing contingency during the project

Contingency works best when it is visible and controlled. Record each time it is drawn on, what for, and how much remains. Agree changes and their costs in writing before work is done. Review the position regularly so there are no surprises at the final account.

If contingency is not needed, it stays in your pocket. Treat it as insurance, not as extra budget to spend.

Reducing the risk up front

The most effective way to need less contingency is to reduce uncertainty before you start: complete surveys and investigations, finalise the design, choose finishes early, and get quotations on the same clear information. That is where a well-prepared scope and tender make a real difference.

Talk it through

If you are setting a budget for a project and want an independent view on what it is likely to involve and how much contingency makes sense, request a free 30-minute consultation. James and Caroline will talk through your plans and where the main cost risks are likely to sit.