GuidesConstruction
Contingency: how much to set aside
Share of the budget set aside for site surprises.
Simple new build: five percent
Complex new build: ten percent
Major renovation: fifteen percent
Common percentages
- Simple new build: five percent
- Complex new build: ten percent
- Major renovation: fifteen percent
- Older building: up to twenty percent
What contingency covers
It absorbs price increases and ground surprises. It does not cover chosen additions.
What justifies a higher percentage
- An older building, full of surprises
- Unknown soil, with no geotechnical study
- A project with high-end finishes
- A site stretching beyond a year
Where to hold the contingency
It can come from your equity or from the loan itself.
A contingency inside the loan costs interest, even if you never use it.
What is left at the end
The unspent portion stays available. It does not turn into extra work.
When the contingency runs out
If it is spent mid-project, the budget is in trouble.
The lender will then require an additional contribution from you.
Track its level at each advance, not only at the end.
What is not a contingency
A change of materials decided along the way is not one.
Such additions are financed separately, or come out of your pocket.
Keep the contingency for surprises, not for upgrades.
