Budget control
How much contingency should my construction budget carry?
Contingency isn't padding. It's the price of not knowing everything on day one — and every project has unknowns.
By Salt & Oak Development Group•
Short answer
Carry three separate contingencies: design contingency (10–20% early, declining as drawings develop), construction contingency (3–7% for new construction, 10–20% for renovation), and an owner contingency of 5–10% that only you control.
Typical ranges
| Project type | Construction contingency | Notes |
|---|---|---|
| New construction, complete drawings | 3–5% | Risk concentrates in site conditions |
| New construction, early pricing | 7–10% | Design is still moving |
| Renovation, known building | 10–15% | Concealed conditions dominate |
| Historic or heavily altered building | 15–25% | Assume discoveries, not surprises |
The rule owners forget
Contingency spent is not contingency saved. Track the balance monthly against percent complete: if you are 30% built and 70% through contingency, you have a budget problem now, not at closeout. That single ratio is the earliest reliable warning sign on any project.
Who may spend it
- Construction contingency: contractor draws it for defined events, with your written approval per use
- Design contingency: released by the design team as drawings resolve, tracked by the owner
- Owner contingency: yours alone, for scope you choose to add — never shown to the contractor
Common questions
- Should I tell the contractor how much contingency I have?
- Tell them the construction contingency in their contract; keep your owner contingency private. Budgets tend to expand to fill whatever number the market knows about.
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