1. What a contingency actually covers
Three things that are unknown by nature. Conditions that could not be fully known before construction, for instance the ground or the condition of an existing building.
Solutions that were undecided when the estimate was made.
Market movement between estimate and quotation.
All three are probabilities, not errors. A contingency covering them is a calculation; a contingency covering carelessness in the estimate is something else, and should not be called by the same name.
2. Two things that are often conflated
This is the practical core of the article. It separates the contingency from unforeseen works.
| What it is | Where it comes from | Whose it is |
|---|---|---|
| Unforeseen costs | from what could not be known | part of the estimate |
| Client changes | from what the client decides differently | the client's room for decision |
These two are often covered from a single contingency, and that is a mistake. Their causes and their handling differ.
If they are not separated, the contingency is consumed by changes, and when genuine unforeseen costs arise there is nothing left. Changes usually come earlier than surprises, so a shared contingency empties in the wrong order.
Practical recommendation: show them as separate lines, even where the sum is the same. That shows which line is being consumed.
3. Why one percentage for everyone does not work
Three reasons. New build on a level plot has fewer unknowns than reconstruction.
A project with a ground survey has fewer unknowns than one without, as covered in the article on foundations and ground conditions. The size of the contingency should reflect that.
A completed design has fewer unknowns than a sketch.
The same percentage across all these situations means it is too large in one case and too small in another. The percentage must be tied to the level of knowledge.
This guide states no percentage, because it depends on the project and stating it as a general figure would mislead. The right question is not how many percent but what is open.
4. How to manage a contingency
Four rules during construction. A contingency is a tracked line, not a hidden sum.
Its use is recorded, together with the reason.
An unused contingency belongs to the client, not the contractor, unless the contract says otherwise. That point belongs in the contract.
A contingency is not used to fund changes unless that is a deliberate decision. A change is a separate decision and a separate line.
The third rule is a contractual question and must be fixed in writing, because there is no single default understanding: both parties usually assume an unused contingency is theirs. It concerns how the contingency may be used.
5. When it reduces
Two moments. When an unknown becomes known, for instance when a ground survey result arrives.
When a decision is made, for instance on the level of finish. Each decision narrows the range.
A contingency does not reduce with the passage of time but with the growth of knowledge. This is the same logic that applies to the range of an estimate, and the connection is worth showing to the client: both narrow on the same decisions.
In summary, and four practical rules
A contingency covers three types of unknown and is not a safety margin. The unforeseen contingency and the client change budget are two different things, and covering them from one line empties it in the wrong order. A single percentage does not work, because the number of unknowns differs by project, and the right question is what is open rather than how many percent. A contingency reduces with knowledge, not with time.
Four rules: separate the unforeseen contingency from the client change budget. Tie the size of the contingency to the number of open questions, not to a general percentage. Fix in the contract who keeps an unused contingency. Reduce the contingency when an unknown is resolved, and show that to the client.
This article serves professional orientation at the date of checking. It is not a quotation.