Three reserves best kept apart
What is called "contingency" actually groups three risks of a different nature. Each one arises at a different moment, is controlled by a different person and shrinks at its own pace. Merging them into a single line makes it impossible to tell, halfway through the works, whether what is left is enough for what remains.
| Reserve | What it covers | Who decides its use | When it shrinks |
|---|---|---|---|
| Estimating reserve | the possible error in a figure calculated on an incomplete design | the client, on the proposal of whoever prepares the estimate | with each design stage, up to the contract |
| Construction reserve | the physical risks of the works: ground, existing building, clashes, undetected conditions | the client, after a report from the dirección facultativa (site direction team) | as the risk items are carried out |
| Client's reserve | the changes the client will want to make: brief, specification, marketing | the client alone | when decisions on brief and finishes are closed |
The estimating reserve is not a construction risk. It measures the gap between a figure calculated with little information and the one that will emerge when the design is complete. In principle it disappears once the price is contracted; if at that point the contract exceeds the estimate, the difference is not a contingency but an estimate that did not hold up.
The client's reserve must not fund other people's failures, nor the other way round. A change of brief paid for from the construction reserve leaves the works with no cushion for the ground or the existing building. A design error paid for from the client's reserve takes away the client's room for decision without anyone answering for it.
Why this article gives no percentages
A single contingency percentage hides the important question: how much uncertainty is left, and where. Two jobs with the same budget may need very different reserves if one is a simple single-storey industrial shed on known ground and the other is the refurbishment of a listed building. No official Spanish reference fixing a contingency percentage for private works has been found, and carrying a figure over from another context gives a false sense of security.
The useful method is to start from the certainty table of the total cost. The article on moving from the works budget to the total development cost classifies each item by the moment it becomes certain. The reserve is reasoned item by item over those that are still estimated or provisional, and then added up; the result is a figure that is justified, reviewable and understandable by whoever provides the funding.
The reserve stage by stage
Each design stage should translate into a lower estimating reserve; if it does not fall, the stage has added no definition. The table summarises what is known and what remains open at each point.
| Stage | What is known | What remains open | What to do with the reserves |
|---|---|---|---|
| Feasibility studies | brief, floor area, location, ground conditions if surveyed | construction solutions, specification, final foundations | high estimating reserve; client's reserve open |
| Preliminary design (anteproyecto) | massing, layout, general construction system | quantities, building services, finishes | review the estimating reserve against a first estimate by trade section |
| Outline design (proyecto básico) | general characteristics of the works, sufficient for planning permission | construction detail, full quantities | the figure is still approximate; keep the estimating reserve |
| Detailed design (proyecto de ejecución) | quantities and itemised budget | market price, lump-sum items, construction risks | reduce the estimating reserve; set the construction reserve item by item |
| Tendering and contract | price committed by the contractor | extra works, physical risks, client changes | cancel the estimating reserve; keep the other two |
| Works | items carried out, ground and existing building uncovered | items still to be carried out, final account | release the construction reserve as the risk items are closed |
The outline design is not enough to reduce the reserve. Article 6 of the Technical Building Code (Código Técnico de la Edificación) provides that the outline design "shall define the general characteristics of the works" (unofficial translation) and serves to apply for planning permission, but not to build. Its cost figure can only be approximate, and approving it as if it were a market price is the mistake that most often turns a reasonable reserve into an inadequate one.
Lump-sum items (partidas alzadas) are pockets of uncertainty within the detailed design. A lump-sum item replaces a measured quantity with a global amount; the more of them there are and the greater their weight, the more the estimating reserve should be kept even when the design is finished. How to read them is explained in the article on lump-sum items in the budget.
When the detailed design exceeds the budget, the reserve is not the answer. Absorbing the deviation with the estimating reserve leaves the works with no margin before they start. The correct treatment, with its options, is described in the article on what to do when the design estimate exceeds the client's budget.
Refurbishment: a higher, slower construction reserve
In refurbishment, the dominant risk lies in the existing building, and it is only known once the building is opened up. Structure, concealed services, damp or protected elements come to light with demolition and opening-up works. The construction reserve weighs more than in new build and is released later, when the works that expose the existing fabric are finished.
Opening-up investigations beforehand reduce the reserve before the contract. A survey of the building before the detailed design costs little compared with the amount it allows to be taken out of the reserve. Reference costs for this type of work are covered in the article on the cost of a full refurbishment.
In public works: amounts to budget for, not margins
The Public Sector Contracts Act (LCSP) contains two figures that are often read as available margin and that are in fact expenditure the órgano de contratación (contracting authority) must be able to pay. The first is excess quantities of up to 10%: article 242.4 of the LCSP provides that variations in quantities which, taken as a whole, do not represent an increase in expenditure of more than 10% of the initial contract price shall not be treated as modifications, and that this excess "shall be included in the final certificate of the works" (unofficial translation). The final certificate is approved within the 3 months following handover (art. 243). For the budget, that amount arrives at the end of the works, when the rest of the appropriation has already been spent: it has to be foreseen from the outset as a likely amount, not discovered in the final account.
The second is a planned modification of up to 20%: article 204 allows the contract to be modified, if the tender specifications provide for it in a "clear, precise and unequivocal" way, "up to a maximum of twenty per cent of the initial price". The estimated value of the contract must include the maximum amount it may reach, "taking into account all the planned upward modifications" (art. 101.2). Providing for a modification in the specifications does not fund it: the expenditure, if it occurs, has to be provided for.
Unplanned modifications are not a reserve. Article 205 limits them to "strictly indispensable" variations and to a closed list of cases. Relying on them to correct a poorly budgeted design is a bet on an exceptional route. Their regime and their limits are dealt with in another branch of this guide.
Rules for using the reserve
A reserve is protected by four written rules. First: every drawdown on the reserve requires a decision by the client, with an amount and a reason, and is entered in a log. Second: transfers between the three reserves are decided expressly; a surplus construction reserve may pass to the client's reserve, but only once the risk items have been carried out. Third: the remaining reserve is always reported together with the risks still outstanding, never on its own. Fourth: whatever has not been used by the end of the works is released, and that release is also logged.
The useful report compares what is left with what remains to be done. A construction reserve that is mostly used up before the foundations or the demolition have been carried out is a warning sign, even if the committed cost has not changed. That comparison, kept up month by month, is what lets the client decide in time: reduce an outstanding item, accept a higher cost or give up a planned change.
This article reflects the state of the rules on the date of verification, 21 October 2026, and is intended as professional guidance. It does not replace legal advice or an examination of the specific case.