Three allowances not to be confused
A single "imprevisti" (contingencies) line hides three risks with different origins, timing and owners. Keeping them separate means that, when the allowance is used up, the client knows why.
| Allowance | What it covers | How it evolves | Who decides to use it |
|---|---|---|---|
| Estimating uncertainty | the gap between the designer's estimate and the price the market will ask | shrinks with each design stage and disappears when the contract is signed | no one: it closes by itself once the price becomes certain |
| Unforeseen events on site | what is discovered during the works: ground, existing structures, hidden services, external events | stays open until the shell and core are complete, then falls | the client, on a reasoned proposal from the works director |
| Client's allowance | the changes to the brief or finishes that the client will decide on | depends only on the client's choices | the client, and the client alone |
The first allowance is not, strictly speaking, a contingency. It measures how far the estimate can still be wrong. At feasibility stage, the estimate rests on approximate quantities and reference prices; at detailed design stage (progetto esecutivo, the construction-ready design), quantities are measured item by item. This uncertainty should not be confused with unforeseen events on site: it disappears when the contract is signed and the price of the works becomes a given.
The second allowance is what everyday language calls contingencies. It covers facts no design could know for certain: the quality of the ground beyond the boreholes, the condition of a concealed floor slab, the route of an undocumented service.
The third allowance is the most underestimated, because clients tend not to regard their own changes as unforeseen. Yet it is the most frequent cause of overruns in private work: a finish chosen on site, a room reconfigured, a system added. Without a line of its own, it ends up consuming the allowance meant for genuine contingencies.
How the allowance changes stage by stage
The relative weight of the three allowances changes at every stage, and the budget should record it. The table describes the trend, without percentages: in private work no official source sets a figure, and every project has its own risk profile.
| Stage | Estimating uncertainty | Unforeseen events on site | Client's allowance |
|---|---|---|---|
| Brief and feasibility study | highest: areas and solutions still open | high, especially without surveys | high: the brief is not yet settled |
| Technical and economic feasibility design | high: the estimate is a computo estimativo (outline cost estimate) | high, reduced by the first surveys | medium |
| Detailed design | low: full computo metrico estimativo (priced bill of quantities) and price list | medium: what cannot be seen remains | low, if the choices have been made |
| Contract signed | none: the price is contractual | unchanged | unchanged |
| Shell and core complete | none | low: ground and structures are known | depends on the choice of finishes |
| Final account closed | none | none | none |
The decisive step is the detailed design. In public works, Annex I.7 to Legislative Decree 36/2023 (D.Lgs. 36/2023) requires for the progetto di fattibilità tecnico-economica (technical and economic feasibility design) an "outline cost estimate of the work" (unofficial translation) and a project cost framework, the quadro economico (art. 6, para. 7, letters i and l), and for the detailed design the list of unit prices, the priced bill of quantities and the cost framework (art. 22, para. 4). The jump in precision between the two documents is why estimating uncertainty falls: a private client who asks for equivalent documents gets the same effect.
Early surveys reduce the second allowance more than any accounting caution. A geological borehole or an opening-up survey of existing structures turns a risk into a quantity to be estimated. Their cost should be weighed against the part of the allowance they make it possible to release.
The only reference in the rules: public works
For public works, Annex I.7 to D.Lgs. 36/2023 sets a range. Art. 5, para. 2, provides that contingencies and works carried out directly by the authority (lavori in amministrazione diretta) be kept "within a threshold of between 5 and 10 per cent of the amount of the works put out to tender", with a calculation that includes safety costs.
The range applies to the two amounts together, not to contingencies alone. Contingencies (sums at the authority's disposal, art. 5, para. 1, letter e, no. 5) and directly executed works (no. 1) share the same threshold: a stazione appaltante (contracting authority) that assigns a significant share to directly executed works leaves less room for contingencies. Separate from both, the allowances for contract modifications (no. 6) have a line of their own. The make-up of the somme a disposizione (sums at the authority's disposal) is explained in the article on sums at the authority's disposal in the cost framework.
This range is a public works rule, not a rule for private work. A private client can use it as a benchmark, bearing in mind that it applies to a design put out to tender, so already developed, and that it covers neither the uncertainty of earlier stages nor changes to the brief made by the client.
One allowance, two uses
In public works, contingencies also serve to fund price revision. Art. 60, para. 5, of D.Lgs. 36/2023 allows the contracting authority to use, "up to a limit of 50 per cent", the contingency sums in the cost framework, together with tender discounts and savings on completed works. The revision mechanism is dealt with in the guide on the bill of quantities; what matters here is the effect on the budget.
The consequence is that an allowance intended for unforeseen events on site can be partly absorbed by price movements. A fictitious example, with round figures, makes this visible.
| Fictitious example | Amount |
|---|---|
| Works put out to tender, including safety costs | 2,000,000 euros |
| Art. 5, para. 2 range (5 and 10 per cent), for contingencies and directly executed works together | 100,000 to 200,000 euros |
| Amount chosen: contingencies 140,000 euros, directly executed works 20,000 euros | 160,000 euros |
| Share of contingencies usable for price revision (50 per cent of 140,000) | up to 70,000 euros |
| Contingencies remaining if revision absorbs the whole share | 70,000 euros |
Whoever sizes the allowance must therefore ask what part will really remain available for unforeseen events on site. In a period of unstable prices, half the allowance can be committed to an item that has nothing to do with the ground or the existing building.
In private work, price risk follows a different route. Art. 1664 of the codice civile (the Italian Civil Code) provides for revision when, through unforeseeable circumstances, increases or decreases exceed one tenth of the total agreed price, and only for the part above one tenth; according to the trend of decisions reported by Brocardi (Cass. no. 5267/2018), the parties may depart from it in the contract. A private client should read the price clause before deciding whether their allowance must also cover this risk.
In private work: no rule, a discipline to adopt
No rule sets a contingency percentage for a private client, the committente, and the "usual" percentages in circulation have no official basis. The allowance should therefore be built on the case: state of the design, knowledge of the site, nature of the works, stability of the brief.
Renovation needs a higher allowance than new build. An existing building hides what the design cannot measure: structures, services, damp, departures from the approved plans. The reasons why refurbishment costs vary more widely are examined in the article on the cost of a full house renovation; the allowance must reflect that spread, especially until demolition has been carried out.
Four rules make the allowance manageable. First: write it on separate lines for the three allowances, not as a single percentage. Second: decide who may propose using it (usually the works director) and who authorises it (always the client, in writing). Third: release the share no longer needed at each completed stage, instead of leaving it available for spending outside the brief. Fourth: do not use it to absorb an estimate overrun before tender.
The last rule is the most important. If the design estimate already exceeds the budget before the works are awarded, covering the difference with the allowance means starting on site with no margin. The right course is to revise the design, as explained in the article on what to do when the estimate exceeds the budget before awarding the works.
The allowance within the total cost
The allowance is an item of the total cost of the project, not a mark-up on the works. It should be calculated on the items it relates to: estimating uncertainty and unforeseen events on site on the works, the client's allowance on the parts of the brief still open. The other items of the total cost are listed in the article from works budget to the total cost of the project.
This article sets out the rules as they stood on the date of checking and is intended as professional guidance. It does not replace legal advice or an examination of the specific case.