The design contingency is usually up to 10% of the total construction cost. Although calculated and identified separately, the contingency amount must be an additional amount maintained by the owner in the project budget. The owner keeps the budget and withholds it for use by the architect and designers to ensure that the entire desired scope is covered. A construction contingency must take into account all types of construction contingencies needed for the project.
Typically, an estimate of 5 to 10% of the total construction budget is allocated to a construction contingency. Home builders and remodelers typically allocate between 5% and 10% of a project budget for a construction contingency. This amount creates enough breathing space for unexpected expenses. Anyone who tracks estimates and costs manually calculates a contingency percentage on top of all costs, before profit margins are applied.
Whether made on paper or calculated by hand, these methods offer familiar and accessible estimation options that put budgets and proposals in the hands of customers. However, any price negotiation or recalculation requires careful follow-up and runs the risk of human error. Contingencies generally relate to costs and are amounts that are kept in reserve to deal with unforeseen circumstances. However, they may also relate to other aspects of the project, for example, the program may include a contingency where it is important that a specific end date be reached.
