Construction Glossary
Contingency
Definition
Contingency is a sum of money set aside in a budget to cover unforeseen costs and risks. It is not allocated to any specific item, it is a buffer for the things you cannot predict, such as ground conditions or design changes. It is usually expressed as a percentage of the construction cost. As risks are resolved, unused contingency can be released.
Every project carries risk, and contingency is how a budget allows for it without pretending the future is certain. Early on, when little is fixed, the contingency is higher, and it usually reduces as the design develops and risks fall away.
It is kept separate from measured costs and provisional sums so everyone can see how much risk money is in the budget and how much remains.
Why it matters
Too little contingency and one bad surprise turns a profitable job into a loss. Too much and your price looks uncompetitive. Sizing the contingency to the real risk on a scheme protects your margin and stops you funding problems out of your own pocket.
We advise on a sensible contingency in your cost plan or estimate so the budget can absorb surprises without wrecking your margin.
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