How much construction contingency should I allow?
Set contingency against the risks still unresolved in your project. A standard percentage is a sense-check, not an explanation of what the money covers.
by Jack Butler-Kettle · About 4 min readShare
The answer
There is no universally correct contingency percentage. A well-defined project with investigated ground conditions has different uncertainty from an early renovation concept.
The allowance should identify what might happen, its possible cost and which party carries that risk. Known scope, client changes and inflation should be visible rather than hidden together.
List the unresolved risks
Work through ground conditions, existing fabric, design gaps, quantities, interfaces, approvals and programme. Ask the relevant specialists to identify technical uncertainties.
For each risk, record the cause, possible consequence, evidence and next investigation. Distinguish a genuine uncertainty from necessary work simply omitted from the estimate.
An unpriced drainage connection belongs in the base scope if it is already known to be required.
Assess probability and cost consequences
Estimate a plausible cost range and likelihood for each material risk, using available evidence. Record the basis rather than presenting judgement as certainty.
For an early screening calculation, a 25% chance of a £20,000 consequence has an expected value of £5,000. That does not cap the possible loss at £5,000.
Several risks may occur together. Consider correlation, affordability of a severe outcome and whether specialist quantitative analysis is proportionate.
Keep different allowances visible
Separate design development, construction risks, client changes and price movement on an explained basis. Check the approach against the RICS NRM framework.
A contractor’s price may include some risk while leaving other risk with the client. Read the contract rather than assuming all uncertainty has transferred.
Remove any duplicated allowance already included in a package rate, provisional sum or separate client reserve.
Control use of the allowance
Keep the original approved allowance and a record of authorised transfers. Link each transfer to the event, supporting amount and approval.
When investigation resolves a risk, reassess it. Do not both spend its allowance and retain the same full allowance in the forecast.
Forecast cost reporting should show base cost, changes and remaining risk separately.
Test the budget before committing
If the project is affordable only with every risk excluded, investigate, redesign or secure an appropriate funding plan before committing.
The result remains an assessment of uncertain cost, not insurance against every possible overrun.
Our Construction cost estimating and planning service records the scope, assumptions and allowances behind a client’s construction budget.
Example
The facts
A fictional budget has £300,000 of defined work and a £30,000 separately approved risk allowance.
What happens
A drainage risk becomes an agreed £8,000 additional scope item. The approved transfer moves £8,000 into the work budget.
The work budget becomes £308,000 and the remaining allowance £22,000. The total remains £330,000.
The team reassesses the remaining risks before concluding that £22,000 is still adequate.
What this shows
Transferring an allowance changes its classification; it does not create extra budget or prove that all remaining risks are covered.
Risk and contingency register
Record risk owners and evidence for each transfer. Reconcile the revised base budget and remaining contingency to the approved total.
Free blank template for your own project. The completed example is shown below. No email address required.
View the completed example
Completed fictional example
Westhaven refurbishment · 14 October 2026 · Version 1.0
Risk register
Scroll across if needed to read the whole record. A dash means no value has been entered.
| Risk | Cause / effect | Allowance (£) | Owner | Mitigation / status |
|---|---|---|---|---|
| R-01 ground conditions | Unknown local obstruction; additional excavation | £12,000.00 | Project lead | Trial pits before main works |
| R-02 design development | Unresolved service routes | £18,000.00 | Design lead | Coordinate before procurement |
Contingency control
Scroll across if needed to read the whole record. A dash means no value has been entered.
| Budget | Original base (£) | Original contingency (£) | Approved transfer (£) | Revised base (£) | Remaining contingency (£) | Total (£) |
|---|---|---|---|---|---|---|
| Approved project budget | £300,000.00 | £30,000.00 | £8,000.00 | £308,000.00 | £22,000.00 | £330,000.00 |
The £8,000 transfer reallocates the existing budget: £308,000 base plus £22,000 contingency still totals £330,000. It is not an extra saving or a new budget.