Common Uses for Contingency in a Construction Budget




Life is unpredictable. And when it comes to construction, unexpected events mean unexpected costs. On top of that, you’ve got a deadline to meet! So what’s the solution? In-part, carrying funds in your budget for contingency. A contingency allowance will help to ensure you still make your deadline without busting the budget.

A contingency allowance is money set aside to cover surprise costs during the construction process. This money is on reserve and not to be used for one area of work in particular: think of it as “insurance” for when things don’t go as planned. No matter how much you plan, there could always be unexpected costs (especially in renovations and rehabs), material substitutions, or items you want to add as construction progresses.

Most construction projects include 5–10% of the total cost as a contingency budget. Go any lower than that, and you may be sorry. Some areas where contingency is used include:

Unexpected Findings

Expect the unexpected, especially when renovating an existing, dated, home. You can only plan so much for what’s behind the walls, under the roof, or in an existing foundation.  Carrying contingency for renovations is prudent, and always recommended.

Upgrades and Finish Modifications

The designer or owner may opt for different (and better) finishes, materials, and accessories than originally planned. These can add costs, especially when the materials are upgraded. However, if contingency funds are available, it takes the sting out of making those much-wanted upgrades.

Design Changes

In any construction project, an owner may opt to move a wall, electric, plumbing, and the list goes on – seeing something in person may have a totally different feel than what it looked like on the plans. Your contingency will allow for some flexibility when it comes to those essential design changes.

So, the question becomes, how can you minimize the risks/changes and therefore the need to dip into your contingency allowance? Preconstruction services and planning are a huge part of minimizing additional costs and changes – and a phase of the project Broadpoint emphasizes and takes very seriously. A complete walk-through of plans with designers, engineers, architects, and the contractor is a good first step. This will create a clearly defined scope so that everyone is on the same page, and knows what needs to get done to make your vision a reality.

Give us a call today (302-567-2100) to create a design, budget, and contingency plan that works for you. Let Broadpoint make your custom home vision a reality!

SOURCES:
https://www.houzz.com.au/ideabooks/54366096/list/13-hidden-costs-often-missing-from-builders-quotes
https://www.fgould.com/middle-east/articles/managing-contingency-construction-cost-estimates/
https://www.houzz.com/discussions/2305349/how-much-to-budget-for-construction-contingency