What Is a Contingency in Construction?
A contingency is the financial breathing space that protects your project from the unexpected. It isn’t spare money. It isn’t a bonus or a cushion for mistakes. It’s the planned allowance that acknowledges reality — no matter how well you prepare, the unknown still finds its way in.
Think of it as the project’s safety net. You hope never to use it, but when you do, it prevents a stumble from turning into a fall. It exists to cover risks that are foreseeable but unpredictable in timing or scale. Maybe the site investigation missed a patch of poor soil. A new building regulations arrive mid-project. Or maybe a key material doubles in price overnight. The contingency gives you options when events like these threaten to derail progress.
What a Contingency Should Cover
In the simplest terms, a contingency covers the risks you know might exist but can’t yet measure. It’s there for design evolution, tricky site conditions, or regulatory updates that appear once works have started. It’s also there for market pressures — the sudden price fluctuations in materials or labour that no one could have foreseen at tender stage.
But a good contingency does more than just absorb costs. It acts as a management tool. It allows projects to keep moving, to adapt quickly without pausing every time a new challenge appears. When you manage it properly, you maintain control and confidence – two of the hardest things to recover once they’re lost.
How Much Contingency Should You Allow?
There’s no universal rule for how much contingency a project should carry. The right figure depends on the stage of design, the complexity of the works, and how much you already know about the site.
In the UK, early-stage budgets often include higher contingencies because designs are still developing and risks haven’t been fully explored. Once you tender the project and complete the drawings, you can reduce the allowance to reflect that greater certainty.
The principle is simple: the less you know, the more you should allow. As information improves, contingency tightens. You aren’t being pessimistic; you are being prepared.
Why Contingency Management Matters
Having a contingency is one thing. Managing it properly is another. Too many projects treat it as a hidden pot of money, gradually eaten away by decisions that have little to do with risk. That’s how budgets spiral.
A well-managed contingency is transparent. It’s tracked, reviewed, and adjusted as the project evolves. When a risk is resolved or no longer relevant, the unused contingency can be released. When a new issue emerges, the allowance can be reassessed. It’s a living part of the budget — not a static line on a spreadsheet.
Keeping it separate from other project costs is key. Once contingency funds blend into general spend, you lose visibility and control. When everyone sees how and why you use it, the team builds trust, and you can defend decisions more easily later on.
Reducing the Need for Contingency
While every project needs a contingency, the best teams work to make it smaller. The more you know before work starts, the fewer surprises you’ll face. That means investing early in surveys, ground investigations, and design development. It means giving consultants enough time to test ideas and spot conflicts before they reach site.
Early collaboration also helps. When engineers, cost consultants, and contractors engage from the start, risks surface sooner — and solutions are found before they turn into costs. Clarity in scope is equally important. The clearer everyone is about what’s included and what’s excluded, the fewer assumptions end up eating into the contingency later.
At Harrison Clarke, we often remind clients that contingency isn’t a sign of poor planning — it’s proof of good risk management. But planning well, testing assumptions, and building realistic programmes are the best ways to reduce how much you’ll ever need to draw on it.
For more detail on building strong, risk-aware budgets, you can read our article on How to Build a Construction Budget.
Common Pitfalls
Where contingencies go wrong, the same patterns appear. Someone sets the allowance too low because optimism feels safer on paper. Or the contingency is quietly absorbed into the main contract value and forgotten until the money runs short. Sometimes, it’s used for things that were never risks at all — scope changes, upgrades, or features added late in the project.
The other mistake is never reviewing it. Risks change over time. If the project is progressing smoothly and certain uncertainties are resolved, the contingency can be released or reallocated. But if fresh challenges arise, it may need to be strengthened. Either way, it needs active management, not neglect.
The Real Role of Contingency
The purpose of a contingency is simple: to keep projects stable in uncertain conditions. It prevents one surprise from toppling the whole structure. But its value goes deeper. It creates confidence. It shows foresight. It helps clients, contractors, and consultants make decisions from a position of control instead of panic.
A project without contingency is like a tightrope without a net. You might cross it, but the risk isn’t worth it. The best budgets anticipate change, and the best teams know how to adapt without losing balance.
At Harrison Clarke Chartered Building Surveyors, we help clients plan and manage contingencies that reflect real risks, not rough guesses — turning uncertainty into something you can control, measure, and master.
If you have any questions, or would like to know more about how Harrison Clarke can help, just get in touch with the team today on 02381 55 00 51 and we would be happy to help.
For more expert advice on surveying and property matters, check out our range of informative videos on our website or YouTube channel. Harrison Clarke Chartered Surveyors is here to guide you every step of the way!
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