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Contingencies

This is a subject that, no doubt, most people would like to ignore. Problem is that ignoring it might just mean it will catch you by surprise.

It is a fact of construction life that there is always the unexpected. Even if you have done your homework, planned meticulously, specified everything and worked out your budget, there will always be something. After all, you can only plan for the expected. It is just not possible to include every possible eventuality in your plans. By definition plans are made up using known elements and likely circumstances.

So contingencies are those unexpected things. The disused Victorian drain that you did not know was there, the wall that needs reinforcing, the electrics that need rewiring, the delayed delivery that means you can't strike the scaffolding etc. And any of these things will cost.

A change of mind during the build, a small detail that you decide you want differently, or an upgrade in the spec. An " Oh! While you are here, can you just do this?" or an " actually, now I see it, can you just move that window?" will all cost.

So you need a contingency fund, in reserve, for just those things, just in case. If you plan to use your entire budget, to the max, without setting anything aside for contingencies, you run the major risk of not being able to complete the job.

How much should you set aside? Well that really depends on the project. A total new build on a greenfield site will probably have fewer surprises than a conversion of an old Oast house, and particularly once the groundworks are done a new build is very predictable. An extension combines new build works with some alterations to the existing.

So I would suggest a 10% initial fund for a complete new build which, as long as you have planned and budgeted for all the elements of the build, could be reduced to 5% once groundworks are done.

For a major conversion project , particularly if the building was non residential, I would suggest that 30% or even more would be wise, while for an extension to an existing property a figure of 10-15% would be appropriate.

All the above is predicated on having good budgetary planning in place before you calculate the contingency and being disciplined enough not to change too many things during the build. The contingency should be held in place at least until all structural works are complete and even then a smaller fund should be in reserve until actual completion.

Hope that helps. More later,

The Project Master