- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 17 Aug 2018
Contingencies in construction
Typically, contingencies refer to costs, and are amounts that are held in reserve to deal with unforeseen circumstances. However, they may also refer to other aspects of the project, for example, the programme may include a contingency where it is important that a specific completion date is achieved.
Monetary contingencies are typically referred to in relation to the overall client for a project. However, other parties in the supply chain are also likely to include contingencies in their cost planning.
While it is advisable for clients to hold a contingency, they might no wish to share this information with the rest of the project team, who may see a contingency as a license to exceed the budget in the knowledge that the client has a reserve that can be spent.
Contingencies are often expressed in terms of percentages. The percentage contingencies applied are at their greatest in the early stages of the project when there are the greatest number of possible risks. But they can then be reduced as better particulars about the project become available and some risks have passed or been overcome.
- At the preliminary business plan stage, total cost estimates might include a 15% contingency.
- In the elemental cost plan this might reduce to 10% of fees and construction costs.
- On awarding the contract, 5% of the contract value might be included as contingency in the cost plan.
In addition to a contingency, the client is likely to hold retention. Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client. The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract. Retention can also be applied to nominated sub-contractors, and the main contractor may also apply retention to domestic sub-contractors.
 Find out more
 Related articles on Designing Buildings Wiki
Featured articles and news
The new NEC4 contract creates a true procurement alliance arrangement for all stakeholders.
Andrew Strauss talks about performance and team building at the 2018 BSRIA Briefing.
Applications have to be in by the end of the week.
Reflections on the 5th Annual Global Congress of Knowledge Economy, held in Qingdao, China.
An artist finds ruined and decaying buildings a source of inspiration for his work. Book review.
When is there a right to light, and what happens if it is obstructed?
What would the nationalisation of economic infrastructure mean for GB?
A new guide to improving value by reducing design error.
We've reached 80,000 page views a day and 10,000 registered users. Why not join them?
A masterplan is a framework within which a location is encouraged to develop or change. Read our introductory article.
New consultation announced on a specialist Housing Court to settle landlord-tenant disputes.