When planning your project, it is important to understand if and what project contingency costs should be considered.
A ‘Contingency’ is an amount set aside to cover unexpected expenses that may arise during the project. These costs can include things like structural issues, unforeseen complications, and additional work that may be required.
When determining the project contingency costs, it is also important to consider the following factors:
- The type of renovation project: Some types of renovations tend to have a higher risk of unexpected expenses than others.
- The age of the house: An older house may have more potential for hidden issues that may require additional work and increased costs.
- The level of experience of the builder: A more experienced builder and contractors may be better equipped to identify and mitigate potential risks and issues, which may require less contingency funding.
- The materials used: The cost of materials can fluctuate, so it is important to have some extra funds to cover any unexpected changes in material costs.
The question of a Contingency figure gets asked a lot and depending on the project type may or may not be so relevant. However, as the project size grows, so does the need to consider a Contingency.
For smaller projects such as Bathrooms, Kitchens, internal renovations; if the correct focus has been giving on design, selections and inclusions, these should not require too much (or at all) of thought.
If the project is an extension of an old, home, then the large nature multiplies small issues quickly. This also means it is more likely to encounter issues with the old house or where the new and old join, etc. (sub floors, damage, stumps, things out of level). While it would be great if all Builders had a crystal ball, sometime these problems are not uncovered until once the project starts. Larger renovations & extension projects often encounter unexpected problems and therefore It’s important to set aside a contingency fund to cover these potential costs. We suggest a 5-10% figure as reasonable if your Builder is also working with you to mitigate the same issues.
It is important to keep in mind that the contingency fund should not be used to increase the scope of the project or to add luxury items. The fund should only be used for unexpected expenses that arise during the renovation project.
In conclusion, including a contingency fund in your overall renovation budget is a important step to to cover you from unexpected expenses. This may not remove them from happening, but allow you to be in a prepared position if they do. The appropriate amount may vary depending on the scope and scale of the project or the potential risks involve, but we believe by at least raising the topic, discussing and planning for this part of the project, will mean you will have less frustration later if something does come up, leaving you in control of the outcome and your projects success.
