In construction, surprises aren’t just possible. They are expected. A crane goes down. A pipe isn’t where the drawings said it would be. A key material is suddenly out of stock. These kinds of curveballs can cost time, money, and peace of mind. That’s why most construction budgets include a little something called contingency. It is the safety net for when things do not go exactly as planned.
Contingency is a portion of the budget set aside for the unknown. It is not meant for changes that the owner requests mid-project or fancy upgrades. Instead, it is for true surprises. Things no one could have reasonably predicted, like hidden site conditions or supply chain delays. Most teams set it between five and ten percent of the total project cost. But just having a contingency fund is not enough. It matters how it is used.
Different teams handle contingency in different ways. Some keep it closely guarded. In these cases, the owner or project manager holds all the control, and anyone who wants to use that money has to make a formal request and get approval. This is often called a centralized approach. It is strict, but it keeps spending in check and makes sure the money is used only when absolutely necessary.
Other teams are more flexible. They use a distributed approach, where parts of the contingency are handed off to contractors or field teams to manage. This can speed things up, especially when decisions need to be made quickly on site. But it also requires a lot of trust and strong communication, because spending can easily get out of hand if it is not tracked carefully.
Some teams use what is called a progressive drawdown method. At the beginning of the project, they might release only a small portion of the contingency. That portion might be just enough to cover early risks like bad weather or soil problems. As the project moves forward and more is known, they unlock more of the contingency little by little. This approach helps teams avoid spending all the buffer too early.
There is also the question of who owns the contingency. On some jobs, the owner holds the contingency, and contractors must justify every use. On other jobs, especially design-build or construction manager at risk projects, the contractor holds the contingency and uses it to manage risks they are responsible for. Some projects even split it. The owner holds one part and the contractor holds another. That can encourage shared responsibility and fewer surprises later in the project.
Beyond who controls it, teams also get strategic about where the money goes. Some break the contingency into specific categories like design, construction, and schedule. That way they can keep a closer eye on which parts of the project are creating the most unexpected costs. Others leave it more general but track the trends over time. For example, if half the contingency is being used to fix coordination issues between trades, that is a red flag that might need attention.
When it comes to deciding when to use contingency, timing really matters. Spend it too early, and you might run out before the real problems show up. Hold onto it too tightly, and small issues could grow bigger and more expensive. That is why many experienced project managers follow a kind of middle path. They are careful early on but ready to act quickly when the problem is time sensitive or puts safety at risk.
Communication plays a huge role in all of this. Everyone on the project—from architects to subcontractors—should understand how contingency works, who can access it, and how to request it. Some teams hold regular contingency check-ins during progress meetings. These help them review what has been used, what is left, and what risks might be coming. It turns what used to be a quiet corner of the budget into a shared, visible tool for managing risk.
Technology is helping a lot here too. Some project teams use digital platforms that track contingency in real time, flag patterns, and even compare usage across multiple projects. This kind of data helps owners and project leaders see what is normal and what is not. It also builds smarter budgets for the future.
It is also worth thinking about what not to use contingency for. Teams sometimes get tempted to dip into it for upgrades or enhancements. These are things that technically were not in the original plan but seem like good ideas once the project is rolling. That is a slippery slope. Contingency is there for real, unavoidable issues. Once it is spent, it is gone. If a real emergency shows up later, you may be out of options.
The best-run projects often finish with some contingency left over. That does not mean they did not face challenges. It means the team was careful, disciplined, and smart about when and how to respond to the unexpected. It is a mark of good planning and even better decision making.
In the end, contingency is more than just extra money. It is a strategy. It is peace of mind. And it is a sign that a team knows construction does not always follow the script. Surprises will happen. But with the right approach, your budget does not have to fall apart when they do.
So when the unexpected hits your jobsite—and it will—will you be ready?