Costs and value
How much contingency should you allow on a home project?
Short answer
A contingency is money held back for costs that cannot be known when the budget is set: what is behind a wall or under a floor, the ground, and design detail that is not yet settled. It is not for upgrades you choose along the way.
Published guidance for homeowners starts at 10%. The Federation of Master Builders (23 February 2026) suggests at least 10% of the total project cost, and 15% or more for older homes or structural alterations. HomeBuilding (5 June 2020) suggests 10% on most sites and 20% on a sloping site, on bad ground or where there is a basement. The RICS cost planning standard, NRM 1, recommends that the allowance is assessed for the project's own risks, not set as a standard percentage.
The published guidance
These are national published figures from the sources named, with their dates.
| Source | Date | Guidance |
|---|---|---|
| Federation of Master Builders, How to budget for a renovation | 23 February 2026 | At least 10% of the total project cost; 15% or more for older homes or structural alterations |
| HomeBuilding, 15 ways to make sure you stay on budget | 5 June 2020 | 10% usually sufficient on most sites; 20% on a sloping site, bad ground or with a basement |
| RICS, NRM 1, 3rd edition | Effective 1 December 2021 | Separate allowances for each category of risk, based on an assessment of the project, not a standard percentage |
The two homeowner guides agree on the floor and on the direction: the less you know about the building and the ground, the more you hold back.
Why older and period buildings carry more risk
NRM 1 lists typical causes of construction risk. Many of them are the ordinary condition of an old house: existing buildings and adjacent structures, asbestos and other hazardous materials, ground conditions and ground water, existing services of unknown condition and location, and people living in the building during the work. The FMB's guidance names the same things in plainer terms: hidden structural problems, outdated wiring and drainage that only show once work begins.
A new extension on open ground has fewer of these. A renovation of a Victorian terrace, where floors come up and walls are opened, has most of them. That is why both homeowner guides move the figure up for older homes.
Design development risk and construction contingency
NRM 1 splits risk into four allowances, and the difference between the first two matters on a home project.
| Allowance | What it covers | When it should be used up |
|---|---|---|
| Design development risk | Design decisions not yet made, planning requirements, estimating data, provisional sums that give no price certainty | During the design process |
| Construction risk | What is found on site: ground, existing structure, services, access, weather | During the build |
| Client change risk | Changes you make to the scope, quality or programme | Whenever you make them |
| Client other risk | Your own risks, such as funding or a date you must be in by | As they arise |
An early estimate needs all four. Once a contractor's price is agreed on complete information, the design development allowance should have been absorbed into the design, and what remains is the construction contingency you hold during the build. Your own changes of mind are not unforeseen. Budget for them separately, or accept that they come out of the same pot. NRM 1 recommends that transfers into and out of the risk allowances are recorded at each stage, so you can see where the money went.
How the allowance comes down
NRM 1 says the risk allowance at the earliest stages can be a significant percentage of the estimate, and that it falls to zero once all accounts are settled. The way to bring it down is information. NRM 1 names more detailed design and further site investigation as ways to reduce risk. On a house that means a measured survey, an early view from a structural engineer, opening up where the structure is uncertain, trial pits where the foundations matter, and an asbestos survey before anything is disturbed.
What this means for you
Hold the contingency as a separate line, outside the contractor's price, and outside the figure you tell yourself the project costs. Decide in advance who can authorise spending it and how it will be recorded. If the contingency is not needed, it is money you still have; if it was never there, the project stops or the finish suffers. The rest of the budget structure is in what a cost plan contains.
Our own figures from recent projects will be added here.
Sources
- RICS: NRM 1, Order of cost estimating and cost planning for capital building works, 3rd edition, sections 2.15 and 3.4 and group element 13 rics.org
- Federation of Master Builders: How to budget for a renovation and avoid going over budget, 23 February 2026 fmb.org.uk
- HomeBuilding: 15 ways to make sure you stay on budget, 5 June 2020 homebuilding.co.uk