How much of a contingency fund should I plan on?

A contingency fund is an amount of money you set aside to cover any unexpected costs that can arise during the project.

If you have never done a remodeling project before you may not have figured a contingency fund into your budget yet.

What is a contingency Fund?

A contingency fund is like a safety net for your home remodel. In other words, it’s extra money you set aside to cover unexpected costs, like:

  • Changes you decide to make during the project, like upgrading materials.
  • Unexpected issues that come up, like hidden damage behind walls.

This money isn’t allocated to any specific part of the project, so you can use it for whatever you need.

How much to set aside?

  • Expect to set aside 5-12% of the project cost for unexpected changes. This is your contingency fund and you manage it.
  • Changes require a written agreement (Change Order) and an updated payment schedule.
  • Banks may include a contingency line item in your loan for similar purposes. This covers unexpected costs beyond the expected construction cost.

What do people use the funds for?

Examples of times when homeowners have used a contingency funds when they haven’t decided to upgrade or add to the scope include:

  • Hidden Rot
  • Electrical Upgrades
  • Plumbing Upgrades
  • Additional work required by the Town

Things are going to come up, it is part of Remodeling. Being prepared for the “What If” will help you enjoy the process and the project more.

Craig Guido

With 20 years of remodeling experience both in the field and working in collaboration with homeowners to develop remodeling projects designed to fit your lifestyle.