Contingency Budget
A financial reserve—typically 10–20% of project cost—set aside for unexpected expenses during a renovation.
A contingency budget is a planned financial cushion that homeowners set aside beyond their base renovation estimate. Industry standard is 10% for newer homes and 15–20% for older or gut-renovation projects where hidden problems are more likely. The contingency is not meant to be spent; it is insurance against surprises.
Common contingency triggers include discovering mold, asbestos, outdated wiring, undersized structural members, or plumbing that does not meet current code. Without a contingency, any one of these discoveries can halt the project or force the homeowner into unplanned debt.
At project completion, any unused contingency funds can be rolled into finishes, landscaping, or simply kept as savings. Never plan to use the full contingency—a project that comes in under the contingency ceiling is a success.
Real-World Example
On a $40,000 kitchen remodel, the homeowner set aside a $6,000 contingency; the crew found knob-and-tube wiring and used $3,800 of it for re-wiring.