What it means
Contingencies can sit with the owner, the contractor or both. A design contingency covers things that are not yet drawn. A construction contingency covers surprises during the work, like concealed damage or unexpected conditions above a ceiling. The amount often depends on how much is known about the building, with renovations needing more than new construction.
A contingency is a tool for managing risk and not an extra pot of money to spend freely.
Why it matters
Projects without any contingency tend to run into trouble as soon as something unexpected appears. Owners who set a realistic reserve have room to respond without scrambling for approvals.
How the contingency is controlled, who approves its use and what happens to unspent funds should be stated in the contract.
How HSM handles it
HSM discusses contingency honestly at the start, based on the age and condition of the building and the stage of design. We report each draw on the contingency with its reason, and show the balance at every progress meeting.
Pre-construction work, including site review, coordination and early investigation by our own electrical and mechanical crews, helps reduce unknowns so that the contingency is used less.
What to plan for
Treat the contingency as part of your total budget, and decide who has authority to approve its use. Fast approvals keep crews working.
Do not use the contingency to pay for upgrades you chose. Keep it for surprises, and treat wishes as separate, approved changes.