How much to budget for construction contingency?

michael_in_chicagoJune 5, 2011

In general, how much would you recommend to budget for construction contingency? Meaning (and I think I understand this correctly), if you are budgeting, say, $100,000 to build a house, you should also budget 10-25% for possible unforeseen overrun. I'm not sure if this means change orders (which we wouldn't do) or just unexpected happenings.

How much did you budget for the unexpected?

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You should budget between 15-30%. The lower cost the build is, the lower your contingency can be---as long as you don't get carried away with the "while we're at its." A build with more allowances in it should budget more than a well spec'd out build with very few allowances. An urban build should budget more than a rural one. One located in a remote area or difficult terrain should budget more than one on a flat city lot with all of the utilities easily available.

Basically, you WILL go over budget. That's a given before you even break ground.. Yes, there will be change orders, and upgrades and substitutions. That's perfectly normal in any build. The only people who have a chance of not going over budget are the ones who planned everything down to the last detail (every single electric outlet and brand and model of plumbing fixture and tile and the tile patterns, etc.)and have pages and pages of specs and don't choose the smoke blowing low ball bidder. And even those folks will have the occasional change order and upgrade during the build.

    Bookmark   June 6, 2011 at 3:40AM
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Good advice. I was going to say 20% minimum. It's hard to say, not knowing what allowances are in your contract.

Don't forget all the non-construction costs, like insurance, taxes, driveway, sprinkler system, landscaping, window treatments...*furniture*! lol

    Bookmark   June 6, 2011 at 12:40PM
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It depends on who you work with and the contracts that go along with the contractor, but generally 20% is a safe bet. We have had clients who have decided to add rooms, remove rooms, remove walls, update flooring, etc. which was beyond the scope of the agreement and added fees to the project. Again, read your contract carefully first!

    Bookmark   June 16, 2011 at 6:21AM
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Epiarch Designs

on our commercial projects, we typically go 7-10%, however the bid difference here is the drawings are 100%, full masterspec format spec book, etc. Houses are much different. Most people can not visualize the house from the plans or even many times 3d renderings. A lot of people want to make some changes once they can physically be in the space and see it. If you are someone like this, then budget more (20-30%). However if you are set on your plans, pre select finishes, fixtures, etc, and will not change things (ya right) then it is safe to budget lower. My personal house I am only doing 10%, but that is because I am building 80% of it and we are drawings it and detailing it, pre selecting the fixtures, etc. This all makes a huge difference.

    Bookmark   June 16, 2011 at 9:02AM
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