Contingency is a budget line for the things you know will go wrong but can’t yet name: buyout gaps, coordination misses, minor scope busts. It comes in flavors. Owner contingency covers owner-driven changes and unforeseen conditions. Contractor contingency (common in GMP contracts) covers the contractor’s own risks inside the price. Design contingency covers drawings that aren’t finished.
Why it matters
Contingency is your buffer against margin fade. Track it like cash. If it burns faster than the job progresses, your forecast is lying to you.
Worked example
Illustrative: a GMP includes a $960,000 contractor contingency. At 66% complete, $710,000 has been drawn, leaving $250,000. Only 26% of contingency remains while 34% of the work is left. That’s a warning: either risks were front-loaded, or the remaining contingency won’t cover the back half. Run a cost-to-complete review before the next WIP.
Common mistakes
- Using contingency to hide budget overruns instead of documenting each draw.
- Spending owner contingency without written owner approval.
- Forgetting the contract terms on unused contingency (returned to owner, shared, or kept).
How os.construction handles it
We’re building contingency as a tracked budget line with a log of every draw tied to its cause, visible next to percent complete. We’re refining it with founding contractors.