Typically, contingencies refer to costs, and are amounts that are held in reserve to deal with unforeseen circumstances. However, they may also refer to other aspects of the project, for example, the programme may include a contingency where it is important that a specific completion date is achieved.
A contingency may also refer to part of a contingency plan, which is a plan that can be enacted to mitigate project risks, such as adverse weather, an industrial dispute, supplier failure, and so on.
Monetary contingencies are typically referred to in relation to the overall client for a project. However, other parties in the supply chain are also likely to include contingencies in their cost planning. While it is advisable for clients to hold a contingency, they might not wish to share this information with the rest of the project team, who may see a contingency as a license to exceed the budget in the knowledge that the client has a reserve that can be spent.
Contingencies are often expressed in terms of percentages. The percentage contingencies applied are at their greatest in the early stages of the project when there are the greatest number of possible risks. But they can then be reduced as better particulars about the project become available and some risks have passed or been overcome.
Remember, a contingency plan is a valuable part of your risk management. Even though it won’t stop the risks from happening, nor even make them more likely, it will give you a clear set of steps to follow if it does happen. This will allow you to rapidly restore control and limit the potential for consequential threats that you might be encountering when building your home. It’s always important to have some extra time to absorb the delays that a realized risk can generate. Most importantly, always have a back-up plan or plan B. Make sure to discuss everything clearly to your builder finder to secure everything will fall into place on the right time and within budget.