Contingency

A contingency is a budget reserve built into a project quote or contract to cover costs that cannot be fully predicted at the time of pricing. It differs from a provisional sum, which is an allowance for work known to be required but not yet fully specified, and from margin, which is the business's planned profit. Contingency covers genuine unknowns: ground conditions in construction, infrastructure access in AV integration, freight costs that depend on project timelines, or material price movements during a long procurement cycle.

Contingency is expressed as a percentage of total project cost and stated explicitly in the quote or contract. Leaving it implicit creates disputes when unforeseen costs appear and the customer expected the quoted price to be firm.

Contingency Benchmarks by Project Type

Typical percentages are scaled to the level of uncertainty at pricing:

• Simple, well-defined projects with confirmed access and detailed drawings: 5-10%
• Mid-complexity projects with some design evolution or third-party dependencies: 10-15%
• Complex or high-risk projects where scope is still being defined: 15-20% or above

(Source: ConstructionLeadPro, April 2026)

For an AV integrator quoting a fixed-price system build where infrastructure access is not yet confirmed, 10-15% is appropriate. For a promotional merchandise distributor quoting a multi-line programme with uncertain delivery volumes, 5-8% on freight and storage covers the gap between estimated and actual costs.

Contingency is a professional pricing tool. A contractor who includes it as a named line item demonstrates cost discipline. Embedding it silently inside unit prices creates a different problem: when the contingency is not needed, the customer cannot see it, and returning it becomes a negotiation rather than a straightforward adjustment.