Contingency
Definition: A budget reserve — typically 10–20% of total project cost — set aside to cover unforeseen conditions, owner-initiated changes, and other unplanned expenses during renovation. The percentage depends on the project’s risk profile: age and condition of the home, complexity of the work, completeness of the plans, and contract type. In new construction, contingencies are smaller because conditions are known; in renovation, contingency is a primary risk-management tool. It should be a separate line item, not a slush fund for upgrades.