How much contingency does a remodel need? An example budget, line by line

A renovation budget is a set of guesses that turn into bills one at a time. The contingency is the part of the budget you deliberately don't assign, so that the guesses can be wrong without the project stopping. Here's how that plays out in one example remodel, the sample project in our renovation tracker: a kitchen and a hall bathroom, line by line.

The setup

Total budget: $46,000. Contingency held back: 10%, or $4,600. That leaves $41,400 for planned work. The first estimates for the 20 line items came to $36,800, comfortably under.

Where the money went

Each item's expected cost is the best number available: the final bill if it's in, otherwise the accepted quote, otherwise the estimate. Partway through the project:

• Labor moved the most. Quotes and bills came in above the estimate on 15 of the 20 items, and one item wasn't in the plan at all: rotten subfloor found under the old tub, $1,850. Without that single surprise, the overrun would have been 10.72%.
• Things you buy yourself moved the least. Fixtures and appliances, priced from a shelf, landed within a few percent, and two came in under.
• By room, the bathroom ran 31.7% over; the kitchen 10.8%. The bathroom is where the rot was: one hidden problem in a small room moves its percentage a lot.

Did 10% hold?

Yes, just. The expected cost of $42,596 is $1,196 above the $41,400 set aside for planned work, so the project is using $1,196 of its $4,600 contingency (26%) with $3,404 left. The estimates themselves were 15.75% low; what saved the budget was that they started below the planned-work line.

Sizing and tracking yours

• Hold the contingency back from the start. Budget the work at, say, 90% of what you can spend, and don't let it get quietly assigned to upgrades.
• Size it to the risk. More for older houses, bathrooms and anything behind walls or under floors; less for cosmetic work and purchases at fixed prices.
• Replace estimates with quotes as soon as you have them. In this example $5,490 of the $5,796 overrun was already visible in the accepted quotes, before the final bills.
• Get more than one bid. The three jobs bid out here had spreads of $340 to $800 between the highest and lowest price for the same work.
• Track contingency used, not just total spent. "We've spent $29,446" says little; "we've used 26% of our cushion with half the bills still to come" is the number that tells you whether to skip the upgrade.

Every figure is from the sample file of our renovation budget tracker, where the totals were recomputed independently. It's an illustrative project, not survey data: your mix of work will move the numbers.