Contingency Reserves: How Much Should You Build Into a Bid?

PRICING · 2026-06-27

A contingency reserve exists to cover the gap between what a takeoff can measure and what a real job encounters. Here is how much to include.

A contingency reserve exists to cover the gap between what a takeoff can measure and what a real job actually encounters — and how much to include depends heavily on how much uncertainty the specific job carries.

New construction

New construction with complete plans typically carries a lower contingency (often 3–5%) since the scope is well-defined and most quantities are directly measurable from the plan set.

Remodels and renovations

Remodels and renovations typically warrant a higher contingency (often 10–20% or more) because existing conditions behind walls, under flooring, or above ceilings aren't visible until demolition begins — this is directly related to the uncertainty in demolition estimating, where hidden conditions are the norm rather than the exception.

Site work and older buildings

Site work and older buildings can warrant even higher contingency, since unknown soil conditions, aging infrastructure, or code compliance surprises are more likely to surface once work begins.

Make it a visible line item

Contingency should be a deliberate, visible line item in a bid — not silently folded into padded material quantities or an inflated labor rate. A client (or your own future self reviewing the job's actual profitability) benefits from seeing contingency as its own line, since it clarifies what was genuinely unknown at bid time versus what should have been calculated more precisely.