how much contingency should you add to a quote?
Ask five contractors and you will get five different answers. 10%. 15%. 20% if the job looks dodgy. These numbers are not based on anything. They are traditions passed down from whoever taught you to quote.
The problem with a flat percentage is simple: it treats every job the same. A straightforward like-for-like kitchen cabinet swap gets the same contingency as a basement underpinning in a century home with no survey. That makes no sense.
the flat percentage problem
| Job | Base Cost | 10% Contingency | Actual Risk |
|---|---|---|---|
| Fence replacement (known supplier, flat yard) | $3,200 | $320 | ~3% needed |
| Bathroom strip-out (century home, no survey) | $12,800 | $1,280 | ~18% needed |
The fence job has $320 of contingency it does not need. The bathroom job has $1,280 when it needs $2,300. One quote is padded. The other is dangerously thin. Both used the same "10% rule."
why percentages feel safe but are not
A flat contingency gives you a false sense of security. You think you have covered yourself, so you stop thinking about risk. But the contingency has no connection to where the risk actually sits. It is spread evenly across items that carry wildly different levels of uncertainty.
The bin rental does not need contingency — you have a fixed price. The custom cabinetry needs a lot — the shop has never made this piece before, and it has to fit into a space you measured once. Flat percentages ignore this completely.
the better approach: risk-weighted estimation
Instead of one percentage for the whole job, rate each line item individually:
- Fixed-price items with written quotes: Certain (+/- 2%)
- Regular supplier, standard materials: Low (+/- 8%)
- Subcontractor you know but who has not quoted yet: Medium (+/- 15%)
- New supplier, specialist item, site unknowns: High (+/- 25%)
- No survey, unfamiliar scope, pure guess: Wild Guess (+/- 40%)
When you run a simulation with these per-item risk ratings, the tool calculates your contingency for you. A low-risk job might need 4%. A high-risk job might need 22%. The number is specific to your job, not pulled from thin air.
what this means in practice
You stop guessing how much buffer to add. You stop worrying you have padded too much (and losing bids) or too little (and losing money). The buffer is calculated from the actual uncertainty in each line item, weighted by how much that item costs.
A $500 bin rental with no uncertainty contributes almost nothing to your contingency. A $6,000 subcontractor quote marked as High contributes a lot. That is how risk actually works. Your contingency should reflect it.
In Canada, this is especially important on jobs with weather risk. An outdoor job starting in October in Ontario carries more duration uncertainty than one starting in June. Your contingency should reflect the season, not just the scope.