Definition
A budget allowance set aside for unforeseen costs during a development project, typically expressed as a percentage of build costs. Lenders usually require a contingency of 5% to 10% of total build costs to be included in the appraisal. Without adequate contingency, cost overruns can exhaust the facility and leave a developer unable to complete the project.
See also
Closely related terms.
Build Cost
The total cost of construction works on a development project, typically including materials, labour, preliminaries, and contractor margins.
Quantity Surveyor
A construction cost professional who prepares detailed cost plans, manages budgets, and provides independent cost verification on development projects.
Professional Fees
The costs associated with appointing professional advisors on a development project, including architects, structural engineers, quantity surveyors, planning consultants, solicitors, and project managers.
Further reading
Guides that touch this term.
Guide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readRead
Where it shows up
Finance products using this term.
Ready to apply
Knowing the term is one thing.
Getting it on your term sheet is ours.
Send us the outline. We come back with indicative pricing from the right lenders inside a working day.