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.
Further reading
Guides that touch this term.
Guide
Can I Get Development Finance With No Track Record?
An eligibility guide for developers without a completed scheme. We explain which lenders will consider you, exactly what they check, and the lower leverage and higher pricing to expect.
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
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