What contingency should I allow for an extension?

The share rises with the finish. A plain job has fewer choices left to make and fewer things that can be priced wrongly. A high-end job has more specification, more bespoke work and more places for a late decision to add cost. The table gives the share and the pounds it comes to for a typical single-storey rear extension and a typical rear dormer loft, at the three finishes.

Each pounds figure is a range, because the building cost it is a share of is a range. Hold the figure that matches the finish you actually expect to build, and treat the top of the range as the number to be ready for.

Three things, and they stack. The first is structure. A loft is built on top of a house that was put up a century or more ago. The joists, the party walls, the chimney breasts and the roof timbers are only fully seen once the work starts, and what is found sets the steel, the strengthening and the fire protection.

The second is discovery. A rear extension meets the ground and the drains; a loft meets the floor below, the wiring and the plumbing that have to be rerouted for a new staircase. Neither can be surveyed in full from outside. The report sets the share by finish, so a rear dormer loft at a good-quality finish carries £6,000 to £10,000, close to the £6,000 to £10,000 on a single-storey rear extension. Because a loft carries more unknowns above and below the new floor, hold the top of that range, or use the next finish level's share.

The third is choice. At a high-end finish more is specified late: stone, glazing, joinery, lighting, bathrooms. Each choice that is still open when the contract is signed is a small price risk. The high-end share of 15% reflects that, and on a rear dormer it comes to £9,000 to £15,000.

The ground. Foundations are priced from assumptions about the soil. If the trench shows made ground, a high water table or tree roots, the foundation gets deeper or wider. In much of London, clay shrinks and swells with the seasons and the trees.

The drains. Old drains often run exactly where the new walls go. A public sewer within a few metres can mean a build-over agreement and a changed foundation, and a collapsed pipe found on camera has to be fixed before anything is built over it.

The existing structure. Opening up reveals what the drawings assumed: a wall that is not where it was shown, a lintel that is not sound, floor joists too small for the new loads, damp or old repairs. Each one is solved on site, usually with more steel or more labour.

Party wall surprises. If a neighbour dissents, or the surveyor asks for a change to the foundation depth or the way the work is done beside their wall, that costs time and sometimes money. The report counts the party wall fees as a line of their own; a change to the design they require is not in it.

Changes of mind. Moving a door, adding a window, upgrading the kitchen or the floor finish once the walls are up is the most common use of a contingency, and the one most within your control.

Lead-time substitutions. Glazing, steel and bespoke joinery can take months. If an item is late or no longer made, the substitute is rarely cheaper, and a day lost on site is a day paid for.

It is not a slush fund for upgrades. Money spent on a better worktop or a bigger rooflight is a decision, and belongs in the budget on purpose. If the contingency is spent on wants, there is nothing left for the problem that arrives in week six.

It is not the contractor's margin. Overheads and profit are already inside a quote. The contingency is held by you, not by the contractor, and it is not a hidden extra on top of their price.

It is not VAT. Every figure in the report already includes VAT, so the contingency is a share of a build cost that has had VAT added, and a quote that says "plus VAT" needs the VAT added before it is compared. It is not the fees either: the professional and council fees are separate lines.

Keep it out of the contractor's contract sum. Agree the contract for the work as drawn and specified, then hold the contingency yourself, in an account you control. If it is written into the contract sum, it is quoted as part of the price and tends to be spent.

Release it only against a written instruction. When something unexpected is found, ask for the cause, the options and the cost in writing, agree one, and sign it before the work goes ahead. That gives you a record of each draw, and at the end a clear picture of what was spent and what is left.

Ask your designer or contract administrator to log every instruction and its cost as it happens. If the work finishes with the reserve unspent, it is yours to keep.

As a separate line, held back. The report prices the building work, the fees and VAT, then shows the contingency as its own line, as a share of the build at your finish level, so you can see what it is and take it out of your mental total if you prefer. The all-in range includes it so that a budget set from the report has room in it.

It is not in the headline build figure, and it is not in the building work range you should compare a contractor's quote with. Quotes are for the building work; the contingency sits beside them, not inside them.

Is a contingency of 10% enough for an extension?

For a straightforward finish on a simple extension it can be, and the report uses 10% there. For a good-quality finish it uses 12%, and for a high-end finish 15%. A house with old drains, shallow foundations or an unknown structure is the case to go higher. These are planning shares, not guarantees.

What if I do not use the contingency?

Then it stays with you. It is held back, not paid to anyone, so an unspent reserve is simply money you did not need to spend. On a typical single-storey rear extension at a good-quality finish it is about £6,000 to £10,000. Many projects use part of it, and some use more, which is why the top of the range is the figure to be ready for.

Should the contingency be on top of the quote?

Yes. A contractor's quote is for the work as specified, so compare it with the building work range and keep the contingency separate from it. For a single-storey rear extension at a good-quality finish the building work is £49,000 to £82,000, and the contingency of 12% sits on top.