Contingency is very helpful in preparing construction or project estimates for a client. My experience is that if you give a client a range of potential cost, they immediately forget the higher number and begin acting as though the lower number is a fact. Including a contingency for "what we don't know yet" tends to work better. In my mind the goal is to prepare the client for reality rather than tell him/her what they want to hear.
It is very rare that a client is unhappy about a project coming in under budget. The the opposite almost always creates a serious problem for everyone.
The contingency amounts that I am comfortable with at the start of various phases are:
I find that explaining the purpose of the contingency and how it becomes lower as the project progresses is accepted as logical. You will want to develop your own list of contingencies for use at different stages of the work.
orig post date Oct 2012