The old cabinets come out, and the floor beside the sink is soft. That is the moment you want some money uncommitted. Not already promised to the nicer handles, and not confused with an allowance in the quote. Contingency is your reserve for uncertainty. How much you keep should follow what is still hidden or unresolved in your house, rather than a percentage borrowed from somebody else's renovation.
How much contingency should you carry?
| Planning reserve | Project profile | Typical uncertainty |
|---|---|---|
| About 5% | Tightly documented finish work with little or no demolition | Minor substrate repair, quantity variation, or coordination |
| About 10% | A defined kitchen, bathroom, or interior renovation that opens walls and coordinates trades | Hidden water damage, legacy services, framing correction, or a route that changes after opening |
| 15% or more | Older or poorly documented house, structural alteration, addition, basement, excavation, or several systems moving | Unknown assemblies, hazardous material, soil, drainage, foundation, or design exposure |
These bands are planning heuristics, not Ontario law or a statistic about every GTA renovation. Choose from the actual house: what remains concealed, how expensive access becomes later, how many systems interact, and how much design is unresolved. A measured built-in and a second-storey addition should not receive the same percentage without considering their different risks.
What is contingency different from?
The base contract pays for defined work. An allowance prices a known category whose selection or quantity is unresolved. Contingency is the homeowner's reserve for genuine uncertainty and approved choices. Ontario's Construction Act generally requires a basic holdback equal to 10% where a lien may arise; its retention, annual release, lien, and notice rules are technical, including changes effective in 2026. Holdback is not spare project money. Ask a construction lawyer about its application and timing on a substantial job.
What should contingency cover?
Reasonable uses include concealed rot, damaged framing, unsafe legacy work, an unrecorded drain, site conditions, or a design consequence that could not be confirmed before opening. It may also fund an owner-requested change, but call that what it is. Contingency should not rescue work omitted from a thin quote, unrealistic allowances, duplicate charges, estimating mistakes on fixed scope, unapproved extras, known permit or design fees, or upgrades you already planned.
Ontario's consumer renovation guide says estimates should describe and itemize the work and contracts should address materials, cost, payments, schedule, cleanup, warranties, and subcontracting. A reserve does not excuse a vague contract. Known work belongs in the scope.
How do you choose the percentage?
List the unresolved conditions before signing. For each meaningful unknown, record the possible condition, evidence available now, investigation that could reduce it, likely response, and who decides. A survey, drain camera, exploratory opening, engineering review, electrical load check, or material test can turn an expensive mystery into a bid item. If older material may contain asbestos, Health Canada recommends professional testing before renovation when it may be disturbed. Suspected asbestos needs assessment before disturbance.
Calculate the percentage against the construction scope that actually carries the uncertainty. Keep appliances, moving, storage, temporary accommodation, financing, and other household effects in their own budget lines. For a kitchen, begin with the categories in the GTA kitchen cost guide. For an addition, the second-storey guide shows why structure, envelope, weather, and temporary protection create different exposure.
How should you spend contingency?
When a surprise appears, pause the affected work, make the area safe and check it against the original scope. On a kitchen strip-out, we found softened subfloor beside an old supply leak. The owner received photos and a priced repair before the replacement floor went down. Her budget sheet recorded the accepted change as soon as it was approved, although the invoice came later. That stopped the same money appearing available for new handles. Record the scope, credits, tax and schedule effect using the Ontario change-order guide.
What happens to unused contingency?
Keep the remaining reserve available while deficiencies, final invoices and closeout costs are still being settled. A nearly finished room can still need a return visit or a replacement part. Once those costs are resolved, the unused homeowner reserve stays yours. You do not have to find another improvement for it to pay for; finishing with money left is allowed.