Contingency and construction cash flow
A contingency covers overruns; cash flow also checks when payments fall due and funds become available.
Try a 20%–30% allowance on selected uncertain remaining costs. This is an editable planning assumption, not law or a guarantee. The suitable allowance depends on the project; it need not apply to land already paid for. Separate cash available now from approved borrowing not yet released. Construction lending may be released in stages subject to checks. Overall funding does not ensure money is available on each due date. Keep living and temporary housing costs in view.
Remaining eligible work of 400,000 with a 25% buffer needs 100,000 extra: 500,000 in total.
Compare 20%, 25% and 30% and identify the costs used as the base.
Official source ↗Check your understanding
What is a 25% buffer on 200,000?
- 25,000
- 250,000
- 50,000
Answer and explanation
50,000. The buffer is 200,000 × 0.25; total need is 250,000.
Does borrowing released next month necessarily cover a bill due tomorrow?
- Yes, without checking conditions
- No; timing matters
- Always
Answer and explanation
No; timing matters. Availability dates matter as well as amounts.
Continue learning
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