Updated · 3 min read
In short
- Big projects often overspend on early phases and stall at the finishes.
- Allocate an approximate percentage to each major phase from the start.
- A central contingency fund is more flexible; review the allocation regularly.
Why uneven allocation exhausts the budget halfway
A common mistake on large projects is spending generously in the first phases (structure, basic services) without a clear allocation for the final phases, which are often just as expensive — finishes, furniture, outside works. The result is a project stuck at the finishing stage for lack of funds, even though the basic structure is completely finished.
A practical method: estimated percentages for each major phase
Allocating an approximate percentage of the total to each major phase — structure and services, interior finishes, exterior and landscaping, furniture and fittings — from the planning stage gives a reference frame that prevents overspending on one phase at the expense of the others. The percentages vary with the type of project, but the principle applies universally.
Contingency: distributed or central
The contingency can be allocated proportionally to each phase (a small reserve per phase) or held in a single central fund available to whichever phase meets an unexpected problem. The central approach is more flexible, letting you send money exactly where the real need appears instead of leaving it locked in a phase that had no problems.
Reviewing the allocation as the project progresses
However well thought out, the initial allocation is rarely perfectly accurate — one phase may cost less than estimated, another more. Reviewing the remaining budget for each phase regularly against real progress lets you adjust the plan in time, instead of discovering the shortfall only at the end of a phase that's already under way.