Owner Contingency Burn Rate Calculator

Owner contingency is the last line of defense against budget overrun.

Total owner contingency

Months elapsed

Contingency used to date

Total project months

Projected exhaustion month

26.5

Monthly burn rate

$132,143

Remaining balance

$1,650,000

How the math works

Burn = used ÷ months. Exhaustion month = total ÷ burn rate.

$1.85M used ÷ 14 months = $132k/mo burn. Exhaustion ~ month 26.5 (past month 24 project end — tight).

How to Use

Enter total owner contingency.
Enter months elapsed.
Enter contingency used to date.
Enter total project months.
Read projected exhaustion month.

Frequently Asked Questions

What's a typical owner contingency?

Ground-up new construction: 5-10% of hard cost budget. Value-add renovation: 10-15% (more unknowns). Historic renovation: 15-25%. Adaptive reuse: 15-20%. Publicly-funded: 3-7% (often can't access above, political pressure). Institutional developers set contingency by product type: easier projects use less, harder more. Lenders require minimum 5% regardless of sponsor comfort level. Include in sources of funds at closing.

Why monitor burn rate?

Contingency should deplete slowly early (0-30% by half-project), then accelerate in closeout as punch-list issues surface. If 50%+ is burned before 50% completion, sponsor likely has systemic issue — GC under-bid, design flaw, market inflation, scope creep. Institutional lenders monitor monthly via construction consultant reports; sponsor should self-monitor weekly and intervene when burn rate exceeds schedule by 15%+.

What if contingency runs out?

(1) Sponsor equity add-on (sometimes required by loan docs as 'cost overrun agreement'). (2) Lender approves contingency increase via re-sizing (rare, requires modification). (3) Scope reduction (cut amenities, downgrade finishes — damages leasing). (4) Deferral (push items to post-occupancy capex). (5) Negotiation with GC (value engineering, GMP reopener). Every option costs money or time; running out before closeout is a sponsor-career-threat.

How do institutional sponsors manage this?

Separate hard-cost contingency (paid to GC for unknowns) and owner-direct contingency (sponsor retains). Each allocated separately in budget. Monthly tracking with forecast-to-complete analysis. Formal release protocol — sponsor CFO approves each draw above $50k from contingency. Report to LPs and lender quarterly. Best-in-class: end with 1-2% remaining for startup operations. Worst: zero at substantial completion, sponsors scramble for emergency equity.