How much contingency does the job need before the budget holds nine times in ten?

Five cost lines with a low, likely and high each. The likely values add to a base budget of 1,150,000. Across 20,000 futures the base holds in 17 in 100 runs, and 90% odds of staying under budget takes a 10% contingency.

Construction Starter Monte Carlo Pro engine

Install free How Monte Carlo simulation works

After you install, this is the model to open.

What contingency gives 90% odds of staying under budget?

In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
Click Start from a template and put that name in the search box.
Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.

This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.

What it does

Five cost lines on a fit-out, each with a low, likely and high estimate. The sheet adds the likely values and gets a base budget of 1,150,000, holds 10% contingency on top, and reads a budget of 1,265,000 with 115,000 of room as typed. Nothing on that sheet says whether 10% is generous or thin. Click Run on the 20,000 trials the template loads with.

The seed is set to 7 so your first run reproduces these figures exactly. Total cost comes back with a mean of 1,195,844 and a median of 1,194,075, and the base budget holds in 17 in 100 runs, because five ranges that each lean high add up to more than five likely values. A 5% contingency, 1,207,500, holds in 61 in 100. The contingency with 90% odds is read off the ninetieth percentile of total cost, 1,259,178, which is 9.5% over the base, so hold 10%: the budget of 1,265,000 holds in 92 in 100 runs, and the room under it has a median of 70,925 and a tenth percentile of 5,822.

If the budget has to hold at 95% odds the ninety-fifth percentile is 1,278,027, which is 11.1%, and 1,300,000 holds in 98 in 100. The tornado says where the contingency goes. Structure leads at 0.69 and carries 50% of the spread, Services is next at 0.43, then Site works at 0.37 and Fit-out at 0.36, and Fees and permits comes last at 0.12.

Second run: if a tender can fix the structure package, narrow that draw in the Risk Analysis panel to 430,000, 450,000 and 500,000 and rerun. The ninetieth percentile falls and the contingency with it, and that is the only kind of edit that moves it, because a contingency with odds attached is a percentile of the cost, not a habit. What the model cannot tell you: the five lines are drawn independently, when a bad site usually means a bad structure too, so the true tail is a little longer than this one; scope that grows during the job is not inside any range; the contingency is a number, not a plan for who releases it; and the model prices cost, not time, so a late job that costs the same reads as on budget.

To make it yours, retype the cost lines and their three estimates, set the same ranges on the matching draws in the Risk Analysis panel, and read your contingency off the ninetieth percentile.

The model

It arrives on a tab called Template: Contingency With 90% Odds, carrying these columns:

Low ($)
Likely ($)
High ($)
Cost drawn ($)

with the model computed beside the data:

Total cost ($)	1,150,000
Base budget, the likely values added ($)	1,150,000
Budget with contingency ($)	1,265,000
Room under the budget with contingency ($, negative = over budget)	115,000

Once it is in your sheet

The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.

Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.

Next question

Every model like this one, and the method behind them: Monte Carlo simulation.

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