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In general, I typically recommend a contingency
of 10% on most projects to deal with surprises.

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You should discuss with your architect what
would be common for your project type. The complexity will determine your
basepoint, and you increase from there as necessary; I’ve even seen people
relieved that they went with a contingency as high as 20%.

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If there is a portion of the project that is
more unknown than others, consider using the higher contingency on the
allowance provided for that specific portion and only a 10% contingency on the
rest of the project.

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Your 10% contingency is for surprises only, and
you increase it based on knowledge that your contractor will have extra work to
do on something that isn’t quantifiable yet. For example, if you happen to know
your roof leaks and there will be water damage somewhere, you don’t plan to use
your 10% contingency for that. You increase the contingency (amount TBD per
conversations with your architect and contractor) and leave the 10% for
unknowns. Make sense?

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You need to condition your brain to believe that
the contingency is money already spent. It isn’t money that you should try to
save in a piggy bank for vacation, or you will hesitate to use it when you need
it most. If you believe that it is already slated for something, you are more
apt to use it wisely when it really matters. There is nothing more satisfying that
when a surprise comes up, you have the resources available to get what you want
rather than convincing yourself that you should get the alternative because it
is cheaper. Gratification at its best!