Written by: George Abadie

We’ve been building in South Florida for nearly 30 years, and few things have changed more starkly than construction pricing. For much of that time, a 10% contingency was considered a reasonable cushion for most commercial construction projects. It provided enough flexibility to account for minor design revisions, unforeseen site conditions, and typical market fluctuations.

Not anymore.

In 2026, a 10% contingency no longer reflects the reality of today’s construction environment. If you’re planning a commercial project in South Florida, 15% should be the new minimum. Between tariff-driven material price increases, ongoing labor shortages, and extended procurement timelines, the financial risk of under-budgeting has grown significantly.

At Seacoast Consulting Group, we’re seeing this firsthand. Active bids continue to reflect higher pricing, tighter subcontractor availability, and greater volatility than many owners expect. Here’s why you need to prepare with an increased contingency budget.

Material Costs are in Constant Flux

Today’s contingency budget isn’t about planning for mistakes, it’s about planning for today’s market conditions. Among the biggest drivers of budget uncertainty are steel, aluminum, and other materials.

Recent tariff changes have pushed steel and aluminum costs to new heights. Producer price data from the Associated General Contractors of America shows steel up more than 20% year over year, and aluminum up roughly 30%, the steepest increase since the 2022 supply chain crunch.

This matters for all commercial projects because even if your project isn’t steel-intensive, nearly every job relies on products affected by these price increases. What’s more, even if pricing stabilizes later in the year or into next year, contractors must still estimate based on today’s market.

The Challenge isn’t Just Material Pricing as Labor Shortages are also at Play

In addition to material costs hampering the contingency budget equation, there’s another key variable in play, and that’s labor.

Despite rising prices, South Florida continues to experience a strong construction boom. And more work means more competition for qualified subcontractors. This increased demand for qualified subs has a host of downstream effects as schedules fill, pricing becomes less predictable, lead times extend, and contractors have less flexibility to absorb unexpected changes.

We’re seeing projects where bids received just weeks apart differ significantly, simply because subcontractor availability has shifted.

Why 10% is No Longer Enough

Some people think of a contingency as their slush fund. It’s not. It’s a tool for managing risk. When you plan accordingly, it can help you absorb issues that might otherwise derail your project.

In today’s market, an adequate (i.e., 15%) contingency helps absorb issues such as:

• Material price increases between budgeting and procurement
• Tariff-related pricing adjustments
• Subcontractor pricing volatility
• Longer lead times that require schedule adjustments
• Owner-requested modifications during construction
• Unforeseen field conditions

When your construction budget contingency is too small, every unexpected cost becomes a change order or forces difficult scope decisions later in the project, whereas a realistic contingency protects both the budget and the schedule.

The Best Way to Protect Your Budget Starts Before Construction

To be clear, we’re not saying that simply adding another 5% to every estimate is going to solve your contingency problems. What we’re recommending is a more accurate budget from the beginning. The way you do that is through thorough pre-construction planning.

An effective pre-construction process helps identify pricing risks early, validate subcontractor pricing with current market conditions, evaluate long-lead materials, and value engineer where appropriate before construction begins, so you’re set up for a successful build all the way through to the final punch-out.

The more uncertainty you eliminate during pre-construction, the less your contingency has to absorb later.

Build Smarter in Today’s South Florida Market

Construction budgets in 2026 require a different mindset than they did even just a few years ago. Tariff-driven increases in steel and aluminum, ongoing pricing volatility, and tight subcontractor availability have changed what responsible budgeting looks like.

At Seacoast Consulting Group, we help owners develop realistic budgets that reflect today’s South Florida market. If you’re planning a commercial project, learn more about our pre-construction services and contact our team today to get a realistic pre-construction estimate so you can build your budget with confidence.

Frequently Asked Questions

How much contingency should a commercial construction budget include in 2026?
Most South Florida commercial projects should budget at least 15%, up from the traditional 10%, to account for tariff-driven material costs, labor shortages, and longer procurement timelines.

Is a construction contingency the same as a slush fund?
No. A contingency is a risk-management tool for absorbing specific, foreseeable categories of cost, like material price swings or subcontractor volatility, not a general-purpose buffer for scope creep.

Does pre-construction planning reduce how much contingency I need?
Yes. Identifying pricing risks, validating subcontractor pricing, and evaluating long-lead materials before construction begins reduces the uncertainty your contingency has to cover later.

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George Abadie is the founder of Seacoast Construction and Seacoast Consultants, with 25+ years of experience managing commercial, multifamily, and residential construction across South Florida. His firms serve as both general contractor and owner’s representative, helping clients build smarter from pre-construction through project closeout.