How Much Contingency Should I Budget on a Pre-1970 LA Home?
Hold 5-10% for a remodel of a pre-1970 Los Angeles home, and closer to 10-15% where the walls are coming open across several rooms. On a $200k-$300k whole-home project that is $10k-$45k held back, and on our own finished whole-home work spanning $36k-$440k it is the line that most often decides whether a project ends calmly. It is not padding. It is the money that pays for knob-and-tube wiring, galvanized supply piping or unpermitted framing found behind a wall that has to be dealt with before anything closes back up.
Why 1970 is the line
It is a rule of thumb rather than a legal boundary, and it marks roughly where several things changed in Los Angeles housing.
Knob-and-tube wiring was installed into the 1940s and survives in place far later than that. Galvanized steel supply piping was standard for decades and corrodes closed from the inside, so it fails long after it was installed. Seismic detailing improved considerably. Permits were enforced less consistently, so alterations made in the 1950s and 1960s are frequently invisible until a wall opens.
A 1962 house is not a bad house. It is a house whose contents behind the plaster cannot be known from the outside, and that uncertainty has a price whether or not anyone budgets for it.
What the contingency actually gets spent on
In order of how often we see it:
Electrical. Knob-and-tube or ungrounded circuits exposed during demolition. Once visible it cannot be closed back up — the building department will not sign it off. Rewiring the affected area typically runs $8k-$25k.
Plumbing. Galvanized supply lines that are visibly corroded. Repiping a section costs far less than repiping the house, but leaving corroded pipe inside a wall you have just finished is not a decision anyone makes twice. Expect $6k-$20k for a partial repipe.
Framing. Walls altered without a permit, notched joists, or posts carrying loads they were never sized for. Remediation ranges $3k-$15k depending on what is holding up what.
Hazardous materials. Lead paint and asbestos are common in pre-1978 construction and must be handled by certified trades under containment. Testing and abatement typically add $2k-$12k.
Subfloor and moisture. Dry rot near bathrooms and exterior walls, usually found the moment the tile comes up.
How the number should be handled
Contingency belongs in the contract as a stated line, not as invisible margin inside the price and not as an unspoken understanding that you will be asked for more later.
It should be spent only against documented discoveries, with a written change order and a price agreed before that work proceeds. It should not quietly absorb items that were always going to be needed and were simply left out of the scope.
And it should come back to you if it is not used. We return ours unspent, which is the arrangement that makes the incentives point the same way — a contractor who keeps the unspent contingency has an interest in finding things.
Reducing the uncertainty before you commit
Some of it can be resolved cheaply in advance.
The electrical panel can be read from outside, and its age and capacity tell you a great deal. The supply piping material is usually identifiable at the water heater or under a sink. A sewer camera inspection costs a few hundred dollars and finds problems that cost tens of thousands to discover later.
Exploratory openings in two or three strategic places, made during design rather than during construction, convert guesses into facts for a very small sum.
None of this removes the need for contingency, because the walls you did not open are still unknown. It moves the number toward the lower end of the range, which on a large project is worth considerably more than it costs.
Frequently asked follow-ups
Is contingency the same as padding the price? +
No, and the difference is visibility. Padding is margin hidden inside line items that you never see and never get back. Contingency is a named amount, spent only against documented discoveries with a signed change order, and returned if unused. A contractor who declines to state it has not removed the risk from your project, only from their paperwork.
What if the contingency runs out? +
Then we stop and have a conversation before continuing, with the options and costs written down. That is uncomfortable and it is the correct behaviour. What should never happen is work continuing past the contingency on the assumption that you will pay whatever the total reaches, which is how projects end in dispute.
Does a newer house need contingency too? +
Yes, just less. Post-1980 construction with documented permits and known systems can reasonably sit at 3-5%. Even then, remodels reveal things drawings did not record. Zero contingency is only defensible on a project where nothing existing is being opened, which is rare.
Can I use the contingency for upgrades if nothing goes wrong? +
You can, and many clients do — it is your money. The important thing is that it is a deliberate decision made late, once the walls are closed and the risk has passed, rather than a decision made early that quietly leaves nothing for the discoveries. Spending it in month one is how a comfortable project becomes a tense one.
Should the contingency be a percentage of the whole project? +
Of the construction contract value, yes, which is the practical convention. A more precise approach weights it toward the parts of the project where existing fabric is being opened, since that is where discoveries happen. On a whole-home remodel of an older house the distinction matters less, because most of the project carries that exposure.
Want the same answer applied to your specific project? Onn personally reviews every inquiry.
Written by Onn Cohen-Meguri, founder and designer at Design Onn Point. Onn has spent 20+ years designing and building in Los Angeles. CSLB #1133368.
Published .