A hidden contingency is any previously unknown job site condition that requires addressing (or
fixing), usually before the project can move forward. It is something underneath the finished walls
or floor or concealed in such a way that the designer had no reasonable way of knowing about it
when creating the design. For example, it could be something as simple as seeing that the exterior
walls don't have any insulation in them when the plaster or drywall is removed. Or It could be
something like tearing out the old flooring to reveal that the subfloor underneath has water
damage and needs to be repaired or replaced. Sometimes the hidden condition can be significant
and very costly to address. For example, one time a project that I was working on called for
removing a wall between the kitchen and an adjoining bedroom. The wall had every appearance
of being just a partition wall until the drywall was removed from it and the ceiling to reveal that it
was actually a load-bearing wall. The situation ended up being rather unusual and a structural
engineer was called in to devise a layout to remove the wall by putting in structural beams. He
confirmed that even he would not have thought the wall was load-bearing prior to uncovering it.
When you contract with a remodeling company they will likely have a clause in their contract that
addresses hidden contingencies. The scope of the work they are contracting with you to do and
the price they are giving you for that work is very specific. It would be unreasonable for you to
expect them to just take care of any contingency that comes up at their own expense. If that were
the case then prices for remodeling projects would be artificially inflated and most people would
end up paying for contingencies that never occur. So your contract will likely have a clause that
states that, should any hidden contingency be revealed during the course of the project, they will
write up a change order or addendum to the contract with a price for the extra work involved.
Often they will have you sign off on the change order and require that you pay for it up front,
although this will depend on the contractor. Now, you are not obligated to have them perform the
work specified in the change order and you could instead hire out the extra work to someone else.
In fact you may think that a situation such as this might be the perfect opportunity for an
unscrupulous contractor to price gouge. I can't speak for other contractors and I'm sure there are
plenty of shady ones out there, but if I were the contractor it would be in my best interest to
address the problem as quickly as possible in order to keep the job running in a timely manner.
Trying to gouge the customer at this point, besides being unscrupulous, would be
counterproductive for me if the client ends up spending time shopping prices and trying to hire the
work out to someone else. Furthermore, hidden contingencies are usually discovered early on in
the project and if my customer now has reason to distrust me, I've just created an unpleasant
working relationship with my client.
When you are budgeting for your project you should keep in mind that you may be required to
come up with more money to cover the cost of addressing hidden contingencies. In fact you
should probably plan on it because these situations are fairly common, although not necessarily as
extreme or costly as the one regarding the load-bearing wall. Also keep in mind that when the
contractor has discovered a contingency and brings it to your attention, it may feel unsettling to
you but to him it's just another day at the office and probably not as big of a deal as it appears.