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The Owner's Premium: Why Contingency Budgets Are Climbing as Trust in Project Information Erodes

Jonathan Shick
4 days ago
5 min read

Why might an owner’s contingency grow from a traditional allowance near 3% toward 20% of project value? In Keith Robinson’s 2026 article, “The Owner’s Premium,” the increase is described less as a response to construction-cost inflation than as a sign that owners have less confidence in the project information they receive.

That figure is an observation discussed in Robinson’s article, not an industry-wide benchmark established by a survey. But the concern it points to is supported by other research. Deltek’s architecture and engineering survey found that 49% of firms identified consistency as a top project-information challenge, and another 49% identified deliverable quality. What happens to an owner’s budget and project decisions when the information behind them is difficult to trust?

When information gaps become financial exposure

Construction disputes illustrate how project information can have direct financial consequences. Arcadis’ 2026 U.S. Construction Disputes Report, based on disputes in 2025, records an average dispute value of US$56 million and an average resolution period of 12.16 months. Respondents ranked failure to understand or comply with contractual obligations and errors or omissions in contract documents as the two leading causes.

These figures describe reported disputes, not the expected cost of a typical project. They nonetheless show why the quality and coordination of project records matter. When scope, requirements, or responsibilities are unclear, the resulting disagreements can consume time and money well beyond the cost of correcting a document.

For owners, the practical question is not simply whether a project has a contingency. It is whether the project team can identify the assumptions, requirements, and decisions that contingency is expected to cover. Arcadis’ report emphasizes familiar sources of disputes: contractual obligations, document quality, and delays.

What changes at each handoff?

Project information passes through teams that describe the same facility in different ways. Architects may organize information around systems and design intent. Estimators work with assemblies and costs. Contractors plan work packages and sequences. Facility managers need asset records, maintenance requirements, and operating instructions.

Each perspective is necessary. The challenge is preserving a usable connection among them. A decision may appear in a drawing or specification while the reason for it (the owner’s objective, a rejected alternative, or an operating constraint) does not make it into the next phase. When that context disappears, a downstream team may have to reconstruct the rationale under schedule pressure rather than make a decision based on the original record.

Such gaps appear in the field as well as on paper. A membrane that terminates without completed flashing, or a penetration left unsealed because the detail did not reach the crew, is the physical version of the missing context described above.

For example, an owner may identify future expansion capacity during early planning. That requirement could affect structural design, utility capacity, and site layout. If the reason is documented and carried forward, a future project team can evaluate the planned capacity. If it is not, the team may need to investigate and revalidate the issue years later, when changes could be more complex or costly.

A building lasts longer than its project team

Many facilities directors oversee a property for a decade or two. The building itself may remain in service for far longer. The owner, however, remains responsible for the asset across its life: from planning and construction through operations, renewal, and eventual replacement or demolition. Project teams and staff change during that period.

This mismatch is especially relevant for Hawaiʻi property owners, including AOAO communities, resorts, and institutional organizations that may hold and maintain assets for decades. In those settings, records need to be useful not only to the people delivering a project today, but also to future managers who did not participate in its original decisions.

The Whole Building Design Guide notes that operations and maintenance can account for as much as 80% of a building’s life-cycle costs and may exceed three times its initial construction cost. The exact proportion varies by building and assumptions, but the broader point is that substantial costs occur after construction is complete.

That means much of a project’s long-term value is realized by people who were not in the room when its early decisions were made. Coordinated, traceable records can also provide useful evidence of the building’s condition, scope, and history during a sale or refinancing. What records would a future owner or lender need to understand how an asset was designed, built, and maintained?

Standards can help organize information

Construction classification standards provide shared structures for organizing project information. CSI’s MasterFormat 2026 Edition introduced 2,185 new listings and reorganized 617 existing listings. UniFormat provides a complementary way to organize building elements and systems, while OmniClass supports broader classification of construction information.

Robinson’s article also describes UniFormat’s expansion beyond buildings into transportation and utility infrastructure, and the addition of cross-references among MasterFormat, UniFormat, and OmniClass. These developments provide teams with more ways to relate planning information to specifications and other project records. They do not, by themselves, ensure that information is complete or that the reason for a decision will be retained.

A related concept is the Project Planning Document: a living record that can develop with a project rather than serving only as an early description. In Robinson’s discussion, the document follows the owner’s requirements through planning, budgets, design-build responses, procurement, construction, and post-construction information such as asset tags and operations and maintenance schedules. The decision log is central: it records not only what was decided, but the reasoning behind the decision.

The term is discussed in the context of work associated with the Design-Build Institute of America and the Canadian Construction Association. Owners considering this approach may want to clarify how the project’s requirements, decision records, and closeout materials will be maintained and updated across phases.

Coordination conflicts between trades are one visible result. When penetrations, sleeves, and assemblies are not reconciled across the documents that each team works from, the discrepancy surfaces during construction as rework, at a cost that lands on the project rather than on the paper it originated from.

Continuity from planning to closeout

For owners, continuity is a project-control issue: how are requirements carried forward, decisions tracked, and completed work verified? A consistent record can help connect early objectives to design documents, construction observations, inspections, commissioning, and maintenance information.

Pono Consulting Group works on the owner’s side of the table across project phases, from concept and development through design, construction, and post-construction commissioning. Our services include building envelope consulting, roofing systems consulting, inspection and testing, and other services. Project and closeout documentation can help record what was built and why. Where a building later experiences damage, a traceable record may also support insurance claim documentation and property underwriting.

The owner’s premium may reflect more than uncertainty about price. It may also reflect uncertainty about information: whether requirements are consistent, whether decisions remain understandable, and whether records will be useful to the next team responsible for the asset.

For owners, developers, and facility managers, what project information has been most difficult to preserve across handoffs? If you are planning a project or reviewing closeout records, contact Pono Consulting Group to discuss your documentation and project-continuity needs.

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