The construction industry is characterised with inherent risk and uncertainties as a result of its fragmented and competitive nature. This therefore makes it difficult to accurately estimate the cost of construction project. To achieve the objective of having work completed most especially within cost and quality, contingency sum is apportioned to cater for unforeseen items of work that may likely evolve. Therefore, this current study aims at evaluating project risks with a view to determining adequate contingency funds to improve project performance. A quantitative approach was used in obtaining data through structured questionnaires administered to the construction professionals practicing in the F.C.T. Abuja as well as survey pro forma to gather archival data on completed building projects. 402 questionnaires were returned (44.4% response rate) and found useful for further analysis and 47 projects were also considered suitable for the study. The data were analysed using Relative important index (RII), Severity Index (SI), correlation and regression analysis. The study revealed that deterministic method (percentage addition to base estimates) was the most commonly used method, contingency sum usually allocated to construction projects are inadequate and that other risk factors are not being considered in its allocation. The study concludes that contingency sum determination was insignificantly related to the perceived level of inherent risk (R2= 7%) in construction project; and also has a weak relationship with the cost overrun. Based on this, more scientific approach to estimating contingency sum should be employed instead of the experiential approach that often results into under or over estimation of construction cost and estimating professionals should pay greater attention to the effects of economic and environmental risk factors in allocating contingency sum.