An allowance is a dollar figure a contractor plugs in for work or materials they haven't actually priced yet — 'flooring allowance: $6,000,' 'electrical allowance: $4,500.' It looks like a real number in the total, but it's a placeholder. When the real cost comes in higher, the difference is yours.
Why contractors use them
Sometimes an allowance is legitimate — you genuinely haven't picked the tile yet. But an allowance-heavy bid is often a way to post a competitive-looking total while leaving the price open. The more allowances in a bid, the less that grand total actually means.
How they become change orders
The job starts, the actual selection or condition exceeds the allowance, and you get a change order for the overage. Because the work is already underway, you have almost no leverage to negotiate. A bid with three or four fat allowances can drift 10–20% over its quoted total this way.
How to pin them down
- Ask for firm unit pricing and quantities in place of each allowance.
- Where an allowance is unavoidable, get the unit price so overages are predictable.
- Compare bids on how much is firm vs. allowance — not just the bottom line.
- Treat every allowance as a change order waiting to happen and budget for it.
BidsScores flags allowances, lump sums, and 'TBD' language automatically and factors that change-order risk into each bid's score — so a placeholder-heavy bid can't hide behind a low total.