Allowance
What is allowance?
An allowance is a placeholder dollar amount a contractor includes for work whose final cost isn't known yet — for example, $4,000 for flooring the owner hasn't selected. The work is in the contract, but the price isn't locked. Allowances create budget risk: the final number can climb once the real selection is made.
Allowances are legitimate when a decision genuinely can't be made at bid time. They become a problem when a contractor uses them to book a low headline number, then trues up the price after you've signed. A bid full of allowances is a bid whose real total you don't actually know yet.
When comparing bids, treat large or numerous allowances as change orders waiting to happen, and ask each bidder to firm up the pricing wherever possible.
What is an allowance in a bid? →
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