Allowance
An allowance is a placeholder dollar amount in an estimate for a selection the client hasn't finalized — like tile, fixtures, or appliances.
When the client's actual selection costs more than the allowance, the difference should become a change order. Allowances that quietly run over without being captured are a common margin leak on remodels.
Related terms
- Change order — A change order is a written modification to the original contract scope or price — added work, a selection upgrade, or a condition discovered on site.
- Contingency — Contingency is a buffer amount (a percentage of cost) added to an estimate to cover the unknowns that show up on almost every job.