Allowances

An allowance is a predetermined budget allocated for a specific construction item that has not yet been selected. Commonly used for items such as cabinetry, countertops, plumbing fixtures, and lighting fixtures, allowances serve as placeholders within the overall project estimate, ensuring costs remain within the contracted budget. This approach helps maintain project momentum while allowing clients the flexibility to choose materials at a later stage without feeling rushed.

However, allowances must be handled with care. When used appropriately, they streamline the project process and provide clients with clarity and control over their selections. On the other hand, improper use of allowances can lead to budget overruns and dissatisfaction. Some contractors may deliberately set unrealistically low allowance amounts in order to present an artificially affordable bid. This tactic can mislead clients, leaving them to later discover that their budget only covers the lowest-grade materials, or worse, doesn't cover the item at all. To make matters worse, contractors often apply a markup - typically 20% or more - on any allowance overages. As a result, the client ends up paying significantly more than anticipated, and often more than if they had chosen a bid with realistic and well-considered allowances from the start, all while enduring unnecessary headaches throughout the process.

At Downy Home, we provide reasonable allowances that reflect the quality of materials and fixtures our clients expect within their vision and budget. Rather than underestimating allowances, we take the time to explain what level of materials each allowance covers, providing actual examples so that clients can make informed decisions. This also helps the customer in comparing bids across contractors to ensure a true “apples-to-apples” comparison. We include a detailed Allowance Schedule in both our estimates and contracts, and throughout the project, we work closely with clients to ensure selections are made in a timely manner, keeping the project on track.

What happens if your actual spending differs from the allowance? If one item exceeds its allowance but another comes in under budget, the overage may balance out. Should you come in under budget overall, we treat any unspent allowances as “your money,” crediting the remaining amount toward your final payment. In the rare instance that the total allowance is exceeded, the client will owe the difference. However, our goal is always to end the project with a credit to our clients, reflecting that we’ve managed the allowances responsibly and fairly.