What an allowance is

Why allowances exist

Nobody can price a countertop that has not been chosen. An allowance lets the job move forward: the contractor can bid the labor and the rest of the work now, and you can make the finish decisions later, often after seeing samples in person. The countertop, the tile, the light fixtures and the faucet are common allowance lines.

That is a reasonable way to work, and on a bid it keeps the paperwork moving while you think. The trouble is what the placeholder figure is based on, and how easy it is to forget that it is only a placeholder.

Why they so often run over

An allowance is usually set before anyone knows your taste. It might be based on a basic version of the material, or on a figure that keeps the bid looking competitive. Then you go to the showroom. The slab you like is a grade up, the edge you want takes more fabrication, and the sink needs an extra cutout. Each choice is small. Together they can take the line well past its allowance.

Allowances also cover different things in different bids. One might include delivery and installation, another might be material only. Two bids with the same allowance figure can mean different amounts of money.

Example The kitchen budget carries a $4,800 countertop allowance. The homeowner picks a slab with a thicker edge and an extra cutout for a prep sink, and the countertops come to $6,200. The line is over its allowance by $1,400. The contingency, set at $3,500, covers it with $2,100 left.

Questions to ask about each allowance

Allowances are easy to skim past because they look settled. Stop at each one and ask:

• What exactly does the figure include: material only, or fabrication, delivery and installation too?
• What would it buy? Ask for an example product or grade at that price, and go and look at it.
• How is the difference handled if you choose something that costs more, or less?
• When does the choice have to be made so the schedule holds?

Write the answers next to the line. They are part of what the allowance means.

If you are comparing several bids, put their allowances side by side as well. A bid that sets the countertops at a much lower figure than the others has not found a better price for the same slab. It has simply left more of the decision, and more of the cost, for later.

Setting your own allowances

If you are building your own budget, set allowances after a first look at what you actually like, not before. Visit a supplier, note the price of the thing you would choose, and use that. If you are working from a contractor's figures, compare each allowance with what you have seen and raise your own budget line if it looks low.

A realistic allowance is not a pessimistic one. It is simply the price of your choice, written down before you make it.

Where an overrun gets paid from

When an allowance line runs over, the extra has to come from somewhere. It can come out of the contingency, from trimming another line, or from making a different choice on the finish itself. None of those is wrong, but each one is a decision, and it is easier to make it at the showroom than after the slab is cut.

Before you commit to a finish, work out what it does to the line and what it leaves in the contingency. If the answer is uncomfortable, look at the other open allowances first. A plainer faucet or a simpler tile pattern can sometimes make room for the countertop you really want, and you stay on budget without giving up the choice that matters most to you.

When the choice comes in under

Sometimes the finish you choose costs less than the allowance. Depending on the contract, that difference may come back to you as a credit on a later payment. Check the wording before you count on it, and log the credit against the line when it arrives.