What does allowance mean in construction?
Short definition
An allowance is a budgeted amount included in the contract for work or materials not fully defined at the time of pricing.
Longer explanation
Allowances help carry uncertain scope while preserving a placeholder cost that can be reconciled later.
Example in context
“The project team reviewed the allowance during the construction phase.”
Common users
- Owners
- Architects
- Contractors
- Construction managers
Related terms
Related resources
Construction Change Management TermsTerms used to identify, price, direct, approve, and record construction changes.Construction Estimating TermsEstimating, takeoff, pricing, contingency, allowance, unit price, budget, and job cost terms.GMP vs Cost Plus ContractLearn how a guaranteed maximum price differs from a cost plus construction contract.Allowance vs ContingencyLearn the difference between an allowance and contingency in construction pricing.Construction Change Order ProcessA field-tested overview of how construction changes are identified, priced, approved, and recorded.Construction Estimating ProcessHow construction estimates move from scope review and takeoff to pricing, risk, and final review.