What are Allowances?

Construction material allowances are an important aspect in any renovation or construction project. Essentially, a material allowance is an approximate estimate of the cost for materials on the part of the contractor. As with most facets of construction projects, the materials budget can be difficult to calculate and the actual cost of the materials will oftentimes be over or under the allowance. The final bill for the project usually covers the difference between the cost and allowance. Material allowances are included in the original contract and are primarily used when the materials to be used in the project haven’t been decided yet.

Facts of Allowances

Allowances can help prevent delays in the construction process due to uncertainty and budgetary constraints. They add a certain flexibility to your contract, giving you the space to adapt as your project progresses. However, allowances can also be problematic in that they add ambiguity to a legally binding contract. That ambiguity can lead to arguments and misunderstandings between you and your contractor. Ideally, you should make all material decisions beforehand and avoid including allowances in the contract, but that isn’t always possible. If allowances are inserted into the contract, it’s important to note every instance where an allowance is used and their designated purpose. A work order should be used with every allowance in the contract, documenting the materials used and their final cost. Material allowances can be a great tool in when it comes to budgeting, but they should be used sparingly and with care.

Estimate allowance

When preparing an estimate for your project, you have plenty of options to customize which will ultimately impact the project allowance. You will have the ultimate decision regarding the materials used for flooring, tile, faucets, door handles, light fixtures, and other features that you may choose to have replaced. If you decide to delegate the responsibility of purchasing these materials, we will be happy to do so. We will then prepare a material allowance alongside your cost estimate and scope of work. With these breakdowns you will have a complete overview of your project’s budget and work to be completed, as well as the budget that has been set aside for the project’s materials to be handled by our top craftsmen and women.

Changes in allowance

Changes in allowances happen all the time. The allowance is there to ensure your renovation gets done within your set budget. However, if you find a great deal on a certain vanity or decide to go with a different hardwood floor that is a little over your set allowance, we simply treat them as a change order. We are always open for providing insight on whether or not a certain material allowance is worth going a bit over the budget for a higher quality product.

We will usually recommend you doing so, especially if it is a higher quality material that is more durable and fits your design and preference. At BT Construction & Development Inc. we take pride in our administrative work and project management. When we are working with a material allowance, we take extra time to organize and maintain our procedures to ensure that our clients have the ability to decide on a different material with minimal delays, confusions, or any unexpected charges that may occur.

How we work with your allowance

When you decide to work with a material allowance, we are happy to provide helpful insight on all your material and design decisions while staying within your budget. These allowances are in place so expenses do not get out of hand and we can get your renovation done cost effectively. Ultimately, your renovation will grow the value of your property and provide you with a top of the line finished product, so maintaining a budget will allow you to increase your potential profit. Material allowances are something we take into consideration during the bidding process. If you already know what you want to be installed for your project and want to provide us with all the materials, you have the freedom to do so. However, if you still need some time to decide or want to shop around a bit we will prepare a material allowance spreadsheet for you to use as a reference when comparison shopping. If you decide on something a little over your material allowance, we are able to remotely invoice you the difference so we can keep your project moving forward with no delays. Find a fixture that comes in under the agreed allowance? We will gladly provide you a credit on that item! We understand renovations can be a bit tricky, so we do our best to provide all the information in our project management program so you are able to track, schedule, make decisions, changes, or add work before they may cause major delays. Renovations should be fun not frustrating, so we aim to provide you with the customer service possible for a positive construction experience.

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