Renovation allowances and builders


Question:
Does part of the allowance always accrue to the builder for installation, or is that assumed in the contract and the allowance is solely for material, not labor?

Answer:
An allowance is a quantity of money set aside in the contract for basically anything. It can be kitchen cabinets, door hardware, flooring, etc.

In the renovation world, allowances are also used to include a set quantity of money in the contract for unknowns, such as mold remediation, rotten wood repair, sheathing on the roof that cannot be identified until the roof is actually removed.

When a project is being bid and certain finishes are not selected the owner has not decided on portions of the scope, or there are several unknowns, then an allowance is used to establish a level bidding situation for all the bidders.

Whether the allowance is all inclusive or not is normally specified in the bid documents and can go either way. For finishes, such as kitchen cabinets it is more common for the allowance to include the material only with the labor already included in the overall bid. However, with unknowns, the labor and material is normally included.