Here at Rose Construction we are known for our detailed contracts. Because most contractors aren’t nearly as thorough, unless a client has worked with us before they generally haven’t heard the term “allowances” as used in our contracts. Although we provide all our clients with a description of the term allowances in the bid, I thought our readers may be interested as well.
If a client knows exactly what material they would like, we include that specific product and cost. However, if a client has only a general (or no) idea of what he or she would like, we will state an allowance in the bid such as “Allowance for prefinished hardwood materials is: $3.99 per sq. ft” (excerpt from an actual bid and, in case you’re wondering, that client chose a prefinished white oak at exactly $3.99 per sq. ft.). We choose the allowance based on what you would like to spend on the material at time time of the bid. For example, if you have a small budget we’re not going to be allowing for $10.99 per sq. ft. for an entire floor of your home (unless, of course, you request it!). Likewise, if you would prefer a high end material, we won’t specify $0.99 a sq. ft. It is in our best interest as well as yours to come close to the final amount, so we work to find an appropriate cost for the allowance.
However, sometimes people change their minds. If we have allowed $1000 for, say, plumbing fixtures but the client loves $1500 worth of fixtures, that extra $500 is added onto the project cost. Likewise, if we have allowed $1000 and the client prefers $500 worth of fixtures, that $500 is deducted from the total bill. And don’t worry, we warn clients when they come close to reaching their allowance.
One of the main advantages of an allowance is that clients can have a budget in mind when they search for those perfect materials. Believe me, it’s much better to visit a showroom with an idea of how much you should spend per square foot than to fall in love with a material only to discover down the road that it’s not in the budget… after you’ve already planned the rest of the room around it!
© Rose Construction 2009