Allowances are frequently included in construction contracts between owners and general contractors. Allowances are typically used for design elements of a project that are either not designed or not quantifiable at the start of a project.

The following is a brief list of design items that allowances were used for on a typical senior living project:  landscaping/site irrigation, exterior, and interior signage, and for commercial kitchen equipment.
The last several years the number of allowances that are used in construction contracts has sky-rocketed. The list of allowances now frequently includes site and courtyard, amenities, millwork, wallcovering, flooring, ceramic tile, low voltage systems, hardware, and light fixtures.

Allowances do allow for the project team to refine designs and determine the final scope of work. Unfortunately, too many allowances can be disruptive to a project and potentially cause significant schedule delays. The reconciliation of allowances takes a lot of focus by the project team, which frequently does not occur in a timely manner, and leads to delays and potentially massive coordination issues. Allowances can be a good tool, however, the number of allowances has to be limited, as well as, limited to a relatively simple scope.

Brian McCarthy
Executive Vice President, Midwest Construction Operations
The Douglas Company

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