Building Process Frequently Asked Questions

What are allowances?

Allowances are essentially budget figures for certain components of the building that are difficult to pin down prior to actual product selection.  There are two types of allowances;

   

·Quantitative; an example of which would be the water well.  Nobody knows how deep the well will be until it is actually drilled.  The actual cost is dependent on the depth.  We establish an allowance based on of the average depth of wells in the area near your site and on what you intend to use the well for (drinking water, geothermal, lawn sprinkling).   

·Subjective; an example of which would be floor covering.  Flooring can vary widely depending on the product selected.  We establish this allowance together based on what type and approximate quality of material you want to use in each room (ceramic tile, hardwood, carpet, etc.)

As allowance items are completed and product selections are made, the contract price is adjusted up or down based on the actual cost compared to the allowance.  This protects you from paying for a 200’ well when it is only 150’ deep and allows you discretion and flexibility in making final product selections.  Allowances must be realistic, the practice of understating allowances to make the proposal more attractive will only cause frustration and cost you money.

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