Understanding Construction Allowances

Construction allowances are misunderstood by many homeowners who have never built a custom home or renovated their current house. Allowances are easy to understand, they are a placeholder value for a particular item that will be used in the construction of your home. This allows you as the client to defer the selection of the item until a later date and allows the contractor to begin construction before all of the final decisions are made. If what you choose is more expensive than the allowance value carried, you pay more. If what you choose is less expensive than the allowance value carried you pay less and a credit gets issued towards the overall construction budget.

Resources:
- 5 Tips to Start Your Project
- Book: The Homeowner's Guide to Residential Design and Construction Projects

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[waysidekitchens]

Your explanation is right on point. I’m glad I found your channel. Good job!

[AllianceEpoxyFlooring]

Great explanation, Thanks for the video

[roryroberts-yutg]

Cost plus contract would not have allowances right? It would charge be the cost of the item plus the GCs fee?

[Victoriahull]

Will the contractor send us to certain stores to pick things out at the time you are doing the plans? What if the appliances you want are not at the stores the contractor uses?

[gigicrisp]

So …
If you go over on a lighting allowance … 3700… and spend 8000
Shouldn’t the allowance be subtracted from the actual overage ???