What is the purpose of allowances in contract documents?

The purpose of allowances in contract documents is to provide a fixed cash sum for estimated items that have not yet been fully defined at the time of bidding. This allows for flexibility in budgeting and can accommodate changes or unforeseen costs that may arise later in the project. By incorporating allowances, contractors can prepare more accurate estimates, while clients can anticipate and allocate funds for specific aspects of the project that may not have complete specifications at the outset.

Allowances are particularly useful in construction where certain materials, fixtures, or items are chosen later in the process, helping to streamline the bidding process while ensuring that there are funds available to cover these costs. This approach also helps to prevent disputes over pricing later in the project, as allowances have been agreed upon in advance.