Using Allowances to Recover Your Costs by Sal Alfano Of t e n you have to begin construction before you know exactly what it is you're building. In situations like this, pricing certain items "on allowance" can save the day, as long as all parties properly understand the concept. An allowance is useful when work is anticipated, but its extent remains unknown. Soil tests may have determined the existence of concealed ledge, for example, but how much ledge is there and how it will interfere with the foundation is unknown. Another common situation develops when certain items are included in the drawings and the contract, but are not specified. For instance, the owner may know the location and quantity of kitchen cabinets,
