What may be covered by an allowance in a contract?

An allowance in a contract typically refers to a predetermined amount of money set aside for specific items or services that may vary in cost or are not completely defined at the time of the contract signing. This allows for flexibility in the project budget and helps address uncertainties regarding the final costs of particular elements.

Light fixture costs can be covered by an allowance because they often depend on the selection of fixtures, which can vary significantly in price based on the design, brand, and aesthetic preferences that can be decided later in the project. By establishing an allowance for light fixtures, the contractor and client can agree on a budget range, with actual expenses accounted for as selections are made.

Uncertainties around labor costs or permit fees typically do not rely on allowances, as these can be estimated more precisely at the outset. Similarly, landscaping expenses are generally more defined or can be estimated based on specific plans, making allowances less common for that specific category.