Allowances in a construction project (credit, contractor, cabinet)

[longislandesign]

Has anyone ever used "allowances" for a major renovation project? How does it work? Is it good? What are the advantages? I know if I go over I have to pay the difference, but what if I go under. Say my contractor gives me a $7,000 allowance for granite, and I only spend $5,000, do I get $2,000 back?

[ocngypz]

On renovation projects we've always specified materials to be used upgfront. XYZ Cabinet Company, Full overlay, Maple, Nutmeg, Style #. Same with counters. When using granite we prefer to have client hand select the slab from the yard and price it into the contract.

Now, new custom construction.....it's a different story. We start the bid with allowances... then work with the client before final contract is signed. The object is to eliminate the necessity of change orders. The more work you put in upfront, the fewer $$$ unpleasantries you have at the end.

[ovi8]

We were given an allowance for the bathrooms (accessories, tile, etc.) and our target was to spend on whatever we wanted up to that allowance. More for some, less for others - whatever we wanted to do. If there's any amount unused, it would be a credit back to us. If we spent more, it would be out of our pocket. Simple as that, BUT ASK YOUR CONTRACTOR UP FRONT. It basically gives you a choice for your own materials/add-ons within the quoted price.