What is an “allowance” in construction estimates?

An "allowance" in construction estimates refers to a predetermined sum that is set aside for a specific item or activity within the overall project budget. This amount is typically included in the estimate when the actual cost of that item is uncertain or when the specific details of the work are not fully defined at the time of estimating. Allowances are useful for providing flexibility in budget planning, as they accommodate potential variations in cost that may arise when the item or service is more clearly specified later on.

For example, if a project requires specialized materials that the designer has not yet identified, an allowance can be included to cover these costs when they are determined. This ensures that there is funding available for these aspects of work even if precise costs cannot be calculated at the initial estimating stage.

In contrast to the other options, which describe concepts not aligning with the standard definition of an allowance, this option clearly captures the essence of how allowances function within construction cost management. Understanding allowances is crucial for effective project budgeting and risk management, particularly in dynamic environments where costs can fluctuate.