A budget placeholder built into the contract for items whose final cost is not known yet.
An allowance is a specified sum included in the contract for a defined scope item whose exact cost cannot yet be determined at bid time. The contractor includes the allowance amount as provided and adjusts the contract sum if actual costs differ. Common allowances cover items like owner-selected fixtures or unknown subsurface conditions.
The contract includes a $25,000 allowance for owner-selected light fixtures, to be reconciled against actual purchase invoices.
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