By: Rebecca Reilly
Project allowances are a means of budgeting for additional repairs that may not be apparent at the beginning of a project. Design professionals often lack full access to the building until the project has already started. Once scaffolding is installed, it’s much easier to assess the extent of the required repairs. Allowance budgets are developed based on the size of a building, general conditions and the overall project budget. Sometimes, necessary repairs that exceed project allowances must be performed. On other projects, all of the allowances are not utilized. The Contractor typically provides unit prices for potential repairs such as: brick replacement, mortar repointing or sealant replacement. Unit prices are typically included in the contract. If the quantity of repairs performed exceeds the allowance, the Contractor will simply multiple the excess quantity by the unit price to obtain the additional cost. This prevents the need for additional proposals from the contractor and protects the owner from increased pricing throughout the project’s duration.
At the end of the project, a final change order is issued that includes the amount of allowances used. The change order is approved by the owner, contractor and design professional. Once this change order is issued, the payment application can be signed off and the contract can be closed out.
Allowance drawings are an as-built set of drawings that includes the quantities of additional allowance work. These drawings are especially useful when creating a final change order for a project. It allows the client to understand exactly where project allowances were applied. Additionally, the client should receive a credit change order for any unused allowances. Regular tracking of project allowances and expenditures allows the client to have an accurate view of project costs, and decreases discrepancies between the design professional’s record and the contractor’s.
Since they indicate precisely where work was performed, a building owner can benefit from having allowance drawings to reference after project completion. Building management can better track other areas of the building that may require future repair. If a building occupant reports a leak in a given area of the building after the completion of a project, the property manager can review the drawings to see if a repair was performed near the leak location. If no repairs were performed in that area, additional repairs will likely be required. If repairs were performed at the leak location, further investigation to determine the source of the water infiltration should be conducted. It may mean that previously performed work is deficient, or that the wrong repair was performed. If repairs are found to be deficient, the project warranty should be reviewed to see if the contractor is responsible for additional repairs. Overall, project allowances are a great way for owners and property managers to budget for additional repairs, and subsequent project allowance drawings aid building owners in track a building’s repair history.