Allowances should cover what costs incurred by the contractor?

• A. The cost of materials and equipment delivered to the site as well as all applicable taxes but not applicable trade discounts
• B. Unloading and installation
• C. Taxes only
• D. All costs including labor

Answer: (A)

Allowances are used to cover the cost of materials or equipment the contractor will provide, when the exact item isn’t determined yet. The amount reflects what the material or equipment will cost delivered to the site, including taxes, but it does not include discounts the contractor might receive. Installation work and unloading are not part of the material/equipment allowance; those are labor and handling costs that are addressed separately in the contract price or change orders. So the allowance should capture the material or equipment cost plus delivery to site and taxes, not include labor or installation.