What costs to the contractor are not covered under the allowances?

• A. Unloading, handling at the site, labor, installation costs, overhead, profit, and other expenses
• B. All costs including labor
• C. Taxes only
• D. None

Answer: (A)

Under an allowance, the amount is set aside for the item itself when the exact product or finish isn’t known yet. The costs for unloading, handling at the site, labor to install, installation costs, overhead, profit, and other expenses are not included in that allowance. Those costs are part of the contractor’s actual cost of completing the work and are settled separately—through a change order—after the item is specified and installed. If the actual cost is less than the allowance, the owner gets a credit; if it’s more, the contract price is adjusted by the difference. In short, the allowance covers the item’s price, while the listed costs are paid outside the allowance and reconciled later.