I'm not exactly sure what you're asking, maybe you could be specific about the situation you're facing? But here's an attempt at an example in my remodel that might be similar to what you're asking.

There was a short sort of "wall" (about 12" maybe) that hung from the ceiling between the kitchen and the family room. I wanted that wall removed -- in other words, I wanted an uninterupted ceiling between the two rooms. So, that was included in the scope. However, at some point, it was determined that in order to eliminate that wall, additional supoort had to be put into the attic at that spot. I was aware this might happen but it was something they couldn't know till they got in there and started doing it.

They gave me a change order with the corrected labor/materials needed to do that part of the job. I signed off and paid. So... it was more expensive to do that than they had originally estimated, it was not due to anything I'd selected, just in the nature of the job.

Is that comparable to your dilemma?

You would have to attach the entire contract for anyone to give you quality advice. Going above an allowance is usually charged on a 'time and material' basis. If you don't trust your contractor enough to somewhat accurately report time and material basis, you shouldnt be working with him or her. Request invoices for materials if you think you are being cheated, and then blast the contractor on Angie's list, etc., if they are in fact cheating you.

I don't understand why something would not be attributable to a choice made by the homeowner. For example, are you asking your contractor to do something not in compliance with local building codes, and he built your kitchen in compliance with the code regardless of your instruction? If a contractor voluntarily installs a more expensive tile for you, you are not responsible to pay for it unless you sign a change order approving it.

Allowances do have contractual relevance. You cannot exceed a construction allowance/budget for a specified category of work without a modification to the terms of the contract, i.e., a change order.

I hope that helps a bit...

fern, I'm not a contract lawyer, nor am I tremendously practiced in remodels, so I can't speak to all the variables that may come in. But, this is what we had done. There were some "what-ifs" budgeted in the initial plans and I think it lay on the homeowner (us) to follow up about if some of the what-ifs were exercised and if not to adjust the amount. On the other hand, we accounted for some of them - such as the "what if the sub-floor needs patching after the old tile is removed" by tasking that the subfloor would be rebuilt when the tile was removed (it was jst too bad for us that it was rebuilt incorrectly but that is a different matter). As per the contract, where some of the hidden jobs looked like they would likely need doing, then we planned to have them done.

As for some of the others, the contractors told us after the demolition that they would indeed have to do (x) and gave us a firm cost for the size of that job, different (or not) from the estimate associated with the what-if on the contract. Basically, little on the bill from the GC was a surprise to us as they told us both that they would have to (or not have to ) do the task before they did so and told us the amount it would be. Of course, at that point there is no turning back so it wasn't like we could decide not to go ahead at that point in time ;-) But we did try to have as few what-ifs left once the job started, as we could.

Hope this is helpful.

Those are all really helpful examples for me, anyway. I get the concept of the upfront explanations and what-if cost estimates, that help you feel as though you have an experienced contractor and that you are getting some estimate of what you "might" get into--of course as long as the need for add'l repairs or work is not due to sloppy teardown, or something--in contrast to someone who rips out the short wall, for example and then says, who would have guessed, we now need to shore up this wall for another $10k!

There are so many different situations! But really the contractor is suppose to get you to sign immediately for change requests and size requests and material requests

***Well: we always put allowance: unless they come in first day stating: "I want Blue Pearl in my kitchen" I call : get pricing right then and there and that goes in the quote.

Changes: along the way: SHOULD BE signed for! "Mr Customer: your tile allowance is for 12x12 and you want 16x16." Sign New REVISED:Estimate!

Very important: 9 times out of 10. I call the customer and tell them their $900 allowance for their granite turned into $1100.49 (slab price) no upcharge: delivery usually $65. They scream and call my boss! They usually get their way: and my boss "eats" the cost and loses money!!!!!!! I see this every week!!!!!!

same with tile: they want 18x18 but allowance states 12x12 @ $1.89 sf but the 20x20 are $2.44 sf. They scream and call my boss and she doesn't want them to cancel. they get their way and my boss loses money!

I don't surprise people.

another example: "listelli" allowance $4.00 each: they turn around and want "glass" tiles: $18.00 sf. Yeah they are going to pay the upcharge! or they aren't getting the glass they want. Or they can go buy their own glass and I will take the "listelli" allowance off their estimate and invoice.

This is a daily issue for me and I have learned the hard way: I communicate with customer at all times! Or it doesn't get installed.

I have a hugh problem right now: (see my side of it)
Customer signed an estimate in SEPTEMBER! yeah: and now he has modified his cabinets. We did templates 2 weeks ago. 15 sf extra added. We could have done the kitchen as it was with a HUGH one slab that I found and had on hold: So adding 15 sf: kicked him into 2 slabs.3cm "Tan Brown" is granite: fyi: so now it's going to cost $1500 for the "Tan Brown": to buy them from vendor! His allowance is for $1000.00 (the difference is because I found 2 smaller slabs that are $750.00 each) + my boss is still paying his $65 shipping not on his estimate)
#1 we have him @ out the door priced $52.63 sf for 3cm "Tan Brown 95 sf kitchen. $5000.00. His original September 2008 estimate is for $4400.00.

My point: he won't sign new estimate and he is LIVID mad! This is just the things I have to deal with on a daily basis. Yes, we have 1/2 his money for old estimate. If we allow him to stay at the $4400.00 for his kitchen: that will be $46.32 per sf. 95 sf kitchen. That includes demo, undermount sink cut out, and drop in stove! And granite 4" splash! Unbelievable. Basically we are installing his kitchen for FREE if he gets his way!

Great last example:
what if your granite allowance is $1000 on 70 sf kitchen. You sign and give your 1/2 down:
Then you turn around and pick-out "Labrador Antique" Granite. Those are $1700 slabs! can be! now: why would we give the customer $1700 slabs X 2 = $3400.00 and lost $2400 on the deal. My boss or myself tell the customer they just picked a granite WAY out of their allowance! New Estimate: and Signature required! CYA
(I am venting: a little: but I mean there is always two sides to every issue. There are contractors out their who are not upfront and honest and then their are: but in the end: what matters is that the customer is happy and tells a good story about their INSTALL EXPERIENCE to their friends! I always keep that in mind!)

~I hope this helped you and others~
~Best wishes~

fern, I think I know what you're talking about and it seems closest to what lowspark describes. Our "what ifs" came from a few places that just could not be nailed down prior to getting the project well underway. For example, we have an older home (50+ years, although not truly old on New England standards) - and the concern was that the original floor joists were not entirely level from one side of the space to the other which would not be acceptable for the new kitchen (the old space had a wall separating the the two suspect areas). The extent of repairing this was unknown - would it be just one area? would it be for the whole new space? etc...we agreed with the contractor that if it could be "patched" so to speak, as in running new joists next to the old ones, in the worst area, then that would be our bill. However, if just placing the new joists (I think they called it "ghost joists"?) in one area was not his preference and he really felt that his standards required the whole area to be done, then we would split the bill. This ultimately is what happened.

Another example was that we couldn't tell if an old addition had been properly insulated in its attic, according to the new electrical codes we now have. If it was not, it would be required by the inspector and would add a nice chunk onto the bill. The builder then mentioned that if they were up there doing the old attic, it would be good for us from an energy perspective to reinsulate neighboring attic spaces too. The solution for this was that we'd pay for whatever was required to pass inspection and then we'd split the amount that was over and above that.

Last, another situation arose when an existing window's elevation had been mis-measured by the KD - when it was discovered, the only solution was to take it out, put in a new header and raise the window, requiring work on the outside siding as well. Since this had nothing to do with our decision making, etc., our builder ate this cost ($3000) but did so without any complaint.

As for other "allowances", as stated by the others above, I would make every possible selection before you start - literally, everything - from lighting to lightswitches, from counters to cabinet hardware, number of can lights to outlets - and then have those items, model #'s and detailed descriptions, written into the contract before you sign it. We built 3 custom homes before moving East and taking on an existing home and renovations - I learned a ton during those projects and all I can say is the more you know before, the better!

Hope that helps!

My contract had clauses about how there may be extra charges depending on what they find when they open up the walls. For example, if they have to do extra framing beyond what is considered normal, or if they discover the pipes are in bad shape and have to be replaced.

The last instance actually happened - I'm in an old apartment building, a lot of the pipes did have to be replaced, and there were extra plumbing charges. Whether they charged me a reasonable amount or overcharged me, I have no way of knowing. I think they were honest about other things, so they were probably honest about this.

HTH.

I'm asking because I want to know what to "look forward to" as my project ends. But this information should also be very helpful to anybody who is in the process of negotiating a contract, particularly considering there does not seem to be much out on the web that's helpful (at least for the homeowner).

Lowspark -- what you describe sounds like a change order and I am familiar with them....as in I've signed them and paid for them!

Kev 800 -- that's pretty much my question: is an exceedance of an allowance something that must be treated as a change order? I have been assuming the allowance numbers did have contractual relevance but then there are things about remodeling that challenge many of one's assumptions so I started to wonder!

Petragranite -- I do see your side. It seems obvious to me that if I make personal choices that exceed the allowance, it's on me. But obviously the idea of allowances causes a lot of misunderstandings, as you have described. This does seem to be an area where homeowners could get into trouble because they don't know the basis (cost per foot, material types, etc.) upon which the contractor established the allowance. So they have expectations that aren't supported by the contract allowances.

mnhockeymom, wow! What a great contractor to split the bill with you. I definitely understood that any surprises in my job -- structural, rot, unlevel floors etc. -- would be mine to approve as change orders, although it's kind of funny because in most cases how are you going to NOT approve something like that when everything is torn up!

My allowances are not items that involve choosing between higher or lower cost items like tiles, flooring, etc. but rather patching stuff like drywall, trim, and existing flooring. At the time it seemed reasonable to make these allowances but as the job ends I realize that how allowances work was not spectacularly clear! Since I bought all of my own fixtures, those things weren't included as allowances and I could make and remake the decisions that mnhockeymom points out should be made up front if possible.

fern4: this post was informative to those of us still in the negotiating process. I don't have any experience with allowances, although my mom does have them in her estimate (we both just happen to be remodelling at the same time, what a surprise that was!)

Before my GC would even give me a rough draft estimate, I had to choose materials (granite, tile, lights, cabinet changes, etc) and detail all electrical work, outlet changes and all possible plumbing changes. Since this is our first experience, I didn't realise it could be different.

Now, our estimate is coming in way, way over budget so I am scrambling to make material choice changes, structural changes and eliminating the few bells and whistles we wanted. This is very frustrating, but in reading this I guess I should feel fortunate that all items that could possibly be addressed are being done so up front.

Now, we'll just pray nothing is lurking in our walls that will be expensive to fix!! haha

"Is the homeowner entitled to any advance notice or request for approval (i.e., a change order) if the allowance is going to be exceeded?"

I don't know what's standard, but we have worked with several different contractors and in each case, we've asked for them to talk with us beforehand when THEY needed to make changes because of unexpected things. Also in each case, we had a 10% (minimum) contingency to help cover these sorts of things.

Regardless of whether we initiated change orders or the contractor needed to change things, we always amended the contract and both parties signed off on the changes. I think this is the only way for both to be protected.

I'm not really sure if I answered what you were asking, but I hope that's what you were after!

So, if I understand correctly, you had allowances for all the labor items? That's not my understanding of what allowances are. All my allowance items were for the things which were out of the contractor's control. So for example, I had an appliance allowance. This quote was based on the specific appliances I had chosen. (Like mnhockeymom suggests, I had picked out everything in advance, it's definitely the best plan of action!) So, if the fridge I'd chosen were no longer available for example, and I had to pick another one, I might exceed or come in under my allowance.

But for let's say, electrical, the amount that was written into the contract was the amount I paid. Again, everything was spelled out in advance in the contract of exactly what electrical work would be done. The only way I would have accepted a different number would have been if additional electrical work had been required, due to circumstances beyond the contractor's control. If it took the electrician longer because he had to rework, or if he'd forgotten some equipment and had to make an extra trip, or whatever, not my problem.

It sounds like you're worried about surprises at the end. My contractor had me pay for stuff as it got completed, so I was paying as we went along and didn't have a huge amount due at the end. It might be a good idea to get with your guy and make sure you're still on the same page.

lowspark, I did not have allowances for all of the labor items, just a few minor ones. And yes I've been paying all along. I just wanted to know how overages on allowances are treated when the issue isn't due to the homeowner's choices of material.

It's frequently helpful to find out more about the "industry standard" on Gardenweb prior to discussing things with contractors. So, for example, people want to know how things should installed before they meet with the contractor or sub to discuss why they aren't happy about the installation.

As far as people who are working on contracts, bearing in mind the advice of someone on the remodeling forum, it might be worthwhile if a contractor suggests an allowance that the homeowner push for an actual labor bid instead. But in some instances, the extent of a repair isn't well known in advance (hence the allowance which is essentially a good estimate) and the contractor would rather hire a sub on time and materials. This doesn't seem completely unreasonable if it's a minor part of something. I guess it's all part of the dance you do with the contractor. Unless you're willing to walk away, and you might not be if this is the person you want, then you sometimes have to do things their way or compromise.

petra granite, those are good examples. But, if it won't sound too irritating, do you see examples of contractors low-balling the estimates to numbers that aren't often achievable, in order to make the bid most attractive--as in, is $1000 granite allowance the absolute lowest price, lucky-day if you find it, commonest variety, and perhaps not telling the customer that, and meanwhile they go merrily looking at "colors" and are disappointed?

This speaks more to KD type stuff, perhaps, in the sense of a KD explaining to the customer some ranges of products (we talked once about we wished we could always get 3 complete designs--budget, mid-range, and wowzer--

You'd be able to tell, if EVERYONE's granite choice came in way over allowance, and nobody was ever under, that there was something wrong with the allowance in the first place.