Contract allowance
A budget allocated for a specific item or work not fully defined at the time of contract.
Allowances are budgeted amounts for specific items or activities where the exact details are not yet determined. They provide flexibility within the budget for unforeseen expenses or design decisions made later in the project. However, reliance on allowances can lead to budget overruns if the actual costs exceed the estimated amounts, underscoring the importance of accurate initial estimates and regular budget reviews.
Used in a sentence
The contract includes an allowance for kitchen fixtures.
Synonyms/variation
Budget Allocation
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