Allowances, and the argument they cause

What an allowance is

An allowance is a number standing in for a decision nobody has made yet. The client hasn't chosen the flooring, so the contract carries a figure for flooring and everyone gets on with the job. It's an honest device, and without it half of residential work couldn't be priced at all.

The trouble is what each side hears. You wrote an estimate, a placeholder you fully expect to true up. The client read a price — a number in a contract they signed, next to a thing they're going to get. When the tile they want costs three times the allowance, one of you thinks that's a change and the other thinks it's what they already paid for.

Four things that stop it

• Name what it covers, and what it doesn't. "Flooring allowance" is where the argument starts. Material only, or material and labour? Underlay? Trim? Removing the old floor? Write the boundary, because the client will assume the generous reading, and they're not being unreasonable when they do.
• Base it on something real. An allowance should be a product you could actually buy at that price today — a named range, a per-unit rate from a real supplier. A round number picked to make the total look right is a promise you've made without knowing it.
• Say how it reconciles. If the actual comes in under, does the client get the difference back, or does it stay in the job? If it comes over, is it a change order or an adjustment on the next invoice? One sentence. Written before anyone knows which way it'll go, which is the only time it can be written fairly.
• Put a date on the decision. Every allowance has a moment where it stops being flexible and starts holding up the job. Say when: "tile selection by the end of framing." An allowance with no decision date is a schedule risk as well as a money one.

The low allowance

The temptation is obvious. Allowances sit in the total, the total is what wins the job, and nobody chooses tile on the day they sign. So the flooring allowance gets set at the cheapest thing that could plausibly be called flooring, and the job looks better than the one next to it.

It always arrives. The client picks something normal, discovers it's well over, and — reasonably — feels the price they agreed to was never a real price. You then spend the rest of the job defending a number you knew was thin. Whatever it won you at the start, it costs more at the end, and it costs it in trust rather than money.

The opposite is also worth avoiding: allowances padded so heavily that the job looks expensive and you lose it to someone less careful. Honest and specific beats both.

When it goes over

Handle it the moment it's known, which is when the client chooses — not when the invoice arrives. Show the allowance, show the actual, show the difference, and get it agreed as a change before the order is placed. That's a five-minute conversation while the client is excited about their choice.

The same difference, found on an invoice three months later, is an argument about whether they were told. They probably were, verbally, in a corridor. It won't matter.

Tracking them

Allowances are the part of a job most likely to drift quietly, because each one is small and the decisions arrive months apart. Keep a list — what the allowance was, what's been chosen, what it actually cost, and whether the difference has been settled. Six or seven allowances each a little over is how a job ends up thousands out with nobody able to point at the reason.

How Millo does it

Plainly: Millo has no special handling for allowances. An allowance is a budget line like any other — you set the figure, the real costs land against it, and the line tells you where it stands and what's left. Approving a change order moves the job's contract value, so an allowance settled as a change is reflected in the job's numbers rather than sitting in your head. Millo is job-costing software that runs on your own office computer, bought once.

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