Bid terms glossary
Allowance
A placeholder dollar amount in a bid for something not fully selected or defined yet.
What it means
An allowance is a fixed amount of money included in a bid for an item that hasn't been fully defined, like a finish that hasn't been picked or an unknown site condition.
When the real cost is known, the contract is usually adjusted up or down against the allowance. Exactly how that works, including whether markup applies, depends on your contract.
Why it matters when leveling bids
Allowances can make a bid look cheaper or more expensive than it really is. A low allowance lowers the headline number and pushes cost to later.
When leveling, make every bidder carry the same allowance amounts for the same items, or give the allowances yourself in the bid request. Then compare everything else.
Example wording
Example only
- “Include an allowance of $[amount] for floor tile material.”
- “Rock excavation allowance: $[amount]. Actual cost to be adjusted by change order.”
- “Signage allowance: $[amount], material and installation.”
Made-up wording to show the pattern. Not taken from any real bid. Bracketed items are placeholders.
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Related terms: Contingency · Unit price · Change order · All terms
General guidance, not legal advice. How a term works on your project depends on your contract documents.