Distinguish an allowance from contingency
An allowance funds a known scope item whose exact product or quantity is not yet selected. Contingency funds uncertainty that has not been identified as a specific line. The two are often mixed in a bid summary, which makes it impossible to tell whether a number is waiting for a decision or protecting against an unknown.
Start the review by labeling each placeholder with its true purpose. If a line has a defined scope but no selection, it is an allowance. If it has a known risk but no scope, it is contingency.
If it has neither, it is probably an unallocated number that needs an owner. This classification takes a few minutes and prevents a later argument about whether a drawdown should reduce the bid or reduce the risk reserve.
Inventory every allowance with its expiry condition
List the allowance amount, the scope it covers, the basis of the amount, the date it was set, and the event that should retire it. The retirement event might be a signed selection, a released drawing, a supplier quote, or a fixed date. Without an expiry condition, an allowance can survive into construction long after the decision was made.
Group the inventory by trade and by decision owner. The electrical package may depend on the owner's fixture selection, while the finishes package may depend on a design team's color approval.
Grouping shows where several allowances wait on the same decision. It also exposes allowances that no one currently owns, which are the ones most likely to be stale.
Test whether the scope is still open
For each allowance, check the current document set and the decision log. If the selection has been made, replace the allowance with the selected product and its actual quantity, freight, and tax treatment. If the design has changed, reprice the scope rather than adjusting the old placeholder by a percentage.
A percentage adjustment is only defensible when the underlying scope is unchanged. Record the evidence for the replacement. A signed selection sheet, a released specification, or a dated supplier quote is evidence.
A verbal confirmation is a lead, not a basis. The material escalation clause review is the companion check when the replacement price depends on a formula or an index.
| Allowance | Evidence to check | Decision owner |
|---|---|---|
| Selection allowance | Signed selection or released specification | Design or owner representative |
| Market allowance | Dated quote and pricing basis | Estimator and commercial lead |
| Design allowance | Current drawing and scope narrative | Design lead |
| Freight allowance | Delivery terms and route | Procurement lead |
| Expired placeholder | Decision date and replacement value | Commercial lead |
Reconcile the money when an allowance retires
Retiring an allowance should produce a visible reconciliation, not a silent swap. Show the original allowance, the replacement value, the difference, and where the difference lands. If the replacement is lower, the team must decide whether the savings stay in the bid, move to contingency, or get returned to the owner.
That decision belongs to the commercial lead, not to the estimator alone. Keep the reconciliation in the estimate file and reference it in the bid clarifications.
If the bid form requires a single lump sum, the internal record still needs the breakdown. A reviewer should be able to see that the allowance was not double counted alongside the replacement scope, which is a common error when two people update the same workbook.
Review expiry at fixed points, not by memory
Put the allowance review on the estimate calendar at three points: when the estimate is frozen, when the bid package is issued, and before final submission. Add an ad hoc review whenever a major drawing revision or addendum arrives. The fixed points make the check routine, and the ad hoc review catches the changes that would otherwise wait for the next calendar date.
Assign a reviewer who is not the person who set the allowance. A fresh reader is more likely to ask why a six month old number is still carrying a scope that was decided last month.
The review should take less than an hour for a typical package if the inventory is current. If it takes longer, the inventory itself needs maintenance.
Document the decision and its conditions
For each allowance that remains open, document the amount, the basis, the owner, and the next review date. State the condition that would change the number, such as a selection deadline or a supplier quote expiry. This converts an unexplained placeholder into a managed assumption that a project lead can monitor after award.
For each allowance that closes, document the replaced scope and the reconciliation. The estimate review evidence index should point to both records. When the project later asks why the bid included a number that was never spent, the answer should be a dated decision rather than a recollection.
Carry the result into the bid narrative
Bid clarifications should state which allowances are included, what they cover, and what happens if the owner does not decide before a stated date. Avoid language that promises a fixed price for an open selection. The clarification should also say whether unused allowance returns to the owner or stays with the contractor, because that term affects how the number is read.
A clear allowance narrative reduces post-award disputes and makes the estimate easier to compare with competing bids. If another bidder appears lower, the reviewer can check whether the difference is scope, selection, or a placeholder that was never priced. That comparison is only possible when the allowance register is part of the estimate record.
A short review agenda that keeps the team aligned
Run the review in the same order every time. Start with the allowances whose decision date has passed, then the ones tied to a current drawing revision, then the ones with the largest value. That order puts the stale and the moving items first, which is where the estimate is most likely to be wrong.
End with a one page summary for the commercial lead: allowance, status, replacement value, and the decision still needed. The AGC construction resources library is a reasonable reference for commercial practice questions that sit outside the estimator's authority. The point of the agenda is not to add ceremony.
It is to make sure the same gaps are not rediscovered at bid close. A team that reviews the same list in the same order gets faster each cycle, and the review becomes a normal part of estimate maintenance rather than a last minute rescue.
