A project specification requires the contractor to include a $15,000 allowance for plumbing fixtures. During construction, the owner selects fixtures costing $18,500. Who is responsible for the $3,500 difference?
Correct Answer
D) The owner pays the additional cost as a change order
When actual costs exceed established allowances, the difference is typically handled as a change order with the owner responsible for additional costs above the allowance amount.
Why This Is the Correct Answer
Allowances in construction contracts are predetermined amounts allocated for specific items where exact costs are unknown at contract signing. When the owner selects items that exceed the allowance amount, this creates a scope change from the original contract terms. The contractor has fulfilled their obligation by providing the allowance amount, and any overage becomes the owner's responsibility through the change order process, which is the standard mechanism for handling cost variations in construction contracts.
Why the Other Options Are Wrong
Option A: The cost is split equally between owner and contractor
The contractor is not responsible for absorbing costs above the allowance because they have already allocated the specified $15,000 as required by the contract. Requiring contractors to absorb overages would make allowances meaningless and create unfair financial risk.
Option C: The contractor must absorb the additional cost
The architect has no financial responsibility for allowance overages. Their role is design and specification, not cost coverage. The owner's selection decision, not architectural error, caused the overage.
Memory Technique
Think 'Allowance = Contractor's Limit, Overage = Owner's Bill' - the contractor's financial responsibility stops at the allowance amount
Reference Hint
Look up 'Allowances and Unit Prices' in contract administration chapters, or 'Change Orders' sections in construction law references
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