Allowances, Exclusions and Change Orders: The Fine Print in a Remodel Bid

Most homeowners read a remodel bid from the top to the total. The parts that decide what you actually end up paying are usually further down, in the allowances, the exclusions and the change-order terms.

I've been in remodeling since 1999. I ran my own custom cabinet company building high-end kitchens, and for the last 11 years I've worked as a project manager, head carpenter and estimator. I've written this fine print, and I've managed jobs where it mattered. Here's what each piece means and what to ask about it.

Part 1: Allowances

What an allowance is

An allowance is a placeholder amount in the bid for something you haven't picked yet. Common allowances in remodels:

• Tile (floor, backsplash, shower)
• Plumbing fixtures (faucets, sinks, toilets, shower trim)
• Light fixtures
• Cabinet hardware
• Countertops
• Appliances
• Flooring

The bid says something like "Tile allowance: $X." When you pick your tile, if it costs less you get a credit, and if it costs more you pay the difference.

Why allowances exist

Allowances let a contractor give you a price before every selection is made. That's useful. Most people don't pick every faucet before they get bids.

How allowances go wrong

• Set too low. A low allowance makes a bid look cheaper, but you'll pay the difference once you pick what you actually want.
• Unclear on labor. Does the allowance cover just the material, or material and installation? A tile allowance that covers only tile leaves installation labor somewhere else in the bid, or not in it at all.
• Hidden markup. Some contracts add a markup on overages, and that's fine if it's disclosed. Know whether yours does.
• No deadline for selections. If selections aren't made on time, the schedule can slip.

Questions to ask about allowances

1. What does each allowance realistically buy? Can you show me an example product at that price?
2. Does the allowance cover material only, or material and installation?
3. If I go over, how is the difference charged? Is there a markup?
4. If I come in under, do I get a credit?
5. When do my selections need to be made?

Tip: when comparing bids, set every bid's allowances to the same realistic number. Otherwise you're comparing guesses, not prices.

Part 2: Exclusions

What an exclusion is

An exclusion is something the contractor is telling you is not in the price. Exclusions may be listed plainly ("Excludes: painting, appliance installation, permits") or tucked into general terms near the end of the bid.

Common remodel exclusions

• Permits and inspection fees (if required)
• Painting, or painting outside the work area
• Appliance installation or hookups
• Electrical or plumbing upgrades beyond like-for-like replacement
• Countertops, glass doors or other items quoted by a separate supplier
• Hidden conditions: rot, mold, water damage, termite damage, old wiring, asbestos or lead (these may require specialists)
• Structural changes
• Patching and finishing adjacent areas
• Final cleaning or haul-away

Why exclusions are a good sign

A clear exclusions list is a sign of an honest bid. It tells you where the contractor's price stops. A bid with no exclusions isn't necessarily all-inclusive. It may just be vague.

How exclusions go wrong

• Missing from the bid entirely, so you only learn about them mid-project
• Very broad wording, like "anything not specifically listed," which pushes everything uncertain onto you
• Key work excluded without telling you who's supposed to do it

Questions to ask about exclusions

1. What's excluded from this price?
2. For each exclusion, who's expected to handle it: me, another trade, or you as a change order?
3. How do you handle hidden conditions once walls or floors are opened?
4. If something excluded turns out to be needed, how will it be priced?

Part 3: Change orders

What a change order is

A change order is a written agreement to change the scope, price or schedule after the contract is signed. Changes happen for three main reasons:

1. You change your mind, like a different tile, an added outlet or a moved light.
2. Hidden conditions show up, like rot under the floor or wiring that isn't up to code.
3. Something was missed in the original scope.

Changes are normal in remodeling. Problems come from changes that aren't written down.

What good change-order terms say

• All changes are in writing and signed by both sides before the changed work is done
• How changes are priced: a fixed price per change, or time and materials plus a stated markup
• How changes affect the schedule
• When change-order payments are due: up front, with the next progress payment, or at the end

How change orders go wrong

• Verbal changes. "Sure, we can do that" on site, then a surprise on the final invoice.
• No pricing method, so you can't predict the cost of a change
• Change orders used to make up for a lowball bid. A bid that looked cheap gets "fixed" through a stream of changes.
• Schedule impact never discussed

Questions to ask about change orders

1. How do you handle changes? Is everything in writing before the work?
2. How are changes priced: fixed price, or time and materials? What's the markup?
3. How will changes affect the schedule?
4. When are change orders paid?
5. Can I see a sample change-order form?

Where the fine print hides

These terms aren't always labeled clearly. When I read a bid, I check a few places:

• The line items themselves. Allowances are often written right into a line, like "Tile per allowance" or "Fixtures — allowance."
• A notes or assumptions section. Phrases like "assumes existing subfloor is sound" or "assumes plumbing stays in place" are exclusions in disguise. If the assumption turns out wrong, expect a change order.
• The general terms and conditions, often on the last page or a separate sheet. This is where change-order rules, payment terms and hidden-condition language usually live.
• Supplier quotes attached to the bid. Cabinet, countertop and window quotes sometimes have their own exclusions and lead times.
• What's not written. If the bid never mentions permits (if required), cleanup or disposal, ask. Silence isn't the same as "included."

Read the whole document, including attachments, before you compare totals. It's a few extra minutes that can save a lot of surprises later.

How the three fit together

Allowances, exclusions and change orders are connected:

• A low allowance becomes an overage, which often gets handled like a change.
• An exclusion that turns out to be needed becomes a change order.
• Clear change-order terms are what keep those surprises fair and predictable.

That's why I read these three sections together when I review a bid. A bid with realistic allowances, a clear exclusions list and written change-order terms is usually a bid you can trust. It may not be the cheapest on paper, but it's less likely to surprise you.

A quick checklist before you sign

• [ ] Every allowance has a dollar amount, and I know what it buys
• [ ] I know whether each allowance includes installation
• [ ] I know how overages are charged and whether there's a markup
• [ ] I've read the exclusions list and know who handles each item
• [ ] I know how hidden conditions will be handled and priced
• [ ] Change orders must be written and signed before the work
• [ ] I know how change orders are priced and when they're paid
• [ ] My selection deadlines are written down

If you can't check every box, ask your contractor before you sign. For legal questions about your contract, talk to a licensed attorney in your state.

The bottom line

The total at the bottom of a bid is only as good as the fine print above it. Realistic allowances, clear exclusions and written change-order terms are what turn a bid's price into the price you'll actually pay.

Want help reading the fine print?

I offer remote bid reviews: a 45-minute Cal Video call with a written summary, or a written-only review. I'll go through your bid's allowances, exclusions and change-order terms and give you the questions to ask. It's advice only, not legal advice, and you make the decisions.

See the bid review options →

Not available for projects in Lucas, Wood or Fulton County, Ohio.

— Jeremy Skadeland, Field Soft Picks

General information only, not professional, legal or financial advice.