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If you’re talking to builders about a new custom home you will find that there are many different approaches to the use of allowances in construction contracts. An allowance is a specific dollar amount available to be spent on one construction item. Allowances are commonly used for things like cabinetry and flooring as a way to designate part of the estimated cost to cover items that have not yet been selected. Think of it as a mini-budget for what you can spend on each item in order to stay within your overall project budget.