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Question DetailsAsked on 5/26/2011

Allowance vs. fixed priced items

We are just finishing up a master bath and bedroom remodel. In getting an explanation from the contractor on some of the final items on the bill, we were surprised to find out that they had moved an overage on a fixed priced line item to an allowance item. They went over their estimate on the fixed priced item and then charged this amount to an allowance item so that so there was no deduct. We had very detailed plans drawn up by an architect that were not referenced by the contractor when he put together the original estimate. We have worked through the other items, but this last one is worth a much larger deduction to us. We have checked for "industry standards" in our area (Portland, OR) to see if this is a normal practice. I have not found anything conclusive. Any thoughts from anyone?

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4 Answers

0
Votes

I have no direct experience with this, but it sounds like something they should not be allowed to do without clearing it with you first. Otherwise, what is the point of having "fixed price" and "allowance" at all?

Answered 7 years ago by Commonsense

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Votes

Why was their cost over their initial estimate? If it was due to a spike in material prices, it may be equitable just to pay the contractor. But your duty is measured by the terms of your contract, not industry standards. "Fixed price" is pretty clear, and I doubt the contractor would be offering you a deduct if his final costs came in substantially under his estimate (nor would he have any obligation to do so).

Answered 7 years ago by will175

0
Votes

Whevever I've hired a contractor, the estimate we agreed on (signed) included all costs, unless I chose to make changes (at which time costs were negotiatable)

Contactor laws may vary by state, but in CA it used to be 10% upfront when a job started, then incremental payments based on progress, with the final 10% whithheld until customer satisfaction.


Answered 7 years ago by tessa89

0
Votes

Another poster (forgot who said this) mentioned you can withold "10%".

Do not withhold any money! The contractor can put a lien on your property. I have been dealing with some $$ money issues & my contractor's board said I must pay in full, otherwise our contractor could put a lien on our property. (apparently it's pretty easy for them to do this-scary!) Of course, your state might be different than ours. If you do decide to "withold" any monies please do check out what the lien laws are for your state, it's best to call your local contractor's board & run it by them.

Answered 7 years ago by espresso




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