If the cost of work for an allowance exceeds the allowance amount, what will happen?

When the cost of work for an allowance exceeds the allowance amount, a change order will be written to increase the contract amount. This is because an allowance is an estimated amount included in the original contract for specific items or work that might not be fully defined at the time of the contract signing.

If the actual costs for the work that falls under that allowance are greater than what was initially budgeted, the contract needs to be adjusted to reflect those higher expenses. Therefore, a change order is created to formally document this increase in contract price. This procedure ensures that all parties are aware of the new costs and that the contractor is compensated appropriately for the additional work or materials needed beyond the original estimate.

In scenarios where allowances are exceeded and no adjustment is made, it would create financial discrepancies and potential disputes, undermining the integrity of the contract. Thus, it's standard practice to initiate a change order to amend the contract amount when applicable.