An allowance is an amount of money set aside in a construction project to cover the cost of materials and services that have yet to be determined. This can include items such as cabinetry, flooring, fixtures, millwork, lighting, appliances, and other miscellaneous items.

Allowances are an important part of a residential construction project as they allow for flexibility and customization when selecting materials and services. Allowances also provide potential room for negotiation between the builder and homeowner during the selections process as they allow for pricing adjustments based on material costs. The allowance budget should also allow for a contingency fund in case unforeseen issues arise during construction.