Reconcile the allowance. Then assess the change.

Set the commercial basis first

An allowance and a change are related concepts, but they are not interchangeable. An allowance is an amount assigned to defined work under the project’s commercial arrangement. A proposed change may alter scope, price, time, or more than one of those. Its treatment depends on the contract and the actual authorization.

Before adding numbers, write down what the original allowance covers. Identify exclusions, markups, taxes, quantity assumptions, and the rule for reconciling unused funds or excess cost. A neat subtraction cannot resolve an unclear scope boundary. Put that ambiguity in the review notes and obtain the appropriate commercial interpretation.

Establish that scope from the contract drawings, specification sections, and authorized revisions. Use the contractor’s coordinated submittals and the design team’s and owner’s required review dispositions to check how the specified work is being implemented. Do not price an already specified requirement as new work merely because its detail appears in a submittal. Equally, do not treat a returned submittal as a contract change: identify any proposed deviation and follow the applicable substitution or change procedure.

This guide offers a practical review method for a simple allowance reconciliation. It does not establish entitlement, interpret a particular contract, or assume that the lowest quotation represents the full installed cost.

Use distinct cost states

1. Preserve the starting amount

Record the original allowance and its source reference before entering proposed revisions. Keep the initial amount visible after changes occur. If the scope has moved between packages, record the transfer explicitly rather than overwriting both starting values.

2. Separate approval from exposure

Maintain a distinction between approved adjustments, proposals under review, rejected proposals, and the current forecast. The approved contract total answers what has been authorized. The forecast answers what the project may ultimately cost. Pending items can inform the forecast without being added to the authorized contract value.

Once required design submittal approval and release conditions are satisfied, the subcontractor should place the order in time to protect the confirmed lead time. Under the agreed payment provisions, eligible onsite or offsite stored materials can enter the monthly progress application before installation. Reconcile their value within the existing commitment, supported by the required storage, owner-interest, insurance, and waiver records; neither early ordering nor payment creates an additional change.

3. Use signed amounts consistently

Define an increase as positive and a credit as negative. Keep that convention in every supporting schedule. Check whether a supplier credit is already reflected in the revised quotation before entering it as a second adjustment. A signed amount needs a description, a status, and a source.

4. Reconcile scope as well as arithmetic

Compare the original inclusion list with the proposed work: quantity, specification, installation, access, testing, and coordination. Resolve differences in quotation dates and assumptions. Ask whether the same item appears in another proposal or contingency. A zero arithmetic variance can conceal a missing scope item.

5. Keep time visible

Record whether the proposal has an asserted schedule effect, whether that effect has been assessed, and the record supporting the conclusion. “No cost change” is not equivalent to “no time effect.” The schedule guide helps frame the follow-up questions; it does not determine delay entitlement.

Ask the entity controlling each affected activity to validate its commitment. A general contractor’s allowance for lead time is an estimate until the relevant manufacturer, supplier, or trade partner confirms its own milestone, including any dependency on its own vendor. Retain scope, conditions, confirmation date, evidence, and the current quotation and requirement revisions. The contractor coordinates the combined effect; technical review and change authorization remain with their assigned parties.

Worked example: avoid the second addition

Use the workbook

Read Guide and inspect Worked example, then use the fifteen blank rows in Register. Establish the reporting date and the original allowance basis. Enter one row per mutually exclusive allowance scope, using the workbook’s positive-increase and negative-credit convention. Enter only approved adjustments in the approved-net-changes field and identify the supporting record in the reference column.

Complete the lower Requirement basis block for each row. Its record identifier follows the main register. Enter the requirement document and revision, the design and owner review role, required submittal or request, actual disposition and supporting evidence, and the contractor’s confirmation that the basis remains current. Evidence linked means those fields are populated; it is not an approval, authorization to proceed, or assessment of the review’s adequacy.

Use the linked commitment record to name the responsible entity and its scope, confirmation status and date, evidence, conditions, and the contractor’s separate forecast and coordination action. Carry the current requirement revision with the evidence. A completed record is not independent confirmation; an unconfirmed date remains an estimate.

Keep pending exposure out of the incurred and remaining-cost inputs. The workbook adds it separately. In the example, enter $40,000 incurred, $24,000 remaining, and $3,500 pending. If your source forecast already includes pending work, reconcile and remove that overlap before mapping the inputs. A blank means unavailable; an explicit zero means the amount is known to be zero.

Keep individual proposals, approval status, rejected or superseded items, and revision history in a separate supporting change record referenced by the allowance row. This workbook does not provide a proposal-status register. Repeating an allowance on several rows would overstate its total. If one proposal affects several allowance scopes, allocate its amount on a documented basis and check that the allocations sum to the source amount.

Review calculated totals against the signed documents and your existing commercial system. A spreadsheet summary is a checking aid; it does not post to an accounting platform, amend a contract, or verify a signature. No integration with Excel services or project software is implied.

Reference the specification and drawing revisions defining each allowance, the applicable submittal and disposition, and the separate change authorization where one exists. If the scope basis is missing, record the available evidence and send the gap to the responsible reviewer before presenting an adjustment as approved.

When a pending item becomes approved, change its state and reconcile the approved total and forecast together. Check that it has left the pending-only total and that its cost remains included exactly once in the forecast. Save a dated issue copy before the next reporting cycle.

Questions that catch the common misses

• Same scope? Does the forecast cover exactly the work represented by the allowance?
• Same basis? Are tax, markup, freight, installation, and testing treated consistently?
• Same item twice? Is the adjustment already embedded in the quotation or forecast?
• Real approval? Is there a recorded authorization from the appropriate party?
• Time assessed? Is the schedule impact known, unresolved, or unsupported?
• Credit retained? Are negative adjustments carried through the summary instead of silently omitted?

If the evidence is incomplete, preserve the uncertainty in the report. Do not force an unresolved amount into an approved state to make the summary reconcile. The decision-control method provides a place to name the missing decision and its deadline.

Sources, method & limitations

This guide’s examples, workflow, and workbook instructions are original teaching material from Pacific Project Controls. The public references below supply background. They do not endorse this site or make this workbook an official assessment tool.

1. GAO Cost Estimating and Assessment Guide, GAO-20-195G (2020)
   Background on defining a cost baseline, documenting assumptions, and updating estimates with actual information. Our report layout, allowance example, and spreadsheet structure are original.
2. U.S. Department of Energy: EVMS Implementation Guidance
   Links to the Department’s change-control guidance and describes checking data validity before interpreting performance. Federal guidance is context; its contractual requirements are not asserted to apply to every reader.
3. AIA Contract Documents: contractor review of submittals
   Explains contractor coordination and review under A201–2017 before forwarding submittals to the architect. Use the actual project contract to identify review responsibilities; this reference does not make that agreement applicable to every project.
4. AIA Contract Documents: payment for materials stored offsite
   Explains A201–2017 section 9.3.2 as one contractual approach: advance owner approval for offsite storage and payment, an agreed location, protection of the owner’s interest, and applicable insurance and transport arrangements. The executed project contract governs eligibility.
5. AIA Contract Documents: payment applications and stored-material reconciliation
   Describes required payment support and moving stored value to completed work as incorporation occurs without charging for the same material twice. Use the project’s actual payment rules and applicable waiver requirements.

Apply the actual project requirements and obtain the relevant professional review. This guide does not establish contractual entitlement, certify technical performance, or replace authorized acceptance. No actual client record or project outcome is represented by the fictional examples.

Release edition · October 21, 2026. Source notes identify the references used in preparation. Report an error or review our correction policy.