Homeowner guide
Why the final number is rarely the first number.
Two mechanisms explain most of the gap between a quoted price and a final invoice. Neither is dishonest by nature. Both are easy to use dishonestly, and both are checkable before you sign.
The short answer
An allowance is a placeholder, not a price.
An allowance is a sum carried in the contract for something you have not chosen yet — tile, fixtures, appliances, lighting. It lets a project be priced and started before every selection is made. When you eventually choose, the real cost replaces the allowance, and the contract price moves by the difference in whichever direction it goes.
A change order is different: it is a documented change to the agreed scope, priced and approved before the work happens. Discovering rotten framing behind a wall produces a change order. Deciding you want a second sink produces a change order. Both are normal.
Neither mechanism is dishonest. Both are how a project that cannot be fully specified on day one gets built anyway. What separates a good contract from a bad one is whether they are used to tell you the truth early or to make a number look low until you are committed.
Allowances
How the same tool goes wrong.
An allowance is only useful if it reflects what you are actually likely to choose.
Used well
- Set against a specific product or a real showroom range you have actually looked at, not a round number.
- Stated as covering material only, or material plus labour — and it says which, because the difference is large.
- Written per item rather than as one pooled sum, so an overage on tile is visible instead of quietly absorbed.
- Reconciled in writing as selections are made, so you see the running position rather than a surprise at the end.
Used badly
- Set deliberately low so the headline contract price beats a competitor, guaranteeing an overage nobody mentioned.
- Ambiguous about whether installation is included — the single most common source of a shocking reconciliation.
- Covering a category so broad that no one can tell what is inside it.
- Reconciled only at the end, when every decision is already made and unwinding any of them is expensive.
This is why comparing two bids on the bottom line alone is close to meaningless. A lower number with thinner allowances is not a lower price — it is the same project with more of its cost deferred into a phase where you have less leverage. Compare the allowance schedules, or you are not comparing the bids.
Change orders
What one has to contain.
A change order that arrives after the work is done is not a change order; it is an invoice. A usable one is agreed in advance and contains all four of these:
What is changing
In enough specificity that someone who was not in the conversation could tell what was added or removed.
What it costs
A price, not a range, and a statement of whether it affects any allowance.
What it does to the schedule
Added work often adds days. A change order silent on schedule is half-written.
Signatures before the work
Approval in advance is the entire point of the document.
A high volume of change orders on a project is a signal, not a scandal. Sometimes it means the house surprised everyone, which happens. Sometimes it means the scope was never developed enough to price honestly — and that is a design failure sold as bad luck.
Wisconsin
Some of this is not just good practice.
Wisconsin regulates home improvement contracting through ch. ATCP 110 of the Administrative Code, and two of its provisions bear directly on everything above.
Changes go in writing, not just the contract
ATCP 110.05(1) provides that the home improvement contracts it lists — which include those requiring the buyer to pay before the seller finishes the work — “and all changes in the terms and conditions thereof, shall be in writing.” The rule also requires that such a contract “clearly, accurately and legibly set forth all material terms and conditions” including a description of the work and the principal materials. A change order is a change in the terms, so the written-change-order practice described above is not merely how careful builders work.
A verbal new completion date does not bind you
ATCP 110.027(1) provides that “no change in performance deadlines is effective unless the buyer agrees in writing to the change.” That is worth knowing before a conversation on site turns into a schedule nobody wrote down.
Which contracts the chapter reaches depends on how the work was sold and how it is paid for, so the conditions matter and this is a description of the rule rather than advice about your situation. The code is linked in the sources below and it is readable.
The distinction that matters
Discovery, or a decision?
Every change is one or the other, and the difference tells you whose problem it was.
Discovery
Something nobody could see: failed framing, a drain that does not run where the drawings said, undersized wiring, water damage behind tile. Investigation during design reduces these but never removes them, because opening a wall is the only way to see inside it with certainty.
These are legitimately unforeseeable. What is fair to expect is that they are found as early as possible, documented when found, and priced before the work proceeds.
Decision
Something you chose: a different tile, a moved wall, an added fixture, an upgraded appliance. These are entirely normal and entirely within your control.
The cost of a decision rises steeply with when you make it. Moving a shower drain is a drawing edit during design, a slab cut during construction, and a demolition problem after tile. This is the single strongest financial argument for resolving selections before work starts.
Before you sign
Six questions worth asking.
- 01Which line items are allowances, and what specific product or range is each one based on?
- 02Does each allowance cover material only, or material and installation?
- 03How and when are allowances reconciled — as we go, or at the end?
- 04What is the change-order process, and will I approve pricing before work happens?
- 05What investigation happens during design to reduce discoveries later?
- 06What is explicitly excluded from this price?
The last one is the most revealing. A contractor who can answer it immediately and specifically has thought about your project. For how these mechanisms sit inside a whole project, see the process, and for what moves cost in the first place, the investment page.
The structural answer is to carry fewer allowances in the first place. An allowance exists because a decision has not been made yet, so every selection settled before the contract is signed is one fewer number that can move afterwards. That is the work of design and preconstruction — and it is why a price arrived at quickly, with a long allowance schedule behind it, is usually the more expensive one by the end.
Before you rely on this
This guide describes general contracting practice, not any particular firm’s terms — including Monarch’s. Your actual allowance schedule and change-order procedure are whatever your signed agreement says they are. Read it, and ask for anything above that is missing.
Sources
Check these yourself. Statutes and municipal codes change, and the version your jurisdiction has adopted is the one that governs your property.
- Written contracts, changes in terms, and performance deadlinesWisconsin Administrative Code — ch. ATCP 110, Home Improvement Practices
Comparing two bids?
Bring both. The allowance schedules and exclusions are where the real difference usually is, and it is a useful conversation whether or not you end up working with us.