What is the term for set-aside money in a contract budget for uncertain costs like electrical and plumbing fixtures?

The term for set-aside money in a contract budget intended to cover uncertain costs, such as those for electrical and plumbing fixtures, is known as an allowance. An allowance is a predetermined amount of money that the contractor and the owner agree upon for specific items or categories of work that may not have been fully defined at the start of the project. This approach provides flexibility in budgeting for additional expenses that may arise as the project develops, allowing for adjustments without the need for extensive contract modifications.

In contrast, retainage refers to a portion of the payment withheld until the completion of the project to ensure that the contractor fulfills all obligations. Modifications involve changes to the original contract terms, often resulting from changes in scope, while liquidated damages are predetermined amounts that the contractor must pay the owner for each day the project exceeds the completion deadline. Each of these terms relates to different aspects of contract management and does not pertain specifically to budgeting for uncertain costs in the manner that allowances do.