![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Construction File: A Guide to the Use of Cash Allowances
1. Proper use of Cash Allowances
Cash allowances are recommended where it is impossible to clearly define the scope of a particular item of work, where it is difficult for bidders to accurately estimate the cost of a particular item of work or where access to certain building systems may limit the bidding competition. The Owner or Consultant establishes the amount of cash allowances. Cash allowances must be stated in the Contract Documents and are to be expended as the Owner directs through the Consultant. Overhead and profit connected to the cash allowances should be included in the bid price, not in the cash allowances. The Contract Price includes all cash allowances. Examples of where it is appropriate to use a cash allowance are:
- Telephone and Cable service connection fees
- Secondary telephone or cable service fees
- Natural Gas service connection fees
- Water service connection fees
- Sanitary and Sewer service connection fees.
- Any other public utility fees
- Transferring ‘as built’ or ‘record drawings’ into
a reproducible format - Inspection of Seismic component construction
where required by a third party - Proprietary products (such as controls for mechanical
systems where an owner may have
an interface requirement with existing systems)
01. Cash Allowances for ‘As Built or Record Drawings’
The Contractor is responsible for maintaining and completing “as built drawings” or “record drawings” throughout the course of construction. The cost of the transfer of the site records onto other permanent or reproducible formats such as CAD drawings or sepias is the responsibility of the Owner.
02. Cash Allowance for Seismic Inspections
There must be no unreasonable allocation of seismic risk onto the Contractor. Where applicable, one of the following methods shall be used to ensure that seismic risk is allocated appropriately:
- The Owner may pay for additional consultant services required to design seismic components;
- A cash allowance may be included in the contract to pay for the design of seismic components; or
- All seismic components shall be included in the tender documents and inspected by a third party hired by the Owner.
2. Who Should Include For Cash Allowances
The contractors have expressed concern about whose responsibility it is to carry the cash allowance. They would like to see the cash allowance stated as being explicitly carried by the appropriate Trade Contractor NOT the General Contractor. The Contractors are typically unable to mark-up elements of work that are not carried as a cost item in their contracts. Even though tender documents may state that the Trade Contractor is to mark-up the cash allowance and provide warranty, the marketplace reality is that the Contractors will likely be unable to do so. While this may sound like a savings for the owner, the problem will manifest itself when the time comes for warranty work to be performed and there is no mental and monetary connection for the trade contractor to perform. This practice contravenes the inherent fairness of the contract process to simply try to assign liability to a party that does not have the corresponding costs (and potentially the mark-up on those costs) included in their contract.
3. Implementation Process
- All elements of the work should flow through the contract.
- The warranty should be the responsibility of the trade that carries the monetary provision for the goods.
- If items have to be pre-purchased, they should be done by cash allowance. a. Cash allowances should be for a specific tender such as asbestos removal or connection fees b. The cash allowance should not be used for contingency items (i.e. miscellaneous mechanical and electric). These types of items should be carried by a contingency allowance on which mark-up is allowed.
- The appropriate trade should carry the specific cash allowance.a. If the cash allowance is not specific to a trade, it is a contingency and the General should carry the contingency.
- The cash allowance amounts should only be listed in the cash allowance section of Division 1. References to these cash allowances should be identified in the appropriate trade section.
- Mark-ups are covered outside of the cash allowance by the appropriate contractor.
The Construction File is a publication of the BC Construction Association.
For additional information contact the BCCA.
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Receiving Bids Efficiently in the 21st Century
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Construction File: BCCA’s position on the BC NDP's Community Benefits Agreement
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Construction File: What the New National Trade Agreements Mean to You
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Construction File: Introducing the BCCA Guideline to Construction Close-Out Procedures
![construction-file-default(1).jpg](/media/400x300/construction-file-default(1).jpg)
Construction File: Pre-qualification of Contractors
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Proactive Release of Project Information for the Construction Industry
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: The Construction Management Project Delivery Method
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Public Openings for Online Bidding
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: CCA Quality of Documents Report Issued
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Onerous Bidding Conditions in 2015
![construction-file-top-10.png](/media/400x300/construction-file-top-10.png)
Construction File: Top 10 Reasons BidCentral’s Online Bidding is a Home Run
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Job Order Contracting
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Liquidated Damages Clauses
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: The Importance of Planholder Lists
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Post Closing Over Budget Negotiations
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: The Pitfalls of Incomplete Contract Documents
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: BidCentral - By the Industry for the Industry
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: What is Fair, Open and Transparent Bidding?
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Trade Contractors in Post Bid Negotiations and Trade Agreements
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Prompt Payment Creates a Sustainable Industry
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Fair Markups on Changes to the Work
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Tercon Decision Important for Construction Industry
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: BCDC Standard Documents and Guidelines for a Stipulated Price Bid
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: BidCentral implements new e-bonding
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Aboriginal Business Enhancement and Set-Aside Programs
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Liquidated Damages Clause
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: BCCA Introduces a Guideline for Choosing a Project Delivery Method
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: BCCA’s External Policy for Use of Owner Forces on Public Funded
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Onerous Bidding Conditions Continue to Trouble Industry
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: Outsourcing = Best Value
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)
Construction File: The Importance of Providing Bid Results
Construction File: Tercon Decision Important for Construction Industry
Construction File: Trade Contractors in Post Bid Negotiations and Trade Agreements
Construction File: The Cost of Onerous Bidding Conditions
Construction File: BCCA introduces the Electronic Bidding System
Construction File: Liquidated Damages Clause
Construction File: Maximizing Competitive Bidding 2009
Construction File: Pre-qualification Contributes to the Rising Cost of Construction
Construction File: Publicly Funded Building Projects - Standard Stipulated Price Contract Documents Updated
Construction File: Use of Standard Documents Reduces Risks
Construction File: Use of Standard Documents Reduces Risks
Construction File: CCDC issues new CCDC2 Stipulated Price Contract
Construction File: Risks to Owners of In House Construction When Projects are Over Budget
Construction File: A Guide to Standards & Practices in the Construction Industry
Construction File: BC Government Introduces Capital Procurement Audit Tool for Capital Asset Management Framework
Construction File: The Importance of Planholder List
Construction File: BCCA to Issue Onerous Bidding Alerts
Construction File: Myths of Gold Seal Requirements as a Condition of Contract
Construction File: Completion of Projects - Getting the Deficiencies Done!
Construction File: Why The Public Construction Council of BC?
Construction File: Procuring Trade Contractor Bids
Construction File: Pre-qualification of General Contractors and Trade Contractors
Construction File: Pre-qualification of General Contractors and Trade Contractors
Construction File: Maximizing Competitive Bidding
Construction File: Construction Management - Selection of CM and Contractor Services
Construction File: A Summary Guide for BC Construction Industry Standards and Guidelines
Construction File: BCCA Policy Gold Seal as a Condition of Contract
Construction File: BCCA POLICY FOR THRESHOLDS FOR PROCUREMENT OF PUBLICLY FUNDED CONSTRUCTION
Construction File: A Guide to the Use of Cash Allowances
Alternative Prices – Should They Be Used and How to Use Them Effectively
Publicly Funded Building Projects - Standard Stipulated Price Contract Documents Now Available Online
Construction File: Keeping Projects on Budget and Over Budget Negotiations
Construction File: COOLNet meets the requirements of AIT
Construction File: HOW DO YOU FIND THE RIGHT TRADE CONTRACTORS FOR YOUR PROJECT?
Construction File: Addressing Holdbacks
Construction File: Dangers of Owner-Supplied Equipment
Construction File: Standard Documents Provide Good Value
![construction-file-default.jpg](/media/400x300/construction-file-default.jpg)