Contractors are obligated to pass on savings from allowances to whom?

Contractors are obligated to pass on savings from allowances to the owner because allowance provisions are typically included in a contract to give the owner a sense of control over costs and to ensure that they benefit from any savings realized during the course of the project. An allowance is a predetermined amount set aside for specific items or activities in the contract, such as materials or labor. If the actual costs come in lower than the allowance, the contractor is responsible for ensuring that the surplus or savings is credited back to the owner, who ultimately bears the financial implications of these allowances. This principle helps maintain transparency and fairness in the financial management of the project, aligning the contractor’s financial responsibilities with the owner's investment interests.