Estimating Allowances

Use Allowances for any project work that doesn't have clear specifications. That way you can start with a firm price, and then adjust it later, when you have more details.

HINT-- The Goldenseal project estimating software uses the allowances as a "fixed price" amount in the estimate. You can then use allowance billing to charge for actual costs, after work starts on the project.

When to Use Allowances

Allowances let you create fixed price estimates, even when you don't know the cost of some items.

For example, use an allowance when a construction project includes kitchen appliances, but doesn't specify the brand or model number. The project price is based on the allowance amount. Billing for allowances is based on actual costs.

HINT-- In other words, you can use an allowance as a small bit of time and materials pricing within a fixed price estimate.

You can also use allowances to combine several unit costs into a simple package that you can use multiple times in an estimate. In that case, turn on the Cost per Unit checkbox, so you can enter a quantity in the estimate.

HINT-- In other words, you can use an allowance just like a temporary Assembly within an estimate.

Entering Allowances

To enter an Allowance into Goldenseal construction estimating software, follow these steps:

  1. Choose Allowances from the Income menu.
  2. Click the New button, or choose New Record from the Edit menu.
  3. Fill in details about the Allowance.

QUICK SETUP HINT-- You only need to enter a Brief Description and Gross Price.


Data Fields

Enter the following information for each Allowance:

Brief Description-- Enter a short description of the allowance. This text will appear in estimates that include this allowance.
Details-- Enter a more complete description of the allowance item.
Gross Price-- Enter the gross price of this allowance, before taxes. If you use a breakdown, the gross price is calculated.
Tax Rate-- Choose the sales tax rate that applies to this allowance.
Total-- Goldenseal calculates the total price with tax.

Date Entered-- Today's date is entered automatically.
Record Number-- A sequential number is given to each allowance.
Billing-- Choose the type of billing to use for this allowance.
Estimate-- When you include this allowance in an Estimate, Goldenseal marks it here.
Project-- When you include an allowance in an estimate and then award the estimate to a project, Goldenseal marks it here.
Comments-- Enter any comments you have about this allowance.

NOTE-- You can't assign an allowance directly to a project. It always needs to be part of an Estimate.

Breakdowns

To make a detailed breakdown of items included in an allowance, click on the breakdown popup field and enter Category or Items.

Goldenseal will show a layout with an allowance breakdown, where you can enter detailed line items to calculate the cost of the allowance, and list any assemblies, labor or material it may need.

More Info

Click the More Info button to enter the following details about an estimating allowance:

Billing-- Choose the type of billing to use for this allowance.
Terms
-- Enter the payment terms for this allowance.
Category-- Enter a cost category to which to apply this allowance.
Subcategory--  Enter a cost subcategory to which to apply this allowance.
Location--  Enter a location for which this allowance will be used.
Labor Hours--  Enter the number of labor hours to schedule for this item.  If you use a breakdown, Goldenseal calculates labor hours automatically.
Crew Size--  Enter the usual crew size that you will use for this item.

HINT-- Goldenseal uses the Labor Hours and Crew Size fields to set up the schedule timing for this item, when it is included in an Estimate.

Goldenseal also shows you the expenses to date for this allowance.

HINT-- When you enter expenses for an allowance, you'll put the allowance into the Applies To field in the expense transaction.

Calculated Fields

Goldenseal displays two calculated fields for each Allowance record:

Material Costs to Date--  The total of all Material Purchases that have been assigned to this allowance.
Other Costs to Date--  The total of all equipment, labor and subcontractor costs that have been assigned to this allowance.

Status Field

When you first create an allowance, its status is listed as Entered.
When costs are entered for an allowance, its status will automatically change to Started.
When the allowance has been billed, its status will automatically change to Completed.
If you decide not to use an allowance, change its status to Void.

Allowance Billing Types

Allowances are like a piece of "time and materials" work. They can be billed in several ways:

All Costs-- The actual price for the item will include all equipment, labor, material, subcontractor and other costs.
Cost With Maximum-- Billing is based on all costs, up to a fixed maximum amount.
Cost With Minimum-- Billing is based on all costs, with a fixed minimum amount.
Materials Only-- The actual price for the item will include only the material costs that are entered for the item.
Materials With Maximum-- Billing is based on material costs, up to a fixed maximum amount.
Materials With Minimum-- Billing is based on material costs, with a fixed minimum amount.

Using Allowances

To use an Allowance, follow these basic steps:

  1. Include the allowance as a line item in an Estimate that has breakdowns.
  2. Award the Estimate to a Project account.
  3. Assign expense transactions to the allowance.
  4. When the allowance item has been completed, use Allowance billing to get paid for it.
There is more about each of these four steps in the following sections:

Including in Estimates

To include allowances in an Estimate, follow these steps:
  1. Choose Allowances from the Income menu.
  2. Enter any allowances that will be included in a project.
  3. Choose Estimates from the Income menu.
  4. Create an Estimate, or open an existing estimate.
  5. Choose either Category or Item from the breakdown popup menu on the left side of the window.
  6. Click in the Cost Area column, and choose Allowance.
  7. Click in the Cost Item column, and choose an allowance.   HINT-- You can also enter a category before choosing an allowance. In that case only some allowances will be listed.
  8. The allowance will be included in the estimate.
  9. Hit the Return key to start a new breakdown line. Repeat steps 6 to 8 for each allowance.

Awarding an Estimate

To award an estimate to a Project account, create a new Project account and enter the estimate into the Estimate field.

Assigning Costs to an Allowance

To enter costs for an allowance, follow these steps:
  1. Create an Equipment Hours, Labor Hours, Material Purchase, Subcontractor Cost or Other Cost transaction.
  2. Enter the supplier, description and amount for the expense.
  3. Enter Project into the Job Class popup.
  4. Enter the specific project into the Job field.
  5. Enter Allowance into the Apply To popup.
  6. Enter a specific allowance into the Transaction field.

Goldenseal 'posts' the expense to the allowance-- you can see totals in the calculated fields labeled Materials to Date and Other Costs to date.

NOTE-- Those fields show the expense amount, without including adjustments or sales tax.  Goldenseal posts the sales tax separately so it can be used for billing.  If you'd like to see it, use the Custom Layout command and add the Sales Tax To Date field to the layout.

Allowance Billing

The estimate will include the allowance price. You'll bill for the basic allowance amount as part of the main project, using either draw schedule, progress payment or time and materials billing.

When an Allowance item has been completed, use Allowance billing to bill for the difference between the original budget amount and the actual costs for the item.  To do that, choose Billing from the Bank menu, and choose Allowances from the submenu.

NOTE-- If you use time and materials billing for the main project, you don't need to bill separately for the allowances, since their cost is already included in the regular project costs.

When you use an allowance on a project that uses draw schedule or progress payment billing, Goldenseal only bills for the difference between the total cost of the allowance and the estimate cost, since the original allowance cost is included in the basic billing for the main project.

Working With Allowance Records

WORKING WITH ALLOWANCE RECORDS
       Entering Records | Changing Records | Deleting Records | Voiding Records
       Finding Records | Sorting Records | Fixing Mistakes

Related Topics

Allowance Billing -- Change Orders | Estimates | Project Accounts

Other Links

       Accounting Software | Project Estimating Software | Project Management Software