Almost every remodel that ends over budget does so through one of three mechanisms. None of them is dishonest, and all of them are easier to manage if you understand them before you sign.
Allowances
An allowance is a placeholder. When you have not yet chosen your tile, your contractor puts a reasonable number in the estimate so the total means something. If you later select a tile at three times that figure, the difference is yours. Allowances are not promises, they are assumptions, and the tighter your selections are before work starts, the fewer of them your estimate needs.
Change orders
A change order records a change to the agreed scope, priced and approved in writing before the work happens. They arise for two reasons: you changed your mind, or the house revealed something. Both are legitimate. What matters is that nothing gets built on a verbal agreement and reconciled later.
Contingency
Contingency is money you set aside for what the walls are hiding. On a newer home it can be modest. On an older Nashville house with original wiring and decades of previous work, it should be genuine. Contingency is not padding and it is not pessimism, it is the difference between a discovery being an inconvenience and a discovery being a crisis.
The takeaway
Ask any contractor you are considering how they handle all three. The answer tells you more about how your project will run than the bottom-line number does.
