Design Development Allowance Is Not a Contingency: Pricing Incomplete Design Honestly
Almost every cost plan carries a design development allowance, and on most projects it is a single percentage applied across the board. Five per cent at concept. Three at developed design. Nothing much behind either figure except precedent and instinct.
It is worth being blunt about what that percentage actually is. It is an estimate of how much the design will grow between the drawings being priced and the drawings being built. That growth is not random. It is entirely predictable to anyone who understands where the design has really landed and where it has not. Which means the allowance should be a measurement, not a mood.
Design management makes that measurement possible by assessing maturity package by package rather than project-wide. On a typical building, at the same point in time, the structure may be well resolved against a coordinated model, the facade may have a performance specification but no tested system, the services may be at concept load calculations with no plantroom layout, and the fitout may be a mood board. Applying one percentage across those four conditions is arithmetic, not risk management. The structure is being over-allowed and the facade is being catastrophically under-allowed, and the two do not cancel out. The facade will simply exceed its allowance while the structural saving is quietly consumed elsewhere.
A design manager working alongside the estimating team can produce a maturity rating for each package, backed by evidence. Has the system been selected. Has it been coordinated. Has it been specified to a level a subcontractor can price without qualifying. Has it been tested against the authority approvals. Those four questions generate a defensible allowance per package. They also generate something more useful, which is a ranked list of exactly which packages are carrying the project’s cost risk.
The commercial consequence of doing this properly is that the allowance becomes an argument you can win. When a client challenges a design development allowance, industry standard is a weak answer. A strong one sounds like this: the facade system has not been selected, three candidate systems vary by roughly eighteen per cent, and this allowance covers the mid-range option until the sample panel is approved. It also tells the client what they have to do to reduce it, which reframes the discussion from cost padding to shared risk.
There is a discipline point too. An undifferentiated allowance is a soft target that gets eroded during value engineering because nobody can say what it is protecting. A package-level allowance backed by a stated assumption is much harder to delete, because deleting it requires someone to name the risk they are choosing to accept.
None of this eliminates design development. Design will always develop. The goal is to stop pretending that a percentage represents knowledge, and start pricing the specific gaps between where the design is and where it needs to be. That is a design management task carried out in service of a commercial submission, which is exactly the intersection where most projects lose money without noticing.
The test is simple. If a cost planner cannot tell you, package by package, what the design development allowance is covering and what would release it, then the allowance is not a forecast. It is a hope with a decimal point.
Emanuel Solomovic has spent much of his career at the point where design maturity meets commercial risk, working with estimating and cost planning teams to convert design uncertainty into figures that can be defended and, more importantly, retired. He treats the design development allowance as a live register of unresolved decisions rather than a line item to be argued over at the end.