If you’re a Quantity Surveyor, you’ve most likely estimated or come across a provisional sum in a price. If you haven’t, that’s ok. By the end of this short post, you will be a pro in understanding Provisional Sums.
A provisional sum is an allowance, usually estimated by a QS or Estimator, that is inserted into tender documents for a specific element of the works that are not yet defined in enough detail for tenderers to accurately price. In other words, it’s our best guess and is usually included as a round figure.
It is included in the overall contract price, but the parties do not expect the figure to be paid without adjustment. The contract that is being used usually provides direction on how it would be dealt with. A common clause provides for the provisional sum to be omitted and an appropriate valuation of the work actually carried out to be substituted for it. As provisional sums are replaced by valuations of the work actually done as the project progresses, the contract sum may increase or decrease. In addition, the actual works that are undertaken may affect the contractor’s programming, planning, and pricing preliminaries.
A provisional sum can be categorised in two ways. ‘Defined’ or ‘Undefined’.
Defined provisional sums are those which have been described in sufficient detail that the contractor is expected to have made allowance for them in their programming, planning, and pricing preliminaries. The work may not have been completely designed but the following information may be known:
1. The nature and construction of the work.
2. How the works may impact the existing building or surroundings.
3. The quantities indicate the scope and extent of the work.
4. Any specific limitations.
Undefined provisional sums are less well described as they refer to work which is not completely designed. As such, the contractor cannot be expected to make allowance for them in their programming, planning, and pricing preliminaries. This means the contractor may be entitled to an extension of time or additional payments when the actual works are undertaken. With undefined provisional sums, the client typically bears the price and scheduling risks.
Why not watch our video on Provisional Sums?