What is a provisional sum?
A provisional sum is an amount included in the contract price for part of the work whose exact content is not yet known when the contract is signed. Typical examples are the front door, the kitchen or the bathroom fittings that the client will choose later. Once the actual cost is known, it is compared with the allowance and the difference is settled: choose something dearer and you pay extra, choose something cheaper and you get a credit. In Dutch this is called a stelpost.
How it is settled
In the UK, JCT contracts priced on bills of quantities use the RICS measurement rules (NRM2), which distinguish two kinds:
- Defined provisional sum: the work is not fully designed, but its nature, how it fixes to the building and its approximate scope are known. The contractor is deemed to have allowed for it in the programme and preliminaries.
- Undefined provisional sum: too little is known to say that, so the contractor has made no such allowance and may be entitled to extra time and cost.
In the Netherlands, the widely used AVA 2013 conditions of Bouwend Nederland settle spending against a provisional sum at the contractor’s actual costs plus a 10% contractor’s fee. For small domestic jobs the rules are whatever your contract or the builder’s terms say, so read them.
Application
- Ask what each sum covers. Supply only, or supply and fit? Including or excluding VAT? Without a description you cannot check the final figure.
- Test whether the amount is realistic. A low allowance makes a quote look cheap but leads to extra costs later. Get a ballpark price from a supplier for what you roughly want.
- Keep provisional sums to a minimum. The more that is open, the less certain your final price. Decide before signing whatever can be decided.
- Ask for the invoices. Settlement is on actual cost, so you are entitled to see what the builder paid.
- Settle together with variations in one overview in the final account.
Common mistake: comparing quotes from different builders on the bottom line when their provisional sums differ widely. Line them up and compare on equal allowances.
Related terms
- Variations in a building contract
- Construction contract
- Contractor
- General terms of contract
- Tendering
Want to know more about building terms? Visit our knowledge base at fredsdiyplans.com.