Last edited 01 Mar 2017

Provisional sum

A provisional sum is an allowance, usually estimated by the cost consultant, that is inserted into tender documents for a specific element of the works that is not yet defined in enough detail for tenderers to price. This, together with a brief description, allows tenderers to apply mark up and attendance costs within their overall tender price and make allowance for the work in the contract programme.

An example of a situation where a provisional sum might be appropriate is when work is required below an existing structure, where the ground conditions cannot be determined until the existing structure is demolished and the ground opened up.

Provisional sums can be 'defined' or 'undefined':

Defined provisional sums are considered to have been accounted for within the contractor's price and programme. In effect the contractor is taking the risk that their estimate will be sufficient.
Undefined provisional sums are not accounted for in the contractor's price and programme. This means that the client is taking the risk for the works and the contractor may be entitled to an extension of time and additional payments.

Provisional sums are provided for in different ways in different forms of contract, and some forms of contract can be a little vague about how provisional sums should be handled, in particular regarding adjustments to the programme.

Provisional sums place either the contractor or the client at risk of unexpected costs or delays. Agreeing the cost of such work or extensions of time that might be claimed can result in tension between the contractor and client. For this reason, they should only be used as a last resort, they should not be an easy fall-back position for consultants (who are not bearing any of the risk) when designs are incomplete or information is difficult to obtain. The risks are significant enough that the NEC Engineering and Construction Contract (NEC3) does not have any allowance for provisional sums.

Provisional sums should not be confused with prime cost sums, which are allowances for the supply of work or materials to be provided by a contractor or supplier nominated by the client. Prime cost sums might include items that have already been purchased by the client, such as equipment, or a specific installation by a company with a strong existing relationship with a client organisation.