Provisional Sum

Defined vs undefined provisional sums

A defined provisional sum has clear scope and quantity but uncertain pricing — for example, an allowance of £30k for "external paving, 200m², spec to be finalised". The contractor must allow for the time and disruption to do the work.

An undefined provisional sum has uncertain scope as well as pricing — for example, "£10k allowance for unforeseen ground conditions". The contractor is not required to programme or price the disruption; if the work materialises, the contractor is entitled to reasonable additional time.

How provisional sums are reconciled

During construction, the actual scope is defined (often via a variation instruction). The actual cost is established and substituted for the provisional sum at final account. If actual is higher, the contractor receives the difference; if lower, the contract sum reduces.

On well-run projects, provisional sums should be reconciled within the first half of the construction period. Letting them drift to final account creates uncertainty and dispute risk.

Common pitfalls

• Treating provisional sums as committed cost. Until reconciled, they're estimates. Many PCSRs incorrectly include the full provisional sum value in committed cost, overstating commitment.
• Letting provisional sums drift to final account. The longer they drift, the harder reconciliation becomes. Resolve them as scope clarifies, not at the end.
• Confusing provisional sums with prime cost sums. PC sums are for nominated sub-contractors / suppliers (a different mechanism). Provisional sums are the consultancy's allowance for uncertain work.

Related

• What is a contingency? →
• What is a final account? →
• What is a PCSR? →