Provisional Sum

A provisional sum (PS) is an estimated allowance included in a construction or fit-out contract for elements of work that are known to be required but cannot be fully defined or accurately priced at contract signing. Rather than leaving the scope undefined, the pricing schedule includes a named sum - for example, "specialist groundworks: provisional sum $18,000" - so both parties acknowledge the work while reserving the right to instruct and price it properly once the details are confirmed.

Provisional sums are standard on projects where ground conditions, specialist sub-contractor scopes, or design details remain unresolved at tender stage. Common examples include groundworks pending a soil survey, specialist mechanical or electrical installations awaiting final services design, and bespoke joinery where detailed drawings are still in progress at contract award.

How Provisional Sums Are Instructed and Adjusted

A provisional sum must be formally instructed by the contract administrator before the work proceeds. The instruction confirms the actual scope. The final account then adjusts the PS to reflect the actual cost: if actual costs fall below the sum, the surplus is deducted; if they exceed it, the additional cost requires a variation order.

The critical discipline is to ensure every PS is formally instructed in writing before work starts and fully adjusted in the final account before the final invoice is raised. A PS that is neither instructed nor formally omitted remains in the contract price as a client credit - which creates disputes at final account if the contractor has incurred costs above the provisional allowance without a signed variation order.