What it means
A provisional sum is an allowance in a construction contract for work that cannot yet be described or priced with enough precision for a firm tender figure. It gives the parties an interim figure in the contract price while design or scope is developed, but it is not a blank cheque and not necessarily the amount eventually paid.
The contract's instructions and valuation mechanism decide what happens when the work is defined. A developer may know that landscaping will be required but lack the final drawings at tender stage, so including a provisional sum of $200,000 allows a budget line without pretending the scope is settled.
The allowance should be visible and described, because if several poorly specified items are buried in a fixed-price headline, the owner may have a false sense of cost certainty. Some contract methods distinguish defined from undefined provisional sums, and the degree of description can affect what the contractor is expected to include for planning, preliminaries or programme.
The label alone is not enough to settle who bears delay or overhead costs, so read the bill of quantities and conditions together and state assumptions in tender documents. Gowling WLG discusses provisional sums and the contractual differences that can arise in their use, and a construction-industry analysis published by Consultancy.uk also explains why the terms and supporting detail matter.
Their legal and practice examples are not universal rules for every jurisdiction, and project-specific contract wording wins over a generic glossary description. The eventual work may cost more or less than the allowance: if a contract provides for substituting a measured valuation of $230,000 for a provisional sum of $200,000, the simple difference is plus $30,000.
The actual adjustment may also account for preliminaries, overheads, profit, taxes and associated time effects according to the contract, so do not post $30,000 as the final contract change before those elements are assessed. Authorisation is crucial too, because the contractor should not assume it may choose a supplier and spend the entire allowance without instruction, the employer should not assume it can order any work whatsoever under the interim figure, and what is instructed, by whom and when should be recorded with drawings and quotations where applicable.
A provisional sum differs from a contingency reserve: the first is an identified allowance in the contract for particular work, governed by contract valuation rules, while a contingency is a budget reserve for uncertainty and may sit outside the contractor's price. Confusing them can lead to double counting or a belief that unspent provisional allowances are freely available for unrelated changes.
The project team should maintain a schedule of all provisional sums, noting the description, original allowance, decision date, design status, approved instruction, current forecast and amount used, and compare the sum of outstanding allowances with the forecast final cost. A simple register shows where the project still has unresolved scope and helps schedule decisions before construction is delayed.
The more important the item, the earlier it should be defined: a utility connection with long lead times can affect opening even if its price allowance is small relative to the whole project, and an uncertain facade specification can affect structure, permits and procurement. Finish design where practical before tendering, especially for work on the critical path, because provisional sums are useful when a project must proceed with incomplete design but excessive reliance on them shifts uncertainty into construction.
In practice
Real-world examples.
Example
A contract includes $200,000 for landscaping to be designed later. The tender shows the allowance as a separate line with a short description, so bidders price the same assumption.
Example
The final landscaping cost of $230,000 replaces the allowance after the design is complete and the work is valued. The owner's budget moves up by $30,000 before any contract adjustments, and the change is recorded against the original instruction.
Example
A QS tracks provisional sums against actual costs in a register. Each month the register shows which allowances have been instructed, which are still open, and how the forecast compares with the original total.
Formula
Calculation
Allowance difference = assessed value of instructed work - provisional sum.
Worked example. An allowance is $200,000 and the assessed work is $230,000, so the simple difference is $230,000 - $200,000 = plus $30,000 before any other contract-specific adjustments. If the contract also allows 10% for preliminaries and overheads on additional work, the extra amount could be $30,000 x 1.10 = $33,000, but only where the contract says so. A register of five such sums with a combined allowance of $500,000 and a combined forecast of $540,000 would show a forecast overrun of $40,000, or 8% ($40,000 / $500,000).Case study
Seen in the real world.
This illustrative and entirely fictional case follows Oasis Villas, an invented developer with many provisional sums for unfinished design. On its next project it defines critical work earlier, maintains a decision register and reviews tender allowances on a comparable basis. The forecast becomes clearer, but final cost still depends on instructions and actual work.
On the earlier project, Oasis had carried $1,200,000 of provisional sums in a $10,000,000 contract, which is 12% of the price, and many were still undefined when building started. On the next project it reduces that share by finishing design for the utility connection and facade before tender. The remaining provisional sums are described in the bill of quantities, so bidders compare like with like.
Watch out
Common mistakes.
- Treating a provisional sum as a fixed final price.
- Spending the allowance without the instruction required by the contract.
- Comparing bids whose provisional allowances cover different assumptions.
Questions
People also ask.
What is a provisional sum?
A contract allowance for work that is not fully defined or priced at tender.
What happens later?
Instructed work is valued and the allowance adjusted under the contract mechanism.
What is the risk?
The final price and timing can change when the work is defined.
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