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Provisional Sum

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Provisional Sum

a "Provisional Sum" refers to an estimated allowance included in a contract for certain work or materials that cannot be precisely specified at the time of contract signing. This sum is typically used for elements of the project where the scope is not fully defined or where there is uncertainty about the cost.

Provisional Sums are included in the contract to provide flexibility and ensure that the project can proceed without delay while allowing for adjustments once the details are clarified. They are often used for items like specialized equipment, unforeseen site conditions, or work that requires further design development.

Once the actual cost of the work or materials covered by the Provisional Sum is determined, the contract is adjusted accordingly. This may involve either an increase or decrease in the contract price, depending on whether the actual cost is higher or lower than the provisional amount.

Key Characteristics of Provisional Sums:

  • Included in fixed-price construction contracts
  • Budget allowance for undefined or unscoped work or materials
  • Estimate of the cost of providing particular services or works
  • Mechanism to accommodate uncertain elements of the project
  • Allocated funds within a project's budget for specific work or materials

It's important for both parties in a construction contract to clearly understand and agree on how Provisional Sums will be managed, including how they will be adjusted and documented, to avoid disputes and ensure smooth project execution.

Synonyms: PS sum, PS

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