Provisional Sums, PC Sums and Allowances

The one round number on a page of odd ones

The quote has been chosen. It is the nine-page one, it reads like somebody went round the house with a torch, and it is on the table waiting for a signature. Somewhere on page six, between the plastering and the decoration, is a line that says provisional sum, kitchen, and a figure. The figure is round, and nothing else on that page is: there is a quantity against the plaster, a rate against the skirting, a number of visits against the scaffold. This one carries none of that. It was not measured. It was picked.

That roundness is not a warning sign; it is closer to the opposite. Nobody can price a kitchen that has not been chosen, and an estimator who invented a precise-looking number for one would be worse, not better. What the roundness does mean is that the total at the bottom of the page is two different kinds of number added together and presented as one — a price, which somebody is bound by, and a placeholder, which nobody is. The headline reads as a commitment across its whole width, and it is not.

So the questions worth an evening are narrow and arithmetical. How much of that headline is actually fixed. Whether the builder's overhead and profit are inside the placeholder or waiting outside it. What the total does on the day the kitchen is chosen and the real invoice lands, in which direction, and by how much more than the obvious difference. If instead you are still holding three quotes and trying to decide between them, that is a different job with a different method, and it is covered on the quote-comparison page rather than here.

Four species of soft money, and only one of them is an allowance

The words get used as though they were synonyms and they are not. An allowance is American practice: a stated sum written into the contract sum for a scope item not yet selected, dealt with in AIA Document A201 at Section 3.8. What that section says about its contents is the part that catches people. The allowance covers the materials and equipment delivered to site with the taxes on them, less trade discounts. Unloading and handling, the labour to install, the contractor's overhead and profit on that labour, and everything else the item drags with it sit in the contract sum around the allowance and not inside it. An allowance of a given size therefore never buys a given size of finished work, and was never meant to.

British practice splits the same idea in two. A prime cost sum is money for something a third party supplies rather than the builder, and the scope of the words has narrowed: under the old Standard Method of Measurement it covered work executed by a nominated specialist as well as goods, while RICS New Rules of Measurement 2 confines it to materials or goods from a supplier and states plainly that the sum excludes the fixing, the main contractor's profit and any attendance. Either way the figure never travels alone: the profit on it and the attendance owed to whoever brings the thing to site are separate priced items beside it in the bill. The word attendance hides two things that behave oppositely, and the split is worth asking about at the quote stage. General attendance is standing provision the specialist merely uses — space to work, the scaffold already up, water, power, welfare, storage — and it is a lump that mostly does not scale. Special attendance is what that specialist alone needs: unloading, hoisting, a hardstanding, a temporary opening left in the wall. Choose a heavier stone and the special attendance can move a long way while the general attendance does not move at all.

A provisional sum is the third species and it is for work rather than goods: an operation everybody knows will be needed and nobody can yet measure — underpinning of an extent nobody has dug to find, a rewire of a floor whose circuits are behind plaster. The fourth thing is not a sum at all. An approximate quantity is a real measured item at a real tendered rate whose quantity is a guess, remeasured at the end, and it behaves better than any of the others because only one of its two components is soft.

Between two provisional sums that look identical on the page sits a single word that decides whether a second bill exists. NRM2 carries the distinction forward from the Standard Method of Measurement of Building Works and the JCT forms use it: a DEFINED provisional sum came with enough description that the contractor is taken to have programmed the work and priced its effect on his preliminaries, and an UNDEFINED one did not. The consequence lands at the end of the job — an undefined sum can carry time and preliminaries as well as value, and what that does to a final account is worked through on the final-account guide. The reason it belongs on this page is that the word is chosen now, by whoever wrote the tender documents, and it is almost never printed on a domestic quote. Ask which it is, and have the answer written on the line, while the ink is still wet.

Nobody can spend it until somebody says so

A provisional sum is not a budget the builder is holding on your behalf. It is a hole in the contract with a number in it, and until somebody with authority fills the hole, the money is not his to spend and the work is not his to do. The JCT forms make this explicit: the contract administrator instructs, and the sum gives way to the value of what was actually carried out. A201 runs the same logic through Article 7 and adds one obligation on the owner at Section 3.8 that is easy to skim past and expensive to miss — the item under an allowance has to be selected in time to avoid delaying the work. The selection is your job, and it has a deadline whether or not anyone has written one down.

Where the two of you cannot agree what the substituted work is worth and it cannot wait, A201 has a mechanism for proceeding anyway: the construction change directive at Section 7.3, a written order signed by the owner and the architect that directs the change before the adjustment has been agreed, with the amount settled afterwards on actual expenditures and savings and a reasonable allowance for overhead and profit. That is a better position than the domestic default, where the work either stops or proceeds on nothing and gets argued about in October. Which valuation basis applies, and how an omission credit differs from an addition, belongs to the variation guides.

Two contracts are worth knowing about for opposite reasons. The NEC4 Engineering and Construction Contract provides no provisional sum at all, deliberately: work is described in the Scope as well as it can be, and anything that turns out differently is a compensation event with its own machinery for time and money. A line reading provisional sum on an NEC contract has been bolted on and will not interact cleanly with the rest of the form. At the other end, a domestic job with no form at all falls back on general consumer law, where the Consumer Rights Act 2015 supplies a reasonable price at section 51 where none was agreed and a reasonable time at section 52 — a backstop rather than a mechanism, telling you what a court would eventually decide and not what happens on Wednesday. In California a change order on a home improvement contract has to be in writing and signed by both parties under the Business and Professions Code provisions at section 7159, which matters precisely because spending an allowance is administered as a change.

1. Write down who is allowed to instruct the sum to be spent — you, an architect, a surveyor — and make sure the builder has the same name written down.
2. Fix the date by which the selection has to be made, working back from the supplier's lead time rather than from the week the trade is due on site.
3. State on the face of the line whether the provisional sum is defined or undefined, because the answer decides whether an extension of time can ride on it.
4. Name the valuation basis for the substituted work and the overhead and profit percentage that applies to it, and whether that percentage lands on the whole cost or only on the excess.
5. Say what happens to the money if the actual cost comes in under the sum, in one sentence, with the word credit in it.
6. Get the substituted figure agreed in writing before the order is placed, not after the goods are on a lorry, because the leverage disappears the moment they are.

Hold the sum against what you want, not against another quote

The comparison that tells you most is not between this quote and the next one. It is between the sum and a real thing with a real price on it. Take the figure to a showroom on a Saturday before signing anything, specify the kitchen you would actually choose, and get it quoted properly. If the sum buys it, the line is honest and you can sign with a clear head. If the sum buys two-thirds of it, you have found the real price of the job while you still have the leverage to do something about it, which is a good afternoon's work.

What the line does not cover is the other half of the exercise and it is rarely spelled out. A kitchen allowance is usually cabinetry: not the worktop, not the appliances, not the sink and tap, not the handles if they are a separate order, not the delivery, and not the electrical alterations the new layout requires. Some of those are priced elsewhere in the same quote, some sit behind a second soft line, and some are nowhere at all. Go through it asking of each only where is this, and accept nowhere when that is the true answer. What a kitchen contains trade by trade is set out on the kitchen-costing guide.

Then there is the form of the allowance itself, which changes what you are exposed to. A cash allowance is a total, and the quantity risk sits with whoever measured it. A per-unit allowance — flooring supplied at a stated rate per square metre — is a rate with no quantity attached, and neither the quantity nor the wastage is in the number. An allowance of that shape can be met exactly on rate and still overrun badly on total, because the area was estimated by somebody who has not measured your rooms and the pattern you chose cuts differently from the one they assumed. Convert every per-unit allowance into a total against your own measured area with the overage the pattern justifies, and only then compare it to anything.

The best provisional sum is the one that is gone before you sign

Every technique on this page manages an exposure that does not have to exist. A provisional sum is there because a decision has not been made, and a decision you could make this month costs nothing to make. Choose the kitchen, get it quoted with model numbers on the quotation, and ask for the line to be replaced by a specification and a firm figure. Most builders will do it gladly: a fixed line is easier to programme, easier to order against, and it removes an argument they were going to have with you in month three.

Where a sum genuinely has to stay — the underpinning nobody can measure until the trench is open, the rewire behind the plaster — three things go on the page beside it and none of them takes a paragraph. A date by which the selection or the survey has to happen, worked back from the lead time. The word defined or undefined, so that everyone knows in advance whether time and preliminaries can travel with it. And one sentence saying how the substituted work is valued, what percentage rides on it, which base that percentage applies to, and that the adjustment runs in both directions. Three lines of writing against a line that could move by five figures.

The uncomfortable version of the same point is worth saying plainly. A quote where a third of the headline is placeholders is not a fixed price with some detail outstanding; it is a partial price with a firm-looking total on the bottom, and it was produced honestly by somebody who could not have done otherwise given what he was told. The way to convert it into a real number is not to negotiate it. It is to go and make the decisions that turn the round numbers into odd ones.