The topic of provisional sums frequently arises when preparing estimates for our builders. It's intriguing because builders utilise (or sometimes completely avoid) provisional sums in various ways, even though one might assume they are consistently used in the same manner.
What is a provisional sum?
Before we begin, let's clarify that we are discussing provisional sums, not prime costs, lump sums, or any other methods of describing costs typically excluded from the main content of an estimate.
There are many detailed pages on the web, but as far as we at The Estimating Company are concerned, when preparing an estimate for a builder, we view a provisional sum as a temporary cost used in the absence of a known fixed cost that includes both materials and labour..
Why would a cost be unknown?
The main structure of a building typically involves standard materials and labour, with well-known construction costs. However, when unique, specialised materials, products, or contractors are needed, the actual costs are unavailable without a fixed quote from the suppliers and installers.
Builders seeking estimates for potential clients often cannot wait for these specialised quotes and understandably do not wish to invest significant effort in obtaining them before securing the job.
In such cases, the only solution is provisional sums.
Examples
Steel
Plumbing & Heating
Electrics
Bathrooms & Kitchens
Finishes
Retaining walls
Specialist cladding
All the aforementioned examples can have fixed costs once the materials and scope of work are determined.
Plumbing, heating, and electrical work might appear to have standard fixed costs, but variations in material costs can be significant. Is the toilet a standard £150 or a premium £750? Is the kitchen £10,000 or £50,000, and so on?
Other types of unknown costs
The full scope of certain necessary building works cannot be determined until elements like the ground, walls, floors, or roofs are exposed. These situations may also necessitate a provisional sum or contingency cost if the required work exceeds initial estimates.
Examples
Drainage
Foundations
Structural works
Asbestos removal
Drainage and foundation projects for example, require ground works that need approval from local building control. These projects are affected by the ground conditions, which are not known until excavation begins.
A foundation initially planned for a 1.0m excavation depth with 0.7m of concrete might uncover weak soil or other irregularities upon digging, requiring a deeper excavation. This leads to a substantial increase in the required equipment, materials, and labour compared to the original estimate.
How much to allow for provisional sums?
This is undoubtedly the most challenging question to answer!
If you consult 10 builders, you'll receive 10 vastly different responses.
This is primarily because builders operate in entirely different ways. Their companies vary, and their thought processes differ, so there truly isn't a one-size-fits-all answer.
Some builders are eager to secure the job, so they keep the estimated cost as low as possible. They use small provisional sums or might exclude them altogether, opting to mark those items as not included.
Others prefer to include everything to adhere to the original estimated cost. They typically use higher provisional sum costs to cover the work but risk providing a less competitive estimate.
We collaborate closely with our clients, ensuring that the agreed or trusted amounts are based on our mutual understanding and familiarity with our clients and their estimates.
While a provisional sum doesn't need to be exact due to its nature, it's still advisable to use an informed cost or some formula to determine the amount, aiming to provide the most accurate estimate total and prevent the client from incurring additional costs.
Conclusion
Provisional sums are an essential expense in nearly every construction project, and we hope to have clarified their purpose, application, and associated costs.
At The Estimating Company, we make sure our estimate reports clearly indicate to both builders and their clients where provisional sums are applied. This way, end clients are aware that any expenses exceeding the provisional sums allowance will incur extra costs.
If you need an estimate and haven't already benefited from a professional estimate from The Estimating Company give us a call or drop us an email.