Provisional Sum

A provisional sum is a lump-sum allowance included in the contract bill of quantities or price schedule for a defined element of work or supply whose scope cannot be fully specified at bid stage, which the contractor prices at the nominated amount and which is only expended as and when instructed by the engineer.

What is Provisional Sum?

Provisional sums appear in works contracts governed by FIDIC and similar standard forms when the employer knows that certain work will be needed but cannot yet define its quantity or design precisely enough for competitive pricing. Common examples include specialist subcontract work, temporary diversion of utilities, or interface work with adjacent contracts whose scope depends on design decisions still in progress. The provisional sum is carried in the contract at the employer's nominated figure, not priced by the tenderer, and forms part of the accepted contract price. As design is completed or circumstances become clear, the engineer issues an instruction authorising the contractor to carry out the work, and payment is made at the rates applicable to similar work or by agreement, not necessarily equal to the provisional sum itself.

A provisional sum differs from a contingency-sum in that it is earmarked for identified but undefined scope, whereas a contingency is an unallocated reserve against unforeseen risk. Both are distinct from a variation-order, which covers changes to defined scope. Day-works rates, used when work cannot be valued by measurement, often govern how work instructed against a provisional sum is ultimately paid.

Why Provisional Sum matters for bidders

Provisional sums are included in the contract at the employer's figure, so the contractor has no pricing discretion over them. However, the contractor should verify that the provisional sum is realistic for the work it covers, because a severe underestimate creates a budget shortfall that can delay instruction, stall the contractor's work, or lead to disputes about the final value of the instructed work. Suppliers should also review the contract to understand what mark-up, if any, they are entitled to add on work carried out against a provisional sum, since this varies by contract form.

FAQ

Does the contractor profit from a provisional sum?

The contractor is paid for actual work instructed against the provisional sum at applicable contract rates or agreed prices, and may be entitled to an overhead and profit percentage on specialist subcontract work, but there is no guaranteed margin on the nominal provisional sum itself.

Can a provisional sum be omitted from the contract entirely?

Yes. If the employer decides not to instruct the work covered by the provisional sum, the sum is simply not expended and is deducted from the contract price. The contractor has no entitlement to it merely because it was included.

What is the difference between a provisional sum and a prime cost sum?

A prime cost sum is an allowance for goods or specialist work to be supplied by a nominated subcontractor or supplier; a provisional sum is for any identified work whose scope is not yet fully defined and does not necessarily involve a nominated third party.