The contingency sum is intended to cover the cost of unforeseen or unforeseeable work and it should not be used for variations or extra work. Such sums are exclusive of any profit required by the main contractor and. C adjustment of provisional sums in the final account. Sometimes part of contract itself may be made a provisional sum. Such sums are exclusive of any profit required by the main contractor and provision is made for main contractors profit addition. Extracts from the standard form of building contract. A prime cost sum pc or pc sum is an allowance, usually calculated by the cost consultant, for the supply of work or materials to be provided by a contractor or supplier that will be nominated by the client that is, a supplier that is selected by the client to carry out an element of the works and imposed.
Prime cost sums or provisional sums are included in the contract sum2. Claims brought by the contractor for works omitted and awarded to a third party. Prime cost is a set budget for an item or set of items that need to be bought for your building or reno project and its often the cause of grief and misunderstandings with builders. There are few different things that can cause costs to blow out on building or renovation project but two of the most common culprits are prime cost pc and provisional sum ps allocations. The difference between a prime cost sum and a provisional sum designing buildings wiki share your construction industry knowledge. A prime cost sum is the cost of an item that has either not been selected or the price was unknown at the time the contact was entered into. These uplifts are generally not applicable to provisional sums. This will not be included in the specifications because these will only. Its an allowance for materials such as appliances, sinks, taps etc. Prime cost is the direct cost incurred in the process of manufacturing a product and typically includes the direct production cost of goods including the raw material and direct labor costs. Pc sum or otherwise referred to as prime cost sum reflects the material allowance being made in the rate for a specific item. These consequential costs arising as additional contract amount, remeasuredother costs, constitute incurred costs to deal with risk. Ipko 2008 identified that provisional sums increase in an average of 40 %. Sums the prime cost sums, which have been included in the contract sum to.
The prime cost calculates the use of raw materials and direct labor, but. Provisional and prime cost items dedicated to project controls. Prime cost refers to a manufactured products costs, which are calculated to ensure the best profit margin for a company. Most simply, prime cost applies to items themselves, provisional sums refers to complete works. There can be one or more than one provisional sum item in a contract. The study was carried out by means of questionnaire and interview administered to quantity surveyors and architects who have practiced in the south west of nigeria for at least ten years. Generally, these costs are known as provisional sums or prime cost allowances. Is the estimates of works 30% more than the provisional sum. The provisional sum for contingencies, which has been included in the contract sum to cover the cost of variations and of works which could not be entirely foreseen at the time the tender documents are issued, is first omitted from the contract sum. Deviations between contract sums and final accounts. For the definition of a provisional sum refer to condition 1 of the general conditions of this contract. There may be so many unpredictable items in site clearance. Provisional sum need not be always allocated specifically for a single task.
Sum wherever used in these bills of quantities shall have the meaning stated in section a item a7 ii of the standard method of measurement. Persons or firms nominated by the project manager to execute work or to provide and fix materials or goods are described herein as nominated sub. May 06, 2007 prime cost sums are the amounts included in bill of quantities to be paid by the main contractor to the nominated suppliers or the nominated subcontractors, statutory undertakers, or utility companies on the architects written instructions. The provisional sum may be for both material and labour.
Provisional sum ps prime cost pc contingency sum design contingency. Such sum shall be deemed to be exclusive of any profit required. The study was carried out by means of questionnaire and interview administered to quantity surveyors and architects who have practiced in. In our contracts the price is usually paid in stages, which may be subject to a price fluctuation. The design contingency during the design stage when many aspects of the project are unresolved or perhaps not yet fully understood the contingency sum will be higher as a proportion of the total budget. Jul 20, 2015 a provisional sum is usually included within the contract price as an estimate of the likely cost of work which is. What is the difference between prime cost and provisional sum. The use of lump sum bills of quantities contracts for. Provisional sums can be interpreted to include one or all of the following.
When youre building a house, the majority of decisions come down to two things. If the actual cost is below the pc or ps allowance in the contract, the builder must deduct this amount. Prime cost sums are the amounts included in bill of quantities to be paid by the main contractor to the nominated suppliers or the nominated subcontractors, statutory undertakers, or utility companies on the architects written instructions. Comparative assessment between provisional sums in private. Prepare tender documents ptpo 4 invitation and receipt of tender pt. The above listed sums are meant for items of work that are uncertain, though measured, items of. If used wisely, they are a handy tool for cost management. If the actual cost is above the pc or ps allowance in the contract, the builder would include this additional.
The practices on dealing with provisional sums have exposed the contracting parties to a number of risks. These consequential costs arising as additional contract amount, remeasuredother costs, constitute incurred costs to deal with risk and uncertainties during construction and commissioning periods. A prime cost or prime cost sum is an amount included in the contract sum as an estimate of the net cost of certain works or materials. As a result, being prepared to accept the most common understanding of provisional sums and prime costs is best or at least the most defensible approach. Prime cost sums and provisional sums with related profit shall be omitted from the final account based on clause 30. Mar 09, 2020 prime cost refers to a manufactured products costs, which are calculated to ensure the best profit margin for a company. Difference between prime cost sum and provisional sum items. Provisional sums has always been a special feature in fidic contracts. The builder must make a reasonable allowance in the contract for this item. Provisional sumdayworkslegislative changes in construction. Provisional sums in construction contracts proje yonetimi. Reformatted and highlighted for pqsl talk on variations, provisional and prime cost sums by mr.
Adjustment of prime cost and provisional sums on building. The final contract sum, usually stated as the total on the summary of account, is determined after the adjustment of prime cost and provisional sum items, remeasurement of provisional quantities, measurement of variations, valuation of fluctuations, and ascertainment of contract claims. March 2009 201 flowchart description action by reference 1. Confusion can arise regarding two items that may appear in standard forms of building contract prime cost sums pc or pc sums and provisional sums ps. It is the direct cost of the inputs to a process that are necessary to create the output. The usual procedure is to allocate a cost against the unknown factor that will be validated at a later time. This is mainly due to the nonpreparation of the technical drawings ogunsemi. Jan 08, 2020 difference between prime cost sum and provisional sum items. Prime cost items are often similar to provisional sums. Prime costs and provisional sums master builders wa. A prime cost item is an allowance in the contract for the supply of necessary items not yet finally selected, for example taps or door furniture. If you want a particular standard of fittings or specific brands or models, make sure your contract is very clear about that.
To elaborate, let us take the example of site clearance. Jul 23, 2018 once construction is complete, a builder must be able to provide evidence of the costs of any prime cost items or provisional sum allowances with invoices or receipts. The difference between a prime cost sum and a provisional sum. For pure lump sum contracts the contractor undertakes to carry out a defined amount of work in return for an agreed price. Aug 14, 2017 when youre building a house, the majority of decisions come down to two things. Provisional sum means a sum if any which is specified in the contract as a provisional sum, for the execution of any part of the works or for the supply of plant, materials or services under subclauses. If you do have prime cost items or provisional sums in your contract, the domestic building contracts act 1995 states that they must be set out in a separate document that includes. In addition the prime cost sum will be subject to an uplift for the contractors attendance and profit. Most building contracts are called fixed price contracts, but the final contract sum can vary due to fluctuations in pc and ps. Provisional sums an introduction sintons newcastle. Provisional sums are also considered as one of the main factors leading to cost overruns omoniyi, 1996.
Feb 27, 2020 the difference between a prime cost sum and a provisional sum designing buildings wiki share your construction industry knowledge. Jul 10, 2005 a prime cost sum means a sum provided for work or services to be executed by a nominated subcontractor or for materials or goods to be obtained from a nominated supplier. It is an essential part of total manufacturing expenses as costing and effective pricing of the goods are primarily determined on its basis. Prime cost pc items and provisional sums ps are two items in a standard building contract which cause great confusion among homebuyers. This paper determined the causes and effects of adjustments of prime cost and provisional sums on building projects in nigeria. Include the estimated quantities of materials if any, unit costof those materials, addedestimated labour cost, and other costs equipment e. Prime cost sums the use of prime cost sums pcss is less now than in the past, due to the limited adoption of the nomination process of subcontractors and suppliers on the part of the clients team or the design team. If the actual amount is lower than what was estimated, the price is deducted from the contract price. Aug 06, 2017 provisional sums has always been a special feature in fidic contracts. A distinction is sometimes drawn between defined and undefined provisional sums as. They both relate to estimates made for certain costs in the absence of exact figures. Prime cost sum is a sum provided for works or services to be executed by a nominated subcontractor, or for materials or goods to be obtained from a nominated supplier. The best quotes have few or no pc allowances in them.
Extracts from the standard form of building contract private. Two of the most common culprits for cost blowouts on a building or renovation project, are prime cost pc and provisional sum ps allocations. Most building contracts are called fixed price contracts, but the final contract sum can vary due to fluctuations in pc and ps items. But the client has not finalized the budget with the same. Essentially a dollar budget where the final selection of those items is still to be confirmed. Prime cost item pc much like a provisional sum, a prime cost item is a dollar figure allowance used in building quotes and contracts. If the actual cost is below the pc or ps allowance in the contract, the builder must deduct this amount from the contract price when submitting its next progress claim. At the commencement of the contract, each prime cost sum pc. For pc and ps, the owner is responsible for bearing the cost of the prime cost item or provisional sum item. A prime cost sum means a sum provided for work or services to be executed by a nominated subcontractor or for materials or goods to be obtained from a nominated supplier. The use of lump sum bills of quantities contracts for civil engineering works 1. Pc sums are normally associated with an average cost of a specific item whereas provisional sums are estimated allowances.
Provisional sums are widely used in the fidic red book forms of contract in the uae construction industry. As an example client has a nominated supplier for a specific item. Administration of provisional sumsrefer flowchart 20. A provisional sum is an allowance in the contract for the cost of foreseeable necessary work, including the supply of materials not fully described or detailed at the time that the contract commenced. Pdf comparative assessment between provisional sums in. Provisional and prime cost items dedicated to project.
Provisional sum contractors best estimate of cost of providing the contracted service. This is because the prime cost sums and provisional sums are just estimated sum and act as estimated allowance but both prime cost sums and provisional sums are subjected to changes. Construction measurement iii sbq3314 prime cost sum. Aug 07, 2015 as a result, being prepared to accept the most common understanding of provisional sums and prime costs is best or at least the most defensible approach. Provisional sum prime cost sum linkedin slideshare. Lets look the usage of these two terms in the construction environment. A provisional sum is usually included within the contract price as an estimate of the likely cost of work which is. Prime cost sum designing buildings wiki share your construction industry knowledge. The only difference is before signing the contract exact cost of the prime cost item should finalise. However, if the lump sum contract contains a significant number of provisional sums there will be a risk that the ultimate cost may be significantly in excess of the original contract sum. The difference between a prime cost sum and a provisional.
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