12 October 2021

Provisional Sums – Back to Basics Part 1 – Definition and Procedure

BY: Rob Dalton | IN: Articles

In this 3-part series of articles we cover provisional sums, including what they are, how they are dealt with under JCT contracts, and a review of the pertinent case law.

Part 1 – Definition and Procedure

During procurement of construction projects, it is common for elements of the design or scope to be unfinished or undecided.  This is often overcome by the inclusion of a provisional sum which is added to the contract sum as a lump sum or rounded figure against a specified item of work.  The provisional sum is not unconditional, as the Employer can omit or instruct the Contractor to expend it.

A provisional sum could include an item for statutory services which cannot be designed until the Contractor breaks ground to uncover apparatus, or simply an element of work which the Employer has not yet decided if it is required, thus has not fully developed its requirements.

If an Employer decides not to proceed with a provisional sum item, the contract already determines the amount to be deducted from the contract sum. If the provisional sum item is required, the Contractor should be paid a reasonable or demonstrable amount for that work and the original provisional sum amount omitted in full.  The final amount may be more or less than the provisional sum allowance, although the Contractor should not be left out of pocket, or, over-compensated for executing the provisional sum item.

Provisional sums are distinct from ‘contingencies’ or ‘risk allowances’ made within the budget or prices.  Those elements are dealt with under the risk allocation and variation provisions of a contract, whereby unexpected occurrences or the realisation of risk events constitute a change under the contract or a Contractor’s risk for which it is deemed to have included provision in its price.

Under the JCT form of contract, valuing an Employer’s change (Variation) and valuing a provisional sum are similar in method. The main difference being, a variation is offset against an Employer’s contingency not included within the Contractor’s contract sum, and a provisional sum is offset against a provisional sum allowance within the Contractor’s contract sum.


A useful description of a provisional sum was provided by Lord Justice May in the Court of Appeal judgment in Midland Expressway Ltd v Carillion Construction Ltd (No.1) in 2006:

[a provisional sum is] used in pricing construction contracts to refer either to work which is truly provisional, in the sense that it may or may not be carried out at all, or to work whose content is undefined, so that the parties decide not to try to price it accurately when they enter into their contract. A provisional sum is usually included as a round figure guess. It is included mathematically in the original contract price but the parties do not expect the initial round figure to be paid without adjustment. The contract usually provides expressly how it is to be dealt with. A common clause in substance provides for the provisional sum to be omitted and an appropriate valuation of the work actually carried out to be substituted for it. In this general sense, the term “provisional sum” is close to a term of art but its precise meaning and effect depends on the terms of the individual contract.

Defined and Undefined Provisional Sums

A provisional sum can be categorised as defined or undefined.  An example of a defined provisional sum could be the cost of installing a marble staircase where the specific type of marble, and therefore its price, is not yet known.  An example of an undefined provisional sum might be work required below an existing structure, where the ground conditions, and so the extent of work required, cannot be determined until the structure is demolished and the ground opened-up. The importance of the distinction between defined and undefined provisional sums is provided in the RICS New Rules of Measurement (NRM2):
  • Defined: work that is not completely designed but for which the following information can be provided: the nature and construction of the work, a statement of how and where the work is fixed to the building and what other work is to be fixed thereto, a quantity or quantities that indicate the scope and extent of the work, and any specific limitations (and so on) identified. Where provisional sums are given for defined work, Contractors will be deemed to have made due allowance their programming, planning, and pricing preliminaries.
  • Undefined: work that is not completely designed and in respect of which the information referred to above cannot be provided, irrespective that it was given in the BQ as a provisional sum for defined work. In these instances, the Contractor will be deemed not to have made due allowance in their programming, planning, and pricing preliminaries (i.e. the Employer bears the price and scheduling risks).
In short, a Contractor’s entitlement to an extension of time and/or indirect costs for a provisional sum depends largely on whether it is defined or undefined.

The RICS ‘Valuing Change’ guidance note provides that a Contractor bears no risk in connection with the adequacy of the provisional sum, irrespective of whether it is defined or undefined.


The standard approach taken in JCT contracts is that the Employer may include provisional sums within the Employer’s Requirements which will then form part of the Contract Sum and should be identified in the Contract Bills/Contract Sum Analysis.

An alternative situation may arise where Contractors incorporate a provisional sum in their Tender/Contract Sum.  In such circumstances, it may be argued that there is no contractual mechanism to instruct or establish a final valuation of such works. Hence, it is advisable for Contractor’s pricing in this way to ensure that they clearly state (i) the basis of their price(s), (ii) that further information is required from the Employer to establish a final valuation, and (iii) whether the final valuation shall be established from first principle, or the change between tender information and final information.

Where a more standard approach is taken, once the Employer has sufficient information available he or she will issue instructions to the Contractor to proceed with the provisional sum work, including elements of design as required. The Contractor will either be instructed to issue a quotation prior to proceeding, or the works will be valued in accordance with the Valuation Rules set out in the Conditions of Contract – being a sliding scale of options based on how closely the varied work resembles the work that is part of the Contract Documents.

The Valuation Rules in JCT contacts are essentially that additional or substituted work shall be consistent with the values of work of a similar character set out in the Contract Bills/Contract Sum Analysis, making due allowance for any change in the conditions under which the work is carried out and/or any significant change in the quantity of the work so set out.

Where there is no work of a similar character set out in the Contract Bills/Contract Sum Analysis a fair valuation shall be made, using fair rates and prices.

The RICS ‘Valuing Change’ Guidance Note (1st edition) looks in more detail at the Valuation Rules and their practical application.


The definition of a provisional sum may be included within the construction contract, if not, then the RICS provides a working definition of valuing provisional sums and the prevailing case law provides an example of how the courts have dealt with provisional sums historically.

These aspects are considered in Parts 2 and 3 of this series on provisional sums.