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Tag: provisional sum

  • Design and Build Risk I’ve found as a Quantity Surveyor

    As a homeowner, you may not be aware of the concept of a provisional sum, but it’s essential to understand its implications on your project. According to a study by the Royal Institution of Chartered Surveyors (RICS), a provisional sum accounts for approximately 45% of the contract value, which can vary significantly from the final amount.

    The provisional sum is not part of the contract and is not guaranteed by the contractor. In fact, the price will change due to the lack of definition, even in the New Engineering Contract (NEC) framework. This highlights the risk that clients take on when using provisional sums, as they are not entirely clear about the costs involved.

    The contractor will only instruct the provisional sum upon receiving further information or guidance from the client. This can lead to delays in the program of works and increase costs for the client. In some cases, the provisional sum can be substantial, and its inclusion can significantly impact the project’s budget.

    A study by the Royal Institution of Chartered Surveyors (RICS) suggests that provisional sums can be treated as a rough estimate, which is often inaccurate due to insufficient information. This can lead to clients taking on unnecessary risk and facing unexpected costs. To mitigate this risk, it’s recommended to obtain a complete design of the property or work with a Quantity Surveyor to create a bill of quantity.

    A Quantity Surveyor can help clients prepare a bill of quantity that is priced against a standard method of measurement, such as the New Rules of Measurement 2 (NRM 2). This can provide clarity on the costs involved and help consultants understand the pricing structure. Alternatively, clients can opt for a design and build contract, where the contractor takes on the risk of the incomplete design.

    Ultimately, it’s crucial for homeowners to be aware of the provisional sum and its implications on their project. By understanding the risks and taking steps to mitigate them, clients can ensure a smoother and more cost-effective construction process.

    References

    • What is a provisional sum?

      What is a provisional sum?

      A provisional sum is a preliminary allocation of funds for a specific activity in a construction project that has not yet been fully defined. This provision is essential, as it allows for a rough estimate of costs, enabling clients to incorporate the sum into their budget. Construction projects often involve varying degrees of uncertainty, making a provisional sum a crucial component. According to a survey by the Royal Institution of Chartered surveyors, the use of provisional sums can be attributed to the uncertainty in project scope, client preferences, or planning process outcomes (Royal Institution of Chartered surveyors, 2020).

      In the context of measured building surveys and topographical surveys, architects may request a provisional sum quotation to propose to their clients. This request acknowledges that the extent of the construction proposal is not always known, and a rough estimate is required to facilitate budget planning. In many cases, the client or architect is not entirely aware of the scope of the project, necessitating a ballpark figure to include in their budget. Insights from research by the Chartered Institute of Building, suggest that a significant proportion of construction projects involve the use of provisional sums due to complexity and uncertainty (Chartered Institute of Building, 2019).

      The key characteristics of a provisional sum are that it is (1) an approximate figure, (2) allocated for an undefined or variable activity, and (3) not part of the scope for deliverables until instructed to proceed by the client. When a provisional sum is instructed, the architect or surveyor will confirm the scope and price (if any changes are made) and proceed accordingly. In this phase, the client is responsible for allocating funds to the itemised provisional sum (Royal Institution of Chartered surveyors, 2020).

      It is essential to note that clients do not need to pay for provisional sums in the contract as they are not defined as deliverables. This aspect of provision sums should be clearly outlined in the quotation to prevent misunderstandings. A commonly cited concern is the practice of ‘fudging’ the provisional sum value, presenting it as part of a lump sum without intending to deliver the associated items (Chartered Institute of Building, 2019).

      To avoid confusion, clients should ensure that provisional sums are itemized in the quotation, making it easier to identify the relevant amounts when applying for fees. It is also worth highlighting that contractors, surveyors, and designers will not need to deliver the provisional sum until instructed to proceed by the client. In any case, ensure accurate budget planning and scope definition to prevent unnecessary costs or lost opportunities. MCS, for instance highlights budget maintenance in project rollout as a good practice.

      Provisional sums serve an essential purpose in the construction industry, providing a preliminary estimate and facilitating budget planning. While they require careful management to avoid misunderstandings, their utility cannot be overstated (Royal Institution of Chartered surveyors, 2020).

      Remember to request itemized quotations and clearly outline the provisional sum provision and scope in your budget planning.

      From here you can get a quote for a measured building survey from us by contacting us at info@icelabz.co.uk.

      References

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