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Difference Between a PC Sum and a Provisional Sum in Construction Contracts

Monday 21st October 2024

In UK construction contracts, the terms "PC Sum" (Prime Cost Sum) and "Provisional Sum" are used to allocate budgets for certain parts of a project. While both deal with uncertainties, they serve distinct purposes and are handled differently. Here's a breakdown of their roles and differences.

1. PC Sum (Prime Cost Sum)

• Purpose:

A PC Sum is an amount set aside in the contract to cover the cost of materials or services (e.g., fixtures, fittings, or equipment) that have not been fully specified at the time of signing. It allows for flexibility in choosing products or services later in the project, such as bathroom fittings or kitchen appliances.

• Control:

The contractor invoices the actual cost of these materials or services, often with an additional markup for overheads and profit. This amount reflects what the client ultimately selects as the project progresses.

• Usage:

A PC Sum is used when the client has not made final decisions on certain materials or equipment at the time of tender. For example, a PC Sum may be allocated for the supply of sanitary ware or light fixtures, where the specific models are to be chosen later.

2. Provisional Sum

• Purpose:

A Provisional Sum is a budget allowance for works that are anticipated but not fully defined at the outset of the contract. It often applies to parts of the project where the scope is uncertain, such as groundworks, where the extent of excavation cannot be precisely determined in advance.

• Control:

The contractor does not have direct control over the expenditure of a Provisional Sum. Instead, the work and costs must be agreed upon with the client as the project unfolds, based on actual site conditions or further details.

• Usage:

Provisional Sums are used for work that cannot be specified in detail during the tendering process, such as unforeseen structural modifications or additional drainage works. For example, if it becomes clear during excavation that more extensive foundation work is needed, the Provisional Sum would cover these costs.

Key Differences

• Scope:

A PC Sum is for the supply of materials or services, allowing for later selection, while a Provisional Sum deals with works that are uncertain or cannot be fully defined at the time of tender.

• Control:

The contractor charges the actual cost of items under a PC Sum, with an agreed markup, but spends Provisional Sums based on mutually agreed costs as unforeseen conditions arise.
In summary, while both PC Sums and Provisional Sums account for uncertainties in a project, a PC Sum covers the cost of specific items or services yet to be chosen, and a Provisional Sum accounts for work that cannot be fully scoped at the outset, usually related to unforeseen site conditions.