How is each one adjusted?
A provisional sum is included at the stated amount and then adjusted when the work is defined and instructed, so the contract sum moves up or down accordingly. The mechanism sits in the contract, and the detail of it, particularly whether you recover margin and attendance on the adjustment, is worth reading before you rely on it.
A prime cost item works similarly for a supplied item: the allowance covers the supply, and the actual cost replaces it once the item is chosen. Nothing adjusts contingency. It is either spent or it is not.
Where do teams get caught?
On margin and attendance. A provisional sum adjusted at cost, with no allowance for your overhead, supervision or programme impact, means the more of the contract sits in provisional sums the thinner your recovery on the job as a whole.
The second trap is treating a provisional sum as certainty. A large provisional sum is unpriced scope, and unpriced scope is where the programme risk hides: the work is instructed late, defined by someone else, and expected inside the original dates.
What should you check in the tender?
Four things. How the adjustment is valued and whether margin and attendance are recoverable. What proportion of the total sits in provisional sums and PC items rather than defined work. Who defines the scope later, and by when.
Then the programme question everyone leaves out: whether an instruction against a provisional sum carries an extension of time when it lands late. If it does not, the work still lands late and your dates do not move.
The three compared
| Term | What it covers | How it is settled | Watch for |
|---|---|---|---|
| Provisional sum | Work not yet defined well enough to price | Adjusted against the actual defined work when instructed | Whether margin, attendance and time are recoverable on the adjustment |
| Prime cost item | Supply of an item not yet selected | Actual supply cost replaces the allowance | That your installation, attendance and margin are priced separately |
| Contingency | Money held against risk | Spent or not; no adjustment mechanism | Whose contingency it is, and whether it is visible to the other party |