Today, I would like to share a quick explanation on what is Provisional Sum or commonly known as PS. You will probably notice this word PS in either your quote or contract.
So what is PS?
* A provisional sum is an amount of money included in the contract sum to cover work or materials, or both, the extent of which cannot be specifically detailed when entering a contract. Typically, builders will include a PS for site work costs. The builder is legally required to take reasonable steps to ensure an accurate site works cost estimate. However, in some circumstances, unforeseen events mean that the provisional sum is exceeded, sometimes by a significant amount. This can be added to the contract sum.
* For example, a building site may seem sandy and clean with minimal site work required. However, there may be large limestone rocks or tree trunks concealed below the surface which only emerge once site works commence, causing a considerable cost overrun.
* Buyers need to plan for these contingencies. Moreover having a “buffer” amount in your financial budget to cover any unexpected provisional sum overruns is desirable.