Prime Cost Sums vs. Provisional Sums

Attribute	Prime Cost Sums	Provisional Sums
Definition	Costs of materials, labor, and plant directly employed on the work	Estimated costs for work that cannot be accurately defined at the time of tender
Accuracy	Exact costs known at the time of tender	Estimated costs subject to change
Responsibility	Contractor responsible for actual costs	Contractor responsible for managing and controlling costs
Adjustment	Actual costs adjusted during construction	Estimated costs adjusted based on actual costs

Definition

Prime Cost Sums and Provisional Sums are terms commonly used in the construction industry to allocate costs for items that are not yet fully defined. Prime Cost Sums refer to specific items or materials that have been identified but for which the exact cost is not known. Provisional Sums, on the other hand, are used for items that have not been fully defined or specified, and therefore require an estimated cost to be included in the overall budget.

Accuracy

One key difference between Prime Cost Sums and Provisional Sums is the level of accuracy in the cost estimation. Prime Cost Sums are typically more accurate as they are based on specific items or materials with known prices. This allows for a more precise budget allocation and reduces the risk of cost overruns. Provisional Sums, on the other hand, are less accurate as they are based on estimates for items that have not been fully defined. This can lead to potential discrepancies between the estimated cost and the actual cost, resulting in budget variations.

Flexibility

Another important aspect to consider when comparing Prime Cost Sums and Provisional Sums is the level of flexibility in the budget. Prime Cost Sums provide more flexibility as they are based on specific items that can be easily adjusted if needed. This allows for a more accurate budget allocation and better control over costs. Provisional Sums, on the other hand, are less flexible as they are based on estimated costs for items that may change during the construction process. This can make it challenging to manage the budget effectively and may result in unexpected cost increases.

Risk Management

When it comes to risk management, Prime Cost Sums are generally considered to be less risky compared to Provisional Sums. This is because Prime Cost Sums are based on known prices for specific items, which reduces the likelihood of cost overruns. In contrast, Provisional Sums are based on estimated costs for items that may change, leading to a higher risk of budget variations. This can make it more challenging to manage the project budget and may result in delays or additional costs.

Transparency

Transparency is another important factor to consider when comparing Prime Cost Sums and Provisional Sums. Prime Cost Sums provide more transparency as they are based on specific items with known prices, making it easier to track and monitor costs throughout the project. This allows for better accountability and ensures that the budget is being managed effectively. Provisional Sums, on the other hand, are less transparent as they are based on estimated costs for items that may change. This can make it difficult to track and monitor costs accurately, leading to potential discrepancies in the budget.

Conclusion

In conclusion, Prime Cost Sums and Provisional Sums are both important tools in construction project budgeting, but they have distinct differences in terms of accuracy, flexibility, risk management, and transparency. Prime Cost Sums are generally more accurate, flexible, and less risky compared to Provisional Sums, which are based on estimated costs for items that may change. It is important for project managers to carefully consider the attributes of each type of sum and choose the most appropriate option based on the specific requirements of the project.