You are on page 1of 5

3/27/2016

Provisional Sum | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet)

Provisional Sum
Login or register to post comments

7 replies [Last post]

Thu, 2004-10-21 05:30

Razi Khan
Offline
Joined: 17 Jun 2004
Posts: 74
Groups: Building
Works

Hi Planners and Contracts People


Please guide me in the following matters:
1. When instruction to execute the work for partial or whole sum of amount for "Provisional
Item" to contractor then what will be the contractual position of Contractor regarding
Extension of Time ?
2. If a certain amount against a work is neither the part of "Original Contact Amount" nor the
part of "Provisional Sum" but included in Contract Documents as "Declaration" than is that
amount can be called as "Provisional" although strictly speaking it is not mentioned as such.

Top

Printer-friendly version

Login or register to post comments

Send to friend

REPLIES
#1

Fri, 2004-11-12 04:30

Joe Mansour
Offline
Joined: 10 Sep 2002
Posts: 45
Groups: Building
Services / E&M, GPC
Lebanon

May I add that when the Engineer makes a decision regarding the provsional sum, two
questions must be considered: What and when.
For the What, was the provsional sum defined or undefined (according to SMM7 definition)? If
it was undefined, or if the scope of nominated subcontractor has increased from the original
given scope, there is a possibility of obtaining extension of time (and a variation). If not the
chance is less.
For the When, I usually include in all my schedules milestones for the Engineer to make
decisions regarding each provisional sum. These milestones would be logically linked to the
relative activity. The duration of that activity would be estimated based on the contract
documents concerning the provisional sum, or otherwise based on the best guess.
Another case to share that might be of interest to somebody. We are currently building a
hospital. The original BOQ included a provisional sum of 8M USD for medical equipment and
furniture. The Engineer has nominated 17 medical equipment contractors for that provsional
sum, instead of one. I submitted a claim and won it (with difficulty) for extra time and cost on
the basis of seggregating the provisional sum into multiple contracts which we (the
Contractor) had to deal with each one of them, instead of dealing with one. (the contract is a

http://www.planningplanet.com/forums/forensic-claims-analysis/412345/provisional-sum

1/5

3/27/2016

Provisional Sum | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet)

FIDIC 87/92).
Joe
Top

Login or register to post comments


#2

Fri, 2004-11-12 02:31

Andrew Ng
Offline
Joined: 3 Jul 2004
Posts: 52
Groups: Acumen,
GPC Australia, Mining
Works, Pending Guild
Members

For sake of clarity, I must confess that my experience with JCT and FIDIC were the earlier
versions and my comments sated in the last posting as such may no longer be tenable in the
light of the recent amendment made thereto.
It was in fact my finding from participants on a conference on contracts and delays last week
that what Stuart stated re the provisions in SMM7 was correct. It is also possible that what he
said in relation to the JCT edition is equally applicable in the latest edition of the FIDIC which I
have not come across nor checked.
I would be most pleased if Stuart or others wish to take this on and elbaorate their current
understanding of the same.

Top

Login or register to post comments


#3

Sun, 2004-10-24 07:59

Stuart Ness
Offline
Joined: 30 Jun 2004
Posts: 352
Groups: None

Hi Razi,
I would suggest that you may have a fair right to claim EOT where the Engineer/Architect
issues an instruction as to how and when Provisional Sums should be spent. A Provisional
Sum is simply a bag of money allowed for carrying out a part of the Works, without any
indication of the workscope, quantities or time involved.
Under JCT80 Form of Contract, Provisional Sums are under the same Clause heading as
Variations (Clause 13). Under Clause 25.3 of JCT80, the Contractor is entitled to an EOT as a
result of a Relevant Event, which by definition under Sub-Clause 25.4, includes dealing with an
Architects instruction under Sub-Clauses 13.2 and 13.3. Sub-Clause 13.3 addresses the
expenditure of Provisional Sums.
Following this concept, Razi, I suggest that you look at your EOT Clause, and it should allow
you to have an EOT as a result of implementing instructions issued by the
Client/Engineer/Architect. Work is ear-marked Provisional simply because the Client doesnt
know precisely what he wants to have done sometimes he doesnt even have a Specification
to relate to. Consequently, he wants to make a financial provision in the Contract Price to
ensure that there is enough money in the budget for the particular item, but normally he fails

http://www.planningplanet.com/forums/forensic-claims-analysis/412345/provisional-sum

2/5

3/27/2016

Provisional Sum | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet)

to include a time provision for the item (usually in the hope that the Contractor will offer to
consume his own float in carrying out this additional work.)
There is a school of thought that considers that it is appropriate for the Contractor to have
already made some allowance in his programme for executing Provisional Items, but this is
dependant upon the Provisional Sum being defined. SMM7, for example, makes reference to
defined and undefined Provisional Sums, and defined Provisional Sums are deemed to
have their programming requirements already included in the Contract Schedule. Execution of
an undefined Provisional Sum will allow an EOT to be claimed.
If you do not have such clarification as SMM7 in your Contract, then I am afraid that we may
be back to the how long is a piece of string? argument! My advice would be that if the extent
of additional work arising from a Provisional Sum is substantial, then the Contractor should be
entitled to an EOT even where the Provisional Sum is not exceeded, since there would be no
other criteria in the Contract documentation for the Contractor to gauge the nature and extent
of work that was to be carried out, and he is, after all, carrying out a formal instruction.
The crux of the matter, however, really also relates to WHEN the instruction in regard to the
Provisional Sum was issued. It may be impossible to carry out the additional work without it
impacting the CP, due to the specialist nature of the work, or long lead times etc.. In such a
case I would certainly pursue the right to claim an EOT.
With regard to your second point about Declaration, I have come across this a few times in
regard to Options, in which the Client has the option to have a part of the Works increased
(or decreased) during the engineering phase for technical reasons. These options which the
Client may or may not use normally have a sell-by date; in other words, the Client only has a
limited time in which he can exercise the options on offer. If he does take up the option before
the sell-by date, then usually the Contractor is not entitled to an EOT, but if the Client calls
for the option at a later date, then the Contractor is usually entitled to an EOT.
I hope this helps.
Cheers,
Stuart
Top

Login or register to post comments


#4

Sat, 2004-10-23 07:30

Razi Khan

Thanks Andrew for your precise interpration and thanks to Shazad also for further reinforcing
your response.

Offline
Joined: 17 Jun 2004
Posts: 74
Groups: Building
Works

http://www.planningplanet.com/forums/forensic-claims-analysis/412345/provisional-sum

3/5

3/27/2016

Provisional Sum | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet)

Top

Login or register to post comments


#5

Sat, 2004-10-23 05:19

Andrew Ng

Thats what I said essentially, no claim unless under exceptionally onerous circumstances...

Offline
Joined: 3 Jul 2004
Posts: 52
Groups: Acumen,
GPC Australia, Mining
Works, Pending Guild
Members

Top

Login or register to post comments


#6

Sat, 2004-10-23 04:23

Shahzad
Munawar

You cannot claim any Extension of Time on the basis of Provisional Sum.Provisional sum is
entirely different from time related costs.

Offline
Joined: 2 Jul 2003
Posts: 551
Groups: GPC United
Kingdom

http://www.planningplanet.com/forums/forensic-claims-analysis/412345/provisional-sum

4/5

3/27/2016

Provisional Sum | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet)

Top

Login or register to post comments


#7

Fri, 2004-10-22 20:46

Andrew Ng
Offline
Joined: 3 Jul 2004
Posts: 52
Groups: Acumen,
GPC Australia, Mining
Works, Pending Guild
Members

Dear Razi,
a) as a general rule so far as my past experience with JCT and FIDIC (Redbook) type clauses,
there is no possiblity of you claiming for any time extension on the basis of partial or whole
expenditure of the Prov Sum. Of course if the scope described or sum provided can be proven
as grossly under provided, and the additional time required for the increased scope can be
proven to have impacted or overextended any activities on the critical path, I reckon that a fair
Contract Administrator would not disregard any well presented application.
b) I have not come across any such "declaration" in the past, but if they possess the common
attributes of provisional or prime cost(PC) sums for which the scope and value of each
declaration are described in sufficient details and accuracy, and for which the contractor is
reimbursed a percentage of the sum/s as his "profits and attendance", I am inclined to guess
that the EOT entitlement would as per case a) above.

Top

Login or register to post comments

Website Development by Hunt Data Solutions and Vit-al Interactive. CMS: Drupal THEME: Acquia Marina

http://www.planningplanet.com/forums/forensic-claims-analysis/412345/provisional-sum

5/5