Provisional sums in a building contract are one of the most common reasons a project finishes well above the price that was signed. They look like ordinary line items, but they are not fixed prices. They are allowances, and when the real cost comes in higher than the allowance, the difference is added to your contract, usually with the builder’s margin on top. This guide explains how provisional sums and prime cost (PC) sums work, why low allowances make a quote look cheaper than it really is, and how an independent review of the allowances protects your budget before you sign.
What provisional sums and PC sums actually are
A provisional sum is an allowance for work that cannot be priced accurately when the contract is signed, because the scope is not yet known. Excavation in unknown ground, site drainage, or landscaping that has not been designed are typical examples. The builder includes a dollar allowance, and the actual cost replaces that allowance once the work is done.
A prime cost sum, or PC sum, is narrower. It is an allowance for the supply cost of an item that has not been selected yet, such as tapware, tiles, appliances or door hardware. The labour to install the item is usually already in the contract price; the PC sum covers the item itself. If you choose a $90 per square metre tile against a $50 allowance*, the difference is payable as an adjustment.
Both mechanisms are legitimate and often unavoidable. The risk is not that they exist. The risk is where the allowances are set.
How low allowances distort a quote
Two builders pricing the same drawings can produce totals tens of thousands of dollars apart* simply by setting their allowances differently. A builder who allows $10,000 for site works where the realistic cost is $25,000* has not found a saving. They have moved $15,000* of the project cost out of the quote and into your future adjustments. On paper their tender looks sharper; in reality the money is still spent, just later, and usually with margin added when the adjustment is processed.
As of 2026, in AUD, the table below shows the kinds of gaps commonly seen between contract allowances and realistic costs on residential projects. The point is not the specific numbers, which vary with every site and specification, but the pattern: allowances are a place where a quote can be quietly thinned.
| Common allowance item | Frequently allowed* | Often realistic* |
| Site works and excavation | $10,000 to $15,000* | $20,000 to $40,000+ on sloping or reactive sites* |
| Floor and wall tiling supply (PC) | $40 to $50 per m2* | $60 to $120 per m2 for common selections* |
| Kitchen appliances (PC) | $5,000 to $8,000* | $10,000 to $20,000+ for mid-range packages* |
| Electrical fittings and lighting (PC) | $3,000 to $5,000* | $8,000 to $15,000+ with downlights and feature lighting* |
*All figures are indicative only, expressed in Australian dollars as of 2026, and vary with location, site conditions, design and selections. They should not be relied on for budgeting a specific project. An independent estimate prepared from your drawings and specification is the only reliable basis for comparing allowances.
Why the adjustments cost more than the gap
When an allowance is exceeded, most contracts entitle the builder to the actual cost plus a margin, commonly in the order of 10 to 20 per cent* depending on the contract. So a $15,000 shortfall in an allowance can become $17,000 or more* by the time it reaches your final account. Multiply that across several understated allowances and the cheapest tender on paper becomes the most expensive project in practice.
There is a timing problem as well. Allowance adjustments tend to land mid-build, when the owner has the least room to move. Finance is already approved against the contract sum, the builder is on site, and the only real options are to pay the adjustment or compromise the specification. The moment to deal with allowances is before the contract is signed, not after.
How to test the allowances before you sign
Read the schedule, not just the total
Every allowance should be listed in the contract with a dollar figure and a description of what it covers. If allowances are buried in the general conditions, or described vaguely, ask for them to be itemised. What is not written down cannot be compared.
Compare allowances against your actual selections
PC sums should reflect the products you actually intend to choose, not a nominal figure. Pricing your realistic tile, appliance and fitting selections against the allowances, before signing, converts a future surprise into a present negotiation.
Have the allowances reviewed independently
An independent estimator can measure the works, price each provisional sum against current market rates, and test the PC sums against realistic selections. Where an allowance is understated, the review quantifies the likely adjustment so it can be corrected in the contract or carried in your budget as a known risk. Professional bodies such as the Australian Institute of Quantity Surveyors (AIQS) exist in part because construction cost is easiest to control when someone without a stake in the outcome checks the numbers.
The same review also puts competing quotes on a level footing. Once every builder’s allowances are adjusted to realistic values, the true gap between tenders is often very different from the gap between the printed totals, and the decision about who to engage becomes a decision about real cost.
Order an independent review of your building contract allowances from Accent Estimating.
Frequently asked questions
What is the difference between a provisional sum and a PC sum?
A provisional sum is an allowance for work whose scope is not yet defined, covering labour and materials together. A PC sum is an allowance for the supply cost of an item not yet selected, with installation usually already priced in the contract. Both are adjusted to actual cost once the work is done or the item is chosen.
Can a builder add margin to a provisional sum adjustment?
Under most Australian standard form contracts, yes. The contract typically states the percentage applied when an allowance is exceeded. Checking that percentage before signing matters, because it applies to every shortfall across every allowance in the job.
Are low allowances a sign of a dishonest builder?
Not necessarily. Some builders genuinely price allowances lean; others simply use standard figures without checking them against the site or the owner’s likely selections. Either way the effect on the owner is the same, which is why the allowances deserve the same scrutiny as the fixed portion of the price.
How many provisional sums are normal in a residential contract?
It varies with how complete the design is. A fully documented project might carry only a handful, while a contract signed off concept drawings can carry many. The more of the contract that sits in allowances, the less fixed the price really is, and the stronger the case for testing each one before signing.
Can allowances be converted to fixed prices?
Often, yes. Where the scope can be defined or the selection made before contract signing, the allowance can be priced and fixed. An independent estimate identifies which allowances can be firmed up and what a reasonable fixed price for each looks like.