Provisional Sums vs Prime Cost vs Fixed-Price Contracts in Construction: What You Really Need to Know

When Are Provisional Sums Used? 

Builders usually include provisional sums when they cannot give a fixed cost with confidence. Some common examples include: 

• Site excavation where soil conditions are uncertain
• Rock removal
• Retaining walls that depend on final engineering
• Stormwater or drainage works where levels are unclear
• Electrical upgrades if the position of services is not confirmed 

A small number of provisional sums is normal. They exist because the builder genuinely cannot know the final cost until they are on-site. 

A large number can be a warning sign that your final price may increase more than expected. 
 

The Risk of Cost Variations 

One of the biggest risks with provisional sums is that they can force a shift in your budget. If the estimate turns out to be too low, you’ll need to pay the additional amount. This can create financial pressure, especially if you’ve already committed to a home loan limit. 

For example, if your contract includes an excavation provisional sum of $5,000 and your block requires $8,000 worth of work, you’ll be asked to pay the extra $3,000. Some people are prepared for this difference; others are not. 

This is why it’s important to look beyond the headline price when comparing builders. A quote that appears cheaper may include many provisional sums. A quote that’s slightly higher but uses a fixed price structure may be far more stable and predictable in the long run. 
 

Questions to Ask 

To protect your budget, it helps to ask clear and simple questions before signing a contract. Some of the most useful questions include: 

• Which items in my quote are fixed costs and which are provisional sums?
• What information is missing that prevents those items from being fixed?
• How often do provisional sums increase in builds like mine?
• Can I provide extra site information to reduce the number of provisional sums?
• Can any of those ‘extras’ be locked into a fixed price before I sign?  

The clearer everything is upfront, the better you’ll feel about what you’re actually going to pay. 
 

Why Some Builders Use More Provisional Sums 

Builders approach quoting differently. Some prefer to give a lower upfront figure to appear competitive and then rely on provisional sums to adjust costs later. Others take the time to investigate details before quoting so they can offer a more accurate price from the outset. 

Both methods are common, but if you want peace of mind, the fixed-price path is the safer bet. It means fewer variables and you’ll know exactly what you’re signing up for. 

This is also why comparing the prime cost and provisional sum matters when reviewing different builders. You can see which builder is offering a realistic price and which one may rely on adjustments after construction starts. 
 

How to Protect Your Budget 

If you want rock-solid price certainty, go for a builder who keeps provisional sums to a minimum and spells out exactly what’s included. Don’t be shy to ask how they came up with any provisional sums and double-check that the numbers add up. 

Complex sites often make it impossible to avoid provisional sums. It’s a good idea to incorporate a buffer into your budget if you can. Ask your lender if you can borrow a little more than the contract value to cover possible additional expenses. 

Lastly, if the prime cost allowances in your contract seem very low, watch out. You’ll probably end up paying more out of pocket later. Select finishes and options that fit those allowances, and you’ll keep your budget right where you want it. 
 

Making a Confident Decision 

Getting clear on provisional sums versus fixed prices isn’t just about definitions. It’s about making fair comparisons between builders and knowing how to dodge those surprise costs. A fixed-price contract offers stability. A contract with many provisional sums can introduce uncertainty. Once you understand what provisional sums and prime cost items really mean and how they can affect your wallet, you’re in a much stronger position to choose the right builder. 

If you want personalised guidance on provisional sum vs prime cost vs fixed price, our experienced team at Eden Brae Homes is here to help. We offer fixed pricing, which means your contract is locked in with no surprises or added charges for unforeseen site conditions.  
 
Our Buildsure Guarantee is also part of our commitment to a smooth and hassle-free journey, from your first design consultation through planning, construction, handover and into your structural warranty period. Talk to us today or visit one of our display homes to see the quality of our homes and learn how we can support you with confidence at every step.