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The term 'provisional sum' is generally well understood in the construction industry. It is used in construction contracts to refer either to work that may or may not be carried out at all, or to work whose content is undefined.
In either case, the parties will not attempt to price it accurately when they enter into their contract. Instead, the provisional sum is usually included within the contract price as an approximate guess. The contract normally provides expressly how it is to be dealt with. A common clause provides for the provisional sum to be omitted and an appropriate valuation of the work actually carried out to be substituted for it.
In this broud sense, the meaning of the term 'provisional sum' is generally understood by everyone, but its precise meaning and effect depends on the terms of the individual contract. Indeed, the unamended standard forms are generally quite reliable in explaining the manner in which the expenditure of any provisional sums is to be handled.
The JCT standard form of contract with quantities, for example, goes to some length to explain that provisional sums should be classified into 'defined' and 'undefined' work by reference to the rules contained within the standard method of measurement. If applied correctly, this will avoid the common argument concerning whether a contractor is entitled to an extension of time and indirect costs for carrying out work instructed against a provisional sum. If the provisional sum is for defined work, there will be no...