Provisional Sums and PC Items: Where Fixed Prices Stop Being Fixed
The two contract mechanisms that let a fixed-price build increase, how to tell a reasonable allowance from a warning sign, and what to ask before signing.
Two terms worth understanding before you sign
A fixed-price building contract is not entirely fixed, and the two mechanisms that let it move are provisional sums and prime cost items. Both are legitimate. Both are also where an optimistic quote quietly becomes an expensive one.
Understanding the difference, and reading what yours cover, is the single most useful hour you can spend on a building contract.
Prime cost items: the thing is not chosen yet
A prime cost item is an allowance for a product that has not been selected. Tapware, tiles, appliances, door hardware, light fittings. The contract carries a supply figure, and when you choose the actual product the difference is adjusted up or down.
These are normal and generally harmless, because you control the outcome. If the allowance for tapware is modest and you want something expensive, that is your decision and you can see the cost before committing.
The trap is allowances set unrealistically low to reduce the headline contract price. An allowance that no real product meets is not an allowance, it is a deferred increase. Ask what the allowance actually buys, and go and look at what it buys before signing.
Provisional sums: the work is not fully known
A provisional sum is an allowance for work whose extent cannot be determined at contract. Site works on an unsurveyed block, rock excavation, connecting to services at an unconfirmed distance, or repairs in a renovation where the condition is hidden.
These are riskier, because you do not control the outcome. If the actual work exceeds the allowance, the contract price increases, and typically the builder's margin applies to the increase as well.
Genuine provisional sums exist because some things really cannot be known. Excavating a block that may contain rock is a fair example. A provisional sum for the entire site works package on a block that could have been surveyed and tested is not — it is an investigation the builder chose not to do.
How to read them
Count them. A contract with a handful of specific provisional sums is normal. A contract where provisional sums and prime cost items cover a large share of the value is not a fixed price in any meaningful sense.
Read what each one covers and what happens if it is exceeded. Ask what basis the allowance was calculated on — a soil test and survey, or an assumption.
Ask specifically whether a soil test has been done for your block and what site classification the footings were priced to. If the answer is that it will be confirmed later, the largest single cost in your site works is a provisional sum whether it is labelled as one or not.
Compare quotes on the provisional sums, not just the totals. A higher quote with properly investigated site costs frequently ends up cheaper than a lower one carrying broad allowances.
What good practice looks like
Do the investigation before the contract. A soil test, a survey and a council property report cost a small fraction of what they can save, and they convert most provisional sums into fixed items.
Where a provisional sum genuinely has to remain, it should be specific, realistically estimated, and clearly explained — you should understand exactly what circumstance would cause it to increase.
In Queensland, domestic building contracts over $20,000 are Level 2 contracts with a deposit capped at 5 per cent, and variations must be documented. That documentation requirement is your protection; insist on it being followed.
We complete the site investigation before quoting, which is why our contracts carry few provisional sums. Our Brisbane custom build page explains what sits behind the fixed price.