What Are Provisional Sums in Building Contracts?

They're the biggest wildcard in your builder's quote — and most homeowners don't see them coming

What is a Provisional Sum?

A provisional sum is an estimate your builder includes for work where the full scope isn't known yet. Unlike prime cost items (which cover supply of products you haven't chosen), provisional sums cover both supply and labour for work that depends on conditions discovered during the build.

Common provisional sum items include:

Site costs and excavation
Soil testing and engineering
Drainage and stormwater
Retaining walls
Rock removal
Landscaping

The builder is essentially saying: "We think this will cost around this much, but we won't know for sure until we start."

Why Provisional Sums Blow Out Budgets

Provisional sums are the single biggest source of cost overruns in Australian residential builds.

The estimate is often based on best-case assumptions — good soil, easy access, no rock, minimal drainage. In reality, conditions are rarely best-case.

That means:

The actual cost is almost always higher than the provisional sum
You pay the difference as a variation
There's no competitive pressure — you're already locked into the contract

A $15,000 site costs allowance can easily become $30,000–$40,000 once excavation begins and real conditions are discovered. That's a variation you didn't budget for.

Where People Get Caught

We see the same patterns in builder quotes repeatedly:

Vague wording — "Site costs provisional" with no breakdown of what's included
No cap or limit — nothing to stop costs escalating indefinitely
Optimistic estimates — allowances based on ideal conditions that rarely exist
Multiple items bundled — excavation, drainage, and retaining walls in one line item
No soil report referenced — the estimate isn't based on actual site data

This is part of a broader issue where important items are either vague or missing entirely from builder quotes.

Think your provisional sums might be underquoted?

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Also worth reading: Prime Cost Items Explained →

What to Check Before Signing

Go through every provisional sum in your quote and ask:

What exactly is included in this provisional sum?
What assumptions has the builder made (soil type, access, slope)?
Has a soil or engineering report been done?
Is there a cap on how much the provisional sum can increase?
What happens if the actual cost is less — do I get a credit?
What's the builder's margin on any overrun?

If the builder can't break down what's in the provisional sum, that's a red flag.

Example: How a $15,000 Allowance Becomes $38,000

Your quote includes:

Site costs (provisional sum): $15,000

What actually happens:

Soil test reveals reactive clay — need deeper footings: +$8,000
Rock found during excavation — removal required: +$6,000
Drainage doesn't meet council requirements — redesign: +$5,000
Builder margin on variations (20%): +$3,800

Final cost: $37,800

That's $22,800 more than the quoted amount — and every dollar is a variation you're contractually obligated to pay.

How to Protect Yourself

You can't eliminate provisional sums — some costs genuinely aren't known upfront. But you can reduce the uncertainty.

Before signing:

Get a soil and engineering report done before signing the contract
Ask the builder to convert provisional sums to fixed prices where possible
Request a detailed breakdown of every provisional sum
Negotiate a cap on total provisional sum overruns
Understand your state's building legislation around provisional sums

The more you know before you sign, the less you'll pay after.

How BuildWhiz Helps

BuildWhiz scans your builder quote and identifies:

Provisional sums with unrealistic allowances
Missing breakdowns and vague wording
Items likely to trigger costly variations

You'll get a clear breakdown of what to question before signing — so you're not caught out when excavation starts.

Frequently Asked Questions

What's the difference between a provisional sum and a prime cost item?

A provisional sum covers both supply and labour for work where the scope is uncertain (like site costs). A prime cost item covers supply only for products you haven't selected yet (like taps or tiles).

Can a builder increase a provisional sum after signing?

The provisional sum itself doesn't change, but if actual costs exceed the estimate, you pay the difference as a variation. This is why it's important to understand what's included.

Are provisional sums required by law?

In most Australian states, builders are required to provide provisional sums in good faith — meaning the estimate should be reasonable based on available information. Check your state's building legislation.

Should I get a soil test before signing?

Yes. A soil and engineering report before signing can convert the biggest provisional sum (site costs) into a more accurate figure, significantly reducing your risk.

Don't let provisional sums surprise you after you've signed.