Dilemma of the Provisional Sums!

One swift solution to clients’ last minute or undecided changes in scope of works in contract is usually covered by “Provisional Sums” by the consultants. Contractors, no matter how swindling they may be perceived, can't do much about it, as attendance, builders' works and OHP needs to be clearly identified in the Bill (BoQ), however, consultants/Engineers sometimes twist the contract in their favor. One example is shared below, which could benefit both the contractors and the consultants, to observe fairness.

This case is of a building project, a re-measurable contract, bespoke conditions of contract and method of measurements. Since, the contract was re-measurable, the overhead and profit spread was not even in order to cover some risks of quantities, missing items and some other risks.

After submission of the tender, consultant requested to provide value engineering to certain scope. Bear in mind that they were not provisional sums items, in the original submission. Contractor proposes a revised much reduced rates/amounts (for that particular scope only), along with the revised specifications and submitted for approval.

Consultant accepted the rates and the specifications for that particular section. The difference from the original sum to the revised VE sum was happily accepted due to obvious savings and similar specs. Subsequently, the same reduced VE rates/amount was instructed to be changed to "Provisional Sums". However, in the series of bill items, due to varying reduced rates, earlier margin was also reduced and needed to be adjusted elsewhere. Consultant insisted to keep all the previous gross rates/amounts as it is. Since, some of the higher margins were spread on those items which now became provisional sums, contractor lost the margins for those items which remains unchanged.

In a competitive market, sometimes contractor agrees to bear such losses in order to keep himself in business. Clients and Consultants should also be fair enough to understand the effects of such changes, so that no party loses in the end.

Hope this would be beneficial for both parties and will endeavor for ethics and fairness to prevail, which I know many do, already.