Does original contract provisional sums include builder margin? How does it works out in real situation?
Say Tender Provisional Sum for Kitchen Joinery is set at $5000.
Refund
Say builder actual cost is $3000 (material & labour). To calculate the refund, which way is right?
R = 5000 - (3000 + 3000x10%[margin] = $1700
or R = (4545[taken 10% margin out]-3000)+10% margin on top = $1700
or R = (5000-3000)+ 0%margin on top = $2000
Extra
Say builder actual cost is $6000. To calculate the extra, which way is right?
E = (6000 + 6000*10%[margin]) - 5000 = $1600
or E = (6000 - 4545[taken 10% margin out]) +10% margin on top = $1600
or E = (6000 - 5000) + 10% margin on top = $1100
Provisional Sums - Refund & Extra Charge
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Whatever maximises the builder's profit.
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If you already have a contract, is the inspection cost stated in there? If not they would be forced to issue you a variation which you could of course object to.