Does builders margin apply to provisional sum ?

Under HIA contract it appears that if the spend come under the allowance for a provisional sum item builders margin does not apply? i.e. 30k allowance for shutters under the provisional sum items, actual cost is 20K , does the client get charged 20K plus 20% builders margin therefore get a credit for $6k (i.e 30 k - (20k + Builder's margin ) or should be be a credit for 10K?

It seems quite clearly stated in the contract builders margin is only applied to amounts that come in over the allowance however our builder has included a margin on amounts lower then the allowance amounts.

Ahhh!

yes builders margin gets applied to PC items

Quiz your builder.
I have had a builder quote a build price with excessive pc costs only to say it dos not matter because they only charge what the pc items cost and refund the difference. When quizzed about the builders margin I was told that does not change. In effect he was lining his pockets with builders margin making out he was going to do me a favour with a refund....

The way most builders charge:

1) initial (retail) price of PC item + GST, let's say $100
2) then they charge their own margin on top, let's say 25%, so 100% turns into $125
3) then they charge their own GST on top, so the customer ends up with paying $137.5

Also, most builders never buy at retail price, most probably they will be buying with at least 10% discount to the retail price.

Your getting confused between a PC (Prime Cost) and PS (Provisional Sum), margin isn't applied to PC items only Provisional Sums. A Provision Sum isnt worked off retail pricing it's worked off the builders cost, if you have doubts that your builder isnt doing the right thing by you, you can ask to see invoices (depending on legislation in your state ) and they have to abide by that and give you evidence.

Here is an explanation of PC vs PS

https://www.mbawa.com/prime-costs-and-provisional-sums/