Feb 08, 2020 9:30 am
I'm wondering how do allowances for provisional sums work? I have two that have been included in my final quote...
1. Allowance for H1 soil test. Inclusion of 500mm edge beams to the waffle pod slab in lieu of 300mm as reqd to meet code = $2500
2. Allowance towards 6 star compliance (vic). Final 6 star requirements can only be determined once the home is sited on the block and final working drawings are completed. Final material requirements and costs may vary depending on this rating. = $2000
My questions are:
1. The soil report came back at H1 which is when the PS 1 was added in. I have since had the slab laid and received the base stage invoice, the cost of which was the same as what was in the contract stage payments breakdown. So I'm presuming the PS for the edge beams is ok and I'm not getting an additional variation for this (greater than the $2500 in the PS). I did receive a variation of $1200 for additional site cut as the fall was more than the 300mm allowed for in the builders standard inclusions.
2. My NatHERS energy report came back prior to the build starting as 7.5 stars. I'm presuming then that the PS for 2 above will be credited back at some stage as I can't see it dropping to below a 6 star. What stage is that credited back at?
Re: How do Provisional Sums work?2
Feb 10, 2020 1:06 pm
General points about Provisional Sums
1 Provisional sum is your money in the contract as a contingency should it arise
2 or alternatively a reasonable allowance for work that is necessary but that at the time of contract it the cost could not be determined
Provisional sum should be excluded from contract to arrive at adjusted contract sum subject of progress claims.
Unfortunately industry contracts are in my view dishonest because they make no provision for adjusted contract sum.
So the builder claims PS in progress claims even though none of the work may be carried out. One of my clients had 80K of 100k PS claimed by the builder in progress claims even though no work has been carried out, then went broke.
To finish the story, ps should not be claimed unless there is a reason for the expenditure. If claimed then there must be proof of cost for adjustment.
Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog
Sign in or Join to reply to this Topic
building-expertProvisional Allowance RefundProvisional Allowance Refund
I don't condone dishonesty even if it is against your bank. You will be asking your builder to act dishonestly in your contract with the bank and then expect him to be…
SaveH2OBuilder's margin & GST on provisional itemsBuilder's margin & GST on provisional items
This is just another way some builders crank up the system. The builder's profit margin is the difference between the cost price and the sell price + the difference for…