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Provisional sum

4 replies [Last post]
Tue, 2012-03-13 05:02
Sankar Vijayan
User offline. Last seen 3 years 29 weeks ago. Offline
Joined: 21 Sep 2010
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Dear All,

How to minimise the risk of Provisional sum in contract after the award of LOI.

MArgin for PS  is fixed at the time od award of LOI.We know that later on this items wont come & we didnt get that margin

at the end of project. Is there any provision to minimise this risk?

Regards

SVN 

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Replies

Tue, 2012-03-13 11:07
#1
Mike Testro
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Joined: 14 Dec 2005
Posts: 4418
Groups: Building Information Modelling, Content Moderators, GPCCAR Editors

Hi Sankar

Once a Provisional Sum has been instructed the amount of the PS is deducted and the cost of following the instruction is paid plus a reasonable mark up for profit and overheads.

You are not obliged to supply material at base cost - you can even charge for unloading and storage.

If they refuse to pay you then make a formal claim and refuse to order any more items until settled.

Best regards

Mike Testro

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Tue, 2012-03-13 07:11
#2
Sankar Vijayan
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Joined: 21 Sep 2010
Posts: 58
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Sir,

Deletion of Prime cost is a compensation event or not?

 

Regards

SVN

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Tue, 2012-03-13 05:46
#3
Sankar Vijayan
User offline. Last seen 3 years 29 weeks ago. Offline
Joined: 21 Sep 2010
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Dear Sir,

This PS items are mainly finishing free issue items .Later they will tell us to procure the material with a basic rate

so that we wont get any margin. Contract is still not finilised .is there any strong arguments we can put forward ?

This items are a part of program.

 

Thanks & Regard

SVN

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Tue, 2012-03-13 05:16
#4
Mike Testro
User offline. Last seen 5 weeks 4 days ago. Offline
Joined: 14 Dec 2005
Posts: 4418
Groups: Building Information Modelling, Content Moderators, GPCCAR Editors

Hi Sankar

There is a difference between Prime Cost PC and Provisional Sums PS.

PC sums cover work that will be executed under the contract and therefore will attract a margin in the tender.

PS are an optional item for the employer to take up if he wishes. There is usually no margin in the tender price and if there is then there is no recovery if the PS is not awarded.

A scope of PS has to be very well defined in the contract if it is to be in the contract programme.

In the UK there are two classes of PS - Defined and Undefined and only Defined get to be in the programme.

Best regards

Mike T.

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