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Understanding your quote: prime cost and provisional sum

So you’re building your dream home, finally knocking down the leaky old lean-to and extending, or giving the kitchen an entertainer’s makeover.

You’ve done your homework, got in touch with builders you’ve heard good things about and now you’re sitting in front of a pile of quotes and….. it’s utterly confusing.

There are terms you’ve never heard of. The figures seem to differ wildly between the quotes. You’re stuck.

You’re not alone. Quotes, especially if it’s your first time working with a builder, can be a minefield. It’s one of the reasons we prefer to sit down face-to-face when we have a quote ready. Work through all the questions straight up, together.

Two terms that cause plenty of confusion are prime cost and provisional sum

 

Prime cost

When a builder doesn’t know the exact item a client wants we’re required by law to allow for it at or above the lowest amount it could reasonably cost. Labour is covered elsewhere.

This is a prime cost. It’s essentially an allowance in the quote for something we know you want, but you haven’t decided exactly which one (or ones) you want. A good example is taps or door furniture.

The thing to remember with a prime cost is that it’s not an exact price. It’s an estimate. So the final cost could vary up or down.

Let’s say the builder, without knowing exactly what you want, allows for door handles at a unit price of $15 and includes this in the quote as a prime cost.

If you select door handles for $20, the final cost will be adjusted and you’ll be charged the difference. If you choose door handles for $14 you’ll be refunded.

Your builder will be required to show receipts or other evidence of the actual cost.

 

Provisional sum

A provisional sum is used when a builder, even with all the information, can’t be sure of an exact cost. A good example is for site excavation.

A builder is required by law to obtain a soil report and foundation data and to give you a price based on the findings.

If that cost is listed as a provisional sum and something unforseen occurs, like uncovering large rocks or tree trunks, you’ll be charged for a the extra work required. Once again, if the final cost is less than the provisional sum you’ll only pay that amount.

A provisional sum might also be used for something like a kitchen. Make sure you look out for this because if the amount allowed doesn’t meet your needs (i.e. you choose more expensive cabinets or appliances) you’ll need to pay the difference.

 

What should I do?

Make sure you’re comparing apples with apples

Beware of quotes that appear to be lower but include prime costs and provisional sums. The final cost may be substantially higher. Prime costs and provisional sums should be clearly identified in any quote.

 

Minimise the need for prime cost and provisional sums

Do your research and be clear as clear as possible about what you want. The more information the fewer fluctuations. Give your builder as many details as you can on building materials, appliances, fittings, make, model, colour, style, etc.

 

Ask questions

If you see a provisional sum or prime cost in your quote, ask your builder what has been allowed for and whether they think that will be enough to deliver the outcome you want. Don’t see any? Ask your builder whether your quote includes them just to be sure.

 

Let’s talk

If you’re planning to work with us, or perhaps you already are, we’d really encourage you to come in and meet with us to discuss your quote.

There’s no pressure to sign a contract. It’s just a great chance for us to break down your quote, answer any questions, get to know more about you and even suggest cost saving measures if you need them.

Contact us to arrange a time on 03 5472 4250

For more information about building contracts visit consumer affairs  https://www.consumer.vic.gov.au/housing/building-and-renovating/checklists/building-contracts