Provisional Sums - Defined or Undefined?

Key words

Bills of Quantities; Defined Provisional Sum; JCT 98; JCT 05; PI Insurance; Standard Method of Measurement, 7th Edition (SMM7); Undefined Provisional Sum.

Introduction

General Rule 10.4 of the Standard Method of Measurement, 7th Edition (SMM7) states that ‘where Provisional sums are given for defined work the Contractor will be deemed to have made due allowance in programming, planning and pricing preliminaries’.

General Rule 10.6 of SMM 7 states that the Contractor is deemed to have made no such allowance for undefined work.

Therefore the categorisation of ‘defined’ or ‘undefined’ Provisional Sums has significant implications.

Defined / Undefined Provisional Sums

Defined provisional sums are sums of money intended for elements of the Works which have not been sufficiently designed but where there is certain defined information available.

The required information is specified within General Rule 10.3 of SMM 7 which requires the following details to be provided in respect of every defined provisional sum in the Bills of Quantities:

(a) The nature and construction of the work.

(b) A statement of how and where the work is fixed to the building and what other is to be fixed thereto.

(d) Any specified limitations and the like identified in Section A35 of SMM 7 (limitations imposed by the Employer e.g. access, disposal of materials found, working hours).

If the information specified in General Rule 10.3 of SMM 7 is not available the Contract Bills should describe the provisional sum as ‘undefined’.

As noted above, General Rule 10.4 of SMM7 states that ‘where Provisional sums are given for defined work the Contractor will be deemed to have made due allowance in programming, planning and pricing preliminaries’.

General Rule 10.6 states that the Contractor is deemed to have made no such allowance for undefined work.

It is not uncommon to encounter contract bills that categorise provisional sums as ‘defined’ but do not include sufficient information regarding the content of work or the conditions under which the work is to be carried out. i.e. General Rule 10.3 of SMM7 has not been satisfied.

In such cases the provisional sum cannot be construed as being ‘defined’ and this may give cause for a claim by the Contractor for delay and/or disruption, on the basis that no allowance for the work in question was allowed for within the Contractor’s tender.

In a case where a provisional sum has been incorrectly badged as being a ‘defined’ Provisional Sum rather than an ‘undefined’ Provisional Sum, clause 2.2.2.2 of JCT 98 (clause 2.14.1 of JCT 05) includes rules for correcting ‘any error in or omission of information in any item which is the subject of a provisional sum for defined work’. Such corrections are to be treated as Variations requiring Architects Instructions issued under clause 13.2 of the JCT 98 (clause 5.1 of JCT 05).

It seems that under JCT 98 (and JCT 05) the correction is not to be made by amending the status of the provisional sum from ‘defined’ to ‘undefined’. Instead, the correction is to be made ‘by correcting the description so that it does provide such information’.

When instructions have been issued under clause 13.2 of JCT 98 (clause 5.1 of JCT 05) they create the possibilities of:-

(a) an extension of time regarding the relevant event listed at clause 25.4.5.1 of JCT 98 (2.29.1 of JCT 05), and

(b) a claim for loss and expense relating to the relevant matter listed at clause 26.2.7 of JCT 98 (clause 4.24.2.3 of JCT 05).

The additional costs to flow from an incorrectly described provisional sum could therefore be substantial.

Conclusion

Incorrectly labelling provisional sums as defined may be the result of the Employer’s consultants either having a lack of understanding of the SMM7, or preparing the documents without due care and attention. However if it is knowingly done in an attempt to save time and money it should be noted that it might have the opposite effect, as outlined above.

If a consultant discovers that he has made such an error when drafting the contract documents he may be well advised to inform his insurers that this is an event that could give rise to a claim against his PI insurance by the employer.

Author: Alway Associates

Date: September 2006

Contact No.: 01992 576440

Alway Associates

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