What are provisional sums and prime cost allowances, and how do they impact budget?

Both are allowances in a contract for things that are not selected or priced at signing. Consumer Affairs Victoria describes a prime cost item as a fitting included in the contract where the owner has not selected the actual item or the price is not known at signing, for example a basin. A provisional sum is an allowance for work or a service that cannot be priced at signing. If the actual cost is higher than the allowance, the contract price generally increases, and a margin may be added, depending on the contract. If it is lower, the difference is generally deducted. In Victoria the contract must list each item with a cost estimate breakdown, and the builder must give you invoices showing actual costs. Other states differ. Allowances that are set too low are a common cause of budget blowouts, so ask for realistic allowances, or specify and price items before signing.

In MyBuildHub: treat each allowance as a budget line marked as an estimate, then replace it with the actual cost when you choose the item, so your forecast shows the real position.

Check yourself: Consumer Affairs Victoria, QBCC, your state fair trading body, and a lawyer.

This is general information only. It is not legal advice, and MyBuildHub is not a law firm. Laws differ by state and change over time. Speak to a lawyer or your state regulator about your situation before you sign or act.