# Provisional sums and PC items — where a fixed-price quote isn't fixed

URL: https://www.varloch.com.au/construction/field-notes/provisional-sums-and-pc-items
By Jan Lochtenberg, published 2026-06-02
Last updated: July 2026

Two line items hide most of the cost surprises in a Sydney residential build. What they are, why they exist, and how to read them before you sign.

The most common phone call we get from a homeowner part-way through someone else's build starts the same way: *"the quote was $2.4 million, we're at $2.7 and the frame isn't up yet — how?"*

Almost every time, the answer lives in two line items the contract called **provisional sums** and **prime cost items**. They're legitimate. They're in every standard residential contract in NSW. And they're where the gap between a fixed-price quote and the actual cost of your house tends to open up.

This article is a plain-language explanation of what they are and how to read them before you sign.

## What a provisional sum actually is

A provisional sum is a place-holder figure in your contract for work the builder couldn't price exactly at quote time. The classic examples on a Sydney site:

- Excavation and rock removal, before a geotechnical report is in.
- Service connections, before the council has issued the engineering conditions.
- Stormwater and drainage, where the design depends on what's found underground.
- Underpinning to a neighbour, where the actual extent only gets nailed down once the wall is exposed.

The builder writes a sensible number against each — say, $80,000 for excavation. If the real cost comes in under, you get the difference back. If it comes in over, you pay the over-run, plus the builder's margin on the over-run.

That last clause is where the trouble starts. Most NSW residential contracts let the builder add 15-25 per cent margin on top of a provisional-sum over-run. So a $40,000 rock-removal surprise can become $48,000-$50,000 on your final account, and that's contract-compliant.

## What a PC item is

A prime cost item is a fixed allowance for a product the client hasn't selected yet. Tapware. Tiles. Appliances. Light fittings. Joinery hardware. The builder allows, say, $3,500 for kitchen tapware, and you go shopping later.

If your real selections come in at $6,200, the difference plus margin gets added to the contract. PC over-runs are usually the most predictable kind — selections almost always blow out, because the showroom price is rarely what the original allowance assumed.

## Why this happens

Builders aren't trying to deceive anyone. There are real engineering reasons these line items exist. You genuinely can't price rock removal before a geotechnical report. You genuinely can't price tiles that haven't been chosen.

The problem is that on a competitive tender, the builder under the most pricing pressure has every incentive to set those allowances as low as plausible. A $60,000 excavation allowance looks better on a quote than $100,000. The headline number wins the job. The over-run becomes a problem for month seven.

We've reviewed quotes from builders we won't name where the entire provisional-sum schedule was thirty per cent low. The job was always going to come in over. The quote just hid it.

## How to read these line items before you sign

When you're handed a tender, before you compare totals, do this:

**Add up every provisional sum.** If they total more than ten per cent of the contract sum on a straightforward site, ask why. Twenty per cent on a complex site is normal. Thirty per cent means the builder has hedged everything they could.

**Ask for the basis of each allowance.** A $90,000 excavation allowance with no geotech report behind it is a guess. A $90,000 allowance referencing the geotech and itemising rock-removal rates at $X per cubic metre is a quote. Same number, very different document.

**Check the PC item list against your tastes.** If the PC allowance for kitchen tapware is $2,800 and you've been shopping at Reece or Astra Walker, you're going to blow that line by 100-200 per cent. Better to know now than at month nine.

**Compare like with like.** When you're choosing between two quotes, two builders can hand you the same headline figure with completely different provisional-sum structures behind it. The lower headline is rarely the lower final cost. We've seen $200,000 swings between builders whose quotes were eight thousand dollars apart on paper.

## How we do it

On a Varloch tender, the provisional-sum schedule is a separate page, line-by-line, with the assumption behind each number. If we don't have the information to price something, we say so — and we tell you what would need to be true to convert it to a fixed price. Some clients want us to wait for a geotech before we sign the contract. Some are happy to carry a known unknown and accept that it might move. Either is a real conversation; both end with the client understanding the number.

The Master Builders' standard NSW residential contract — the one most builders use — caps provisional-sum margins, requires written notice of variation, and gives the client the right to inspect actual costs. A lot of homeowners don't know they have that right. You do. Use it.

## The phrase to remember

A fixed-price contract isn't a fixed-cost contract. It's a fixed-price-of-the-known-work contract, with the unknown work itemised in two columns on a different page. Read those columns. The honest builder gives you the same final account either way.