Final accounts
Provisional and cost sums
Prime cost sums
The use of prime cost sums (PCSs) is less now than in the past, due to the limited adoption of the nomination process of sub-contractors and suppliers on the part of the client's team or the design team.
At the commencement of the contract, each prime cost sum (PC sum) should be identified, including allowance for profit and overheads, general attendance and other attendance relating to the PC sum.
An architect's instruction (AI) will be necessary to authorise the expenditure of the PC sum. The AI will state the name of the nominated sub-contractor (NSC) or supplier and the value of the order.
If variations occur to the NSC package, it will be necessary to make further adjustments. Nominated suppliers or sub-contractors generally issue final accounts for the package in question. Variations will need to be checked and priced in the same manner as that detailed for AIs and anticipated architect's instructions (AAIs) above. It will also be necessary to adjust for profit and to consider adjusting the 'attendance and builders' work' item. Invoices should also be checked for discounts.
Provisional sums and provisionally measured items
Provisional sums fall into 2 categories - defined and undefined. General Rule 10 of the Standard Method of Measurement for Building Works (7th edition) (SMM7) clarifies the distinction between the 2 in the following way.
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Defined |
A Provisional Sum for defined work is a sum provided for work which is not completely designed but for which the following information shall be provided: (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 work is to be fixed thereto. (c) A quantity or quantities which indicate the scope and extent of the work. (d) Any specific limitations and the like identified in Section A35.
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Undefined |
A Provisional Sum for undefined work is a sum provided for work where the information required in accordance with rule 10.3 cannot be given. |
Again, it is best practice to list these on separate sheets, as with the prime cost (PC) sum.
It is often useful to produce a schedule of every set of provisionally measured items (see Remeasures), cross-referencing these to the relevant bills of quantities (BQ) items and ensuring that there are no sums or items hidden in obscure places in the BQs, such as preliminaries.
Expenditure of the sum or item is generally via a site instruction or architect's instruction (AI). As the contract progresses, work carried out must be measured and recorded, with the resulting value included in the cost report and adjusted as necessary.
The amount included in the final account must be completed on the basis of the agreed information.