Construction Law/Provisional sum


QUESTION: Dear Florin,

We have a road project (Fidic 1987 reprinted 1992) we have provisional sum amount specifically dedicated for underground services with an amount say 100,000 AED my questions as below:

1) If the contractor needs to use the P.S (for above mentioned purpose) and agreed by the engineer does he (contractor) have to submit invoice for this unforeseen work as a variation or just invoice to fix the rates?

2) if the total work (for P.S) exceeds the 100,000 AED (the amount of P.S in the contract) in this case how we will deal with that? it will be considered as a variation and it is the employer responsibility to find budget for that or what is the status contractually?


ANSWER: Hi M.dzaie,

Welcome back!

In case of Provisional Sums, Contractor is paid at its actual Costs.

If he has to purchase something, say a car, a copy machine, etc, he is paid the amount on the related invoice and possibly, depending on Contract provision, overhead and profit. Possibly, but not mandatory.

If he has to execute some works under that Provisional Sum, Unit Rates available in the Contract shall be used.

If amount established by the Employer at the time of tender and which the Tenderers/ Contractor had to include in their offers, without changing it, is not sufficient, Employer must top that up, for Contingencies, or whatever other resources they may have.

If that amount is not consumed entirely, remaining difference stays with the Employer and they can use it in any other way they please.

Anyway, when invoicing, Contractor must provide supporting documents, bills/ invoices from suppliers or calculation of value of executed works for the respective item.

Hope that answers your query.

---------- FOLLOW-UP ----------

QUESTION: Thanks for replying,

But still I did not get the answer whether the contractor has to submit the invoice under a variation ?

and also what if the actual amount exceeds the p.s in the boq? as per questions 1&2 above.


Dear M.dzaie

Thank you for coming back.

If you speak about an invoice issued by the Contractor to the Employer, no, it should be enough to include respective amount, properly highlighted and detailed in the Monthly Statement.

If you speak of eventual invoice from suppliers to the Contractor, yes, that should be included as a supporting document.

And in respect of exceeding the amount, that has been answered in my previous message, Employer must find the additional money to cover the cost.

Hope it is clear now.

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Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

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