You are here:

Construction Law/Fixed sum and provisional sum

Advertisement


Question
Dear Mr.Dowse,

My question is about Fixed sum and Provisioanl sum.
Can they be applied by Price Adjustment Formula?
Maintenance of Engineer's houses given in months is it fixed sum?

Thank you very much,

Aslan Sembayev

Answer
Dear Asian Sembayev,

Thank you for this question.

To begin this answer I would like to give a definition of a "fixed sum" compared with a "lump sum", as these are sometimes confused.

A fixed sum is one that is not subject to price fluctuations. A fixed sum can be constituted several component payments or a single payment. A lump sum is a single payment only but it can be subject to price fluctuations.

A provisional sum is an item or items included which are to be expended only upon the direction of the Engineer. Of itself the provisioal sum is not subject to price adjustment until costs are incurred against the item. Usually any expenditure is paid for at current prices and, therefore, price adjustment is not necessary; however where the sums expended against a provisional item are historically based, those elements should be subject to the price adjustment.  

Relating this to your query about a maintenance item, unless the contract expressly states that an item or items are to be deemed fixed (not subject to price adjustment) the item can be adjusted.



I hope that this assists you.

Kind regards,
John Dowse

Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to info@cerno.org, stating SUBSCRIBE in the subject line

Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to info@cerno.org (When e-mailing, please include “AllExperts” in the subject line.)

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

©2016 About.com. All rights reserved.