Construction Law/Fixed sum and provisional sum
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,
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.
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