{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Economic research & forecasting Economics Housing outlook Tailored market research Economic reports & data Inspiring Australia's building professionals Business & digital Products & innovation Projects HOUSING Online The only place to get your industry news Media releases Member alerts Submissions See all
Business support
Business support $vuetify.icons.faArrowRight
Become an apprentice host Hire an apprentice Why host a HIA apprentice? Apprentice partner program Builder & manufacturer program Industry insurance Construction legal expenses insurance Construction works insurance Home warranty insurance Tradies & tool insurance Planning & safety solutions Building & planning services How can safety solutions help you? Independent site inspections Solutions for your business Contracts Online HIA Tradepass HIA SafeScan Advertise jobs Trusted support & guidance Contracts & compliance support Professional services Industrial relations Member savings Toyota vehicles Fuel savings Handy pay See all
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials & products Concrete, bricks & walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Falls from heights Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects COVID-19 Getting approval to build Sustainable homes See all
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer Frequently asked questions Study with us Find a course to suit you Qualification courses Learning on demand A job in the industry Get your builder's licence Continuing Professional Development (CPD) Find jobs
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Mates rates Get involved Become an award judge Join a committee Partner with us Our initiatives GreenSmart Kitchen, bathroom and design hub Get to know us Our members Our people Our partners Support for you Charitable Foundation Mental health program
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Awards program People & Business Awards GreenSmart Australian Housing Awards Awards winners Regional Award winners Australian Housing Award winners 2023 Australian Home of the Year Enter online Industry events Events in the next month Economic outlook National Conference Events calendar
HIA products
HIA products $vuetify.icons.faArrowRight
Shop @ HIA Digital Australian Standards Contracts Online Shipping & delivery Purchasing T&Cs See all Products Purchase NCC 2022 Building codes & standards Economic reports Hard copy contracts Guides & manuals
About Contact Newsroom
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Change location
{{propApi.text}} {{region}} Change location
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

Provisional sums and prime cost items – Fixed price contracts in WA

Provisional Sums and Prime Cost Items are effective contractual mechanisms to address works or items that are unable to be finalised at the time of contract signing.

When contracting for a fixed price with a client for domestic building work the builder may not know the definitive price for some items or works.  Provisional Sums (PS’s) and Prime Cost Items (PC Items) are two options that can be used to allow for undocumented selections or unquantifiable work.

What are Provisional Sums?

A PS is a monetary allowance for works that will be carried out, but cannot be priced exactly at the time of signing the contract.  They often include a combination of items, materials, labour and plant hire.  A PS is not to be used where the relevant item is for supply only.

In the HIA HBCA Lump Sum Building Contract for projects valued between $7,500 and $500,000 (the Contract), Clause 11 states that PS’s include all materials, subcontractor charges, delivery to the Site and installation, plus the Builder’s supervision, overhead and profit.  PS’s must be listed in the Schedule of Particulars at Item 10(a) and the applicable margin is listed at Item 11.

What are some examples of PS’s?

  • Site works;
  • services connections;
  • structural elements that are not yet designed;
  • a pergola where the Owner has not decided on the construction method or size; and
  • soft landscaping where the design and selections have not been finalised.

What are Prime Cost Items?

A PC Item is an item that has not been selected at the time of signing the Contract. A PC Item includes the cost of the supply of the item only.

Under Clause 11 of the Contract, PC Items exclude the cost of delivery to site, installation, fixing, supervision, overhead and profit, which must all be included in the Contract price.  PC Items must be listed in the Schedule of Particulars at Item 10(b).

What are some examples of PC Items?

  • Kitchen appliances such as cooktops and ovens;
  • bathroom fixtures and fittings such as taps, basins and toilets;
  • door hardware; and
  • floor finishes including tiles, floor boards and carpet.

Are there any guidelines for estimating PS’s and PC Items?

The Builder should make an informed estimate of PS and PC Items based on the information available at the time of entering into the Contract. The law requires the estimate be equal to or above the lowest amount that the work or item could reasonably cost.  The cost must not be understated in the Contract and if it is the Builder may be prosecuted and fined.

For this reason it is not appropriate for Owners, financial institutions or industry organisations to be informing the PS and PC Item figures.

How do I claim for work associated with a PS or for a PC Item?

Upon completion of the work or installation of the item, or at the next progress payment notice, the Builder must provide the Owner with an itemised statement of the price for the work or the items in accordance with the provisions of the Contract.  The Contract price will be adjusted accordingly.

What if the PS or PC Item costs more or less than the allowance in the schedule?

If the actual cost of an item or work exceeds the amount listed in the schedule, in particular circumstances the Builder can claim the additional amount, plus the Builder’s margin, as a variation.  This may occur where the additional cost is the result of work required by a building surveyor, by law or where the work was genuinely unforeseeable at the time the Contract was signed.

If the final value of the work associated with the PS or PC Item is valued less than what was estimated, the Builder should credit to the Owner the difference between the actual cost of the work/item and the allowance.

When does a PS become a variation?

The nature of a PS means the description is usually very broad.  This gives the parties the ability to include a range of work under the PS without the need for a variation.  Unlike a PC Item, where there is a change to the scope of work there is no need to do a variation for a PS.

Example: The Contract contains a PS for ‘the supply and installation of a kitchen cooktop’.

If the Owner selects a gas cooktop (which includes the laying of gas lines and certification of gas installation), then all the costs are calculated as a PS and if there is a positive difference in the actual cost price over the allowance, then the Builder’s margin is added to that difference.

When does a PC Item become a variation?

Changing a specification to a new specification is not a PC Item adjustment, it is a variation.

Example: The Owner decides to change the PC Item described as an ‘electric cooktop’ to a ‘gas cooktop’, which requires gas installation and certification.

This is no longer something that can be calculated as a PC Item and becomes a variation.  The calculation shall include the price of the new cooktop plus any installation costs, less the PC allowance.

Example: The contract has a PC Item for tiles with standard laying.

The Owner decides to purchase different tiles from the specification, which have different laying and bonding requirements.  The actual tile price may be calculated as a PC Item adjustment, but a variation is also required to account for the change in the price of installation.

Example: The Owner makes an ‘upgrade selection’ from the standard kitchen sink that is covered by a PC Item. 

As the item remains within the general specification, there is grounds for a variation to cover the additional cost, plus the Builder’s margin on the difference.

Do I have to provide my invoices if the Owner asks?

There is no contractual or statutory requirement for a Builder to provide an Owner with a copy of its invoices.  However, if the Builder chooses to decline such a request, this may be perceived poorly by the Owner and may impact upon the ongoing relationship.

Can a PS or PC item be removed from the Contract?

If the parties agree to remove a PS or PC Item from the Contract, the Builder must ensure that the removal is treated as a variation and shall follow the variation procedure under Clause 12 of the Contract.

To find out more, contact HIA's Workplace Services team

Email us

Share with your network:
More articles on:
{{ tag.label }} {{ tag.label }} $vuetify.icons.faTimes
Find the latest expert advice, guides and much more!

Managing your business


Can’t find what you need, check out other resources that might be closer to the mark.

Explore resources

Become a HIA member today

Join Australia’s largest residential building association to gain access to a huge range of industry products and business services. We can help you manage, operate and grow your business.

WA Addenda to Specification - Form 12

This addenda is sold separately from the WA Specification for Brick or Framed Construction document. These two items make up a set, although some builders have the HIA specification only and add their own addenda. The standard spe...

WA Cost Plus Contract - Form 13D (Pack of 2)

This contract is used for residential constructions works on a cost plus basis, not a lump sum ‘fixed price’. Costs are totalled and a percentage or fixed sum added for administration, supervision and profit. It allows for project...

WA Claim for Extension of Time - Form 5 (Pad of 30)

Builders wanting an extension of time for completing work will need this WA Claim for Extension of Time pad, which includes 30 sheets. This product complies with Western Australian legislation as the builder must advise the client...

WA HBCA Lump Sum Contract - Form 16K (Pack of 2)

The WA HBCA Lump Sum Contract – Form 16J contract (pack of two) is suitable for work over $7500 and less than $500,000, which requires a written, signed contract to comply with provisions of the Home Building Contracts Act 1991. A...

WA Practical Completion Certificate - Form 14 (Pad of 30)

The Western Australian Certificate of Practical Completion (pad of 30) enables builders to list work that may be required following a joint pre-handover inspection by the owner and builder. This is a hard copy version of the docum...

WA Job Quotation - Form 9 (Pad of 25)

The Western Australian Job Quotation Form (pad of 25) is suitable for sub-contractors to list their conditions. It's carbonised and individually numbered and dated. It's suitable as a contract for works under $7500.

WA Alterations & Additions Contract - Form 38E (Pack of 2)

The WA Alterations & Additions Contract – Form 38E (pack of two) is designed specifically for use on alterations, additions and renovations over $7500 and less than $500,000 and complies with the Home Building Contracts Act (HBCA)...

WA Pre-Fabricated Homes Contract - Form 45C (Pack of 2)

The WA Pre-fabricated Homes Contract – Form 45C (pack of two) has been designed specifically for use with modular or transportable homes.

WA Specification Brick & Framed Construction - Form 7 (Pack of 2)

The WA Specification for Brick or Framed Construction document (pack of two) provides a detailed description of quality of materials or workmanship, working drawings, details and other contract documents, to achieve an accurate co...

WA Variation to Contract - Form 1 (Pad of 30)

The WA Variation to Contract – Form 1 details changes or variations to works requiring an update to the contract between builder and owner. It can also be used for variations between builder and sub-contractor. This is a hard cop...

WA Small Works Contract - Form 10A (Pad of 25)

The WA Small Works contract (pad of 25 and in duplicate) has been designed specifically for projects $7500 in value or less (where the Home Building Contracts Act 1991 does not apply). This contract is simple to use, carbonated an...