Provisional Sum vs Prime Cost Sum vs Variation — What You're Actually Paying For (NZ)

sp8002
May 31
5 min read

Three words on a NZ building invoice cause more confusion than any others: provisional sum, prime cost, and variation. They are three different things with three different rules — and the difference is real dollars on your final account.

By Steve Parker · Trueworks · NZ construction contract review · 5 min

What you'll learn

What separates a provisional sum, a PC sum, and a variation
Why an allowance adjustment is not a variation — and the double-margin trap
A four-point check for these line items on your invoice

Quick answer: A provisional sum is a budgeted allowance for work that could not be fully scoped when you signed; a prime cost (PC) sum is an allowance for an item you will choose later; a variation is an actual change to the agreed scope. Provisional and PC sums are expected to be adjusted to their real cost, carrying the margin already agreed in the contract — they are not variations, and they should not pick up a second variation margin. Working out which of the three a charge actually is tells you what you genuinely owe.

Provisional sum, prime cost, variation. They get used interchangeably in conversation and on some invoices, but they are three separate mechanisms with three separate rules. Knowing which one you are looking at is the difference between a charge you owe and a charge you can question.

A provisional sum

A provisional sum is an allowance the builder includes for work that could not be fully measured or priced when you signed — classically groundworks, drainage, or piling, where the real scope only emerges once digging starts. The contract carries a number, say "$18,000 provisional for site drainage." When the work is detailed and done, that number is adjusted to the actual, substantiated cost — up or down. The adjustment is expected. It is not a variation, and it is not a sign anything went wrong.

A prime cost (PC) sum

A PC sum is an allowance for a specific item you have not selected yet — tapware, tiles, appliances, a wood-burner. You pay the actual supplied cost of whatever you choose, plus the builder's agreed handling margin. Choose above the allowance and you pay the difference; choose below and you should be credited. Again: an adjustment to an allowance, not a fresh variation.

A variation

A variation is an actual change to the agreed scope — something added, removed, or substituted relative to what the contract described. It is priced and, on residential work of $30,000 or more, notified under the contract's variation procedure. The full mechanics are in our homeowner's guide to building variations.

How each is charged — and what to check

| Line item | What it is | How it should be charged | What to check | |---|---|---|---| | Provisional sum | Allowance for not-yet-scoped work | Actual substantiated cost + the contract margin | Substantiation of actual cost; margin matches the contract, not a new one | | PC sum | Allowance for a not-yet-selected item | Actual supplied cost + agreed handling % | The handling %; that you were credited if you chose below the allowance | | Variation | Change to the agreed scope | Priced per the variation clause, with notice | Written notice (10 working days); a breakdown; the clause followed |

The double-margin trap

The most common overcharge in this area is simple. A provisional-sum or PC-sum adjustment arrives relabelled as a "variation," with a fresh variation margin stacked on top of the margin already built into the allowance. You can be charged margin once. If the same dollars carry it twice, that is the line to question first.

A four-point check before you pay

Label check — is each extra correctly described as a provisional sum, a PC sum, or a variation?
Margin check — is margin applied once, at the agreed rate?
Substantiation — are actual supplier costs shown for the provisional and PC items?
Credit check — were you credited where a PC selection came in under its allowance?

If a single allowance adjustment runs into the thousands, or several stack together, it is worth a written, clause-cited read before you pay.

Send Trueworks your contract and the line in question. You receive a written, code-cited assessment of whether it was identified, notified, and priced the way the Building Act and your contract require — a second opinion you can put straight in front of your builder. NDA available; files NZ-hosted. → Email steve@trueworks.co.nz
or start at trueworks.co.nz

Not sure a variation or charge on your build is justified?

FAQ — Provisional sums, PC sums and variations in NZ

Is a provisional sum the same as a quote? No. A quote is a price for defined work. A provisional sum is an allowance for work that could not be fully defined at signing, expected to be adjusted to the real cost later.

Can a provisional sum go down? Yes. It is adjusted to the actual cost, up or down. If the real cost comes in under the allowance, you should be credited the difference.

Do I pay margin on a PC sum? Yes — the agreed handling percentage on the actual supplied cost, applied once.

Is a provisional-sum adjustment a variation? No. It is an expected adjustment to an allowance, not a change to the agreed scope. It should not carry a separate variation margin.

My builder charged variation margin on a provisional sum — is that right? That is the double-margin trap. Margin applies once. A second margin on the same dollars is the line to question.

How Trueworks helps

Trueworks reads your contract and final account and sorts every extra into its correct category — provisional sum, PC sum, or variation — then checks the charge and the margin against what the contract actually allows. You get a written, code-cited account of what you owe and what is open to question.

About Trueworks

Trueworks is built by Steve Parker — 20 years on the analytical side of NZ construction: variation reviews, contract advisory, and AI-augmented document analysis. It is the same defensible, code-cited read a quantity surveyor would give a variation, made available to the homeowners and trades on the receiving end of one. I answer every email personally during pilot phase.

steve@trueworks.co.nz · trueworks.co.nz