These are the distinctions used in RICS's NRM 2 measurement framework. [1]
Provisional sums: what remains unknown?
Ask for a description of the work, the assumptions supporting the allowance and the information needed to replace it with a price. In NRM 2, defined provisional sums include information about the nature, extent and constraints of the work; an undefined sum does not provide the same basis for planning and pricing. [1]
For your own comparison schedule, record the unanswered question beside each allowance. Is a survey needed, is the design unfinished, or has the client not selected the product? Give that decision or investigation an owner and a target point in the programme. This applies the risk-identification approach described by RICS. [2]
Prime cost sums: check what is excluded
Under NRM 2, a prime cost sum is a supply-only allowance for materials or goods whose precise quality has not been settled. Installation, ancillary materials and the relevant additions are not automatically included in that allowance. Domestic quotations may use the label less precisely, so ask for the actual definition in your agreement. [1]
Request a written answer to three questions: what can be purchased within the allowance, what additional work is priced elsewhere, and how the difference is calculated when you choose the final item? This prevents a product budget from being read as the installed cost of an entire room.
How the allowance becomes expenditure
Before the work or order is authorised, obtain the proposed price and identify the original allowance being replaced. The change record should distinguish the new amount from any associated installation, programme or other contractual adjustment. RICS's cost-reporting and final-account guidance treats the expenditure of allowances as a reconciliation exercise, not simply an unexplained extra. [3] [4]
Do not assume an allowance is a guaranteed ceiling. Equally, do not accept the full allowance being retained and the replacement price added again without a contractual explanation. Ask the person assessing the account to show the adjustment clearly. [4]
Compare unresolved risk as well as totals
Ask for unresolved work to be defined and priced before committing wherever possible. In your comparison, keep each allowance visible and ask which risks remain after the proposed price is accepted. Make a separate decision about your own reserve instead of treating the contractor’s allowances as discretionary spending money.
Keep a live allowance schedule with the decision needed, person responsible, proposed replacement price and your approval record. Review unresolved entries before placing the next major order.