Contract sum

Revision as of 09:57, 10 January 2012

There are very many different names given to the stages of cost planning and cost control.

Cost plans are generally prepared by cost consultants (often quantity surveyors). They evolve through the life of the project, developing in detail and accuracy as more information becomes available about the nature of the design and then actual prices are provided by specialist contractors, contractors and suppliers. They range from very early initial cost appraisals through to tender pricing documents and the final account.

There are as a consequence a great number of names that can be used for key cost planning documents. On designing buildings wiki we have standardised these as follows:

• Initial cost appraisals (studies of options prepared during the feasibility study stage).
• Elemental cost plan (prepared during the project brief stage and carried through to detailed design).
• Approximate quantities cost plan (from the end of detailed design through to tender).
• Pre-tender estimate (prepared alongside tender documentation).
• Tender pricing document (strictly speaking this is not a priced document, but is part of the tender documentation issued to the contractor for pricing).
• Contract sum (agreed with the contractor during the tender period and adjusted during the construction period).
• Final account (agreed during the defects liability period).

Other than initial cost appraisals, these all relate to the construction cost of the project (rather than wider project costs that the client might incur, such as equipment costs, cost of moving staff, contracts outside of the main works and so on).

The contract sum is the price agreed with the contractor and entered into the contract. It may be subject to adjustment under the terms of the contract for example, if a variation to the works is agreed, or where provisional sums are included. When the contract sum is adjusted, this adjustment should be taken into account in the valuation of subsequent interim certificates.

On measurement contracts, the contract sum may not be known when the contract is entered into, but instead is calculated as the works progress based on some agreed method of measurement.

The contract sum should be calculated and checked very carefully as errors in the contract sum are deemed to have been accepted by both parties.

See also

• Provisional sums.
• Interim certificates.
• Variations.
• Base date.
• JCT: Deciding on the appropriate JCT contract.