Fixed Price vs. Provisional Sums: What Private Clients Should Understand Before Signing a Building Contract

You've had your tender analysis back, chosen your contractor, and now there's a contract in front of you to sign. It says “Fixed Price” at the top, until you turn the page and find a schedule of provisional sums totalling several thousand pounds. So which is it: fixed, or not?

This is one of the most common points of confusion for private clients signing a building contract for the first time, and it's worth understanding properly before you sign, because it directly affects how much control you have over your final cost, and how disputes get resolved if the number moves. It's also, in our experience, where the disconnect between a homeowner's expectations and a contractor's assumptions causes more friction than almost anything else on a project.

What “Fixed Price” Actually Means

In a residential building contract, “fixed price” doesn't mean the total cost can never change under any circumstances - it means the contractor has agreed a firm price for everything that can be accurately defined at the point of signing: the specified structure, the named materials, the agreed drawings. Anything that genuinely can't be priced with confidence at that stage, because it depends on what's found once work starts, is carved out separately as a provisional sum rather than folded into a guess.

Used correctly, this is exactly what you want: a contractor who's honest about what they don't yet know, rather than one who's quietly padded their fixed price to cover every possible unknown — or worse, priced optimistically and plans to recover the difference through disputed “extras” later.

Why Provisional Sums Exist

Certain things simply can't be assessed accurately until work is physically underway: what condition the drains are in once excavated, what the ground actually consists of below the trial pit, what's found once old plaster or a suspended floor is opened up, what a utility company will charge to move a supply, or what a party wall surveyor's process will actually require.

A provisional sum is a stated allowance for exactly this kind of item — agreed in advance as part of the contract sum, but understood by both parties to be provisional rather than fixed. It isn't a loophole. It's an honest acknowledgement that some costs can't be known yet, and a mechanism for dealing with them fairly, rather than pretending they don't exist until they turn into an unpleasant surprise.

How a Provisional Sum Gets Firmed Up

Once the actual scope becomes clear — the drains are exposed, the ground is tested, the wall is opened up — the provisional sum is replaced with the real cost. In a well-drafted contract, this happens through a formal instruction, valued against rates agreed at the outset (a schedule of rates, or a quotation for the specific work), not simply invoiced after the fact.

The difference between the original allowance and the actual cost — up or down — is then added to or deducted from the contract sum as a variation. Done properly, you should know the revised figure and agree to it before the work proceeds, not discover it on your next invoice. This is precisely where private clients run into trouble without independent advice: verbally agreeing to “just get it sorted” on site, then finding a five-figure variation on the next valuation with no paper trail showing what was agreed, or at what rate.

Fixed Price, Guaranteed Maximum, or Cost-Plus?

It's worth knowing which structure you've actually signed up to, since contractors use the terms loosely. A fixed price contract fixes cost for a defined scope, with provisional sums covering the rest. A guaranteed maximum price caps the total regardless of how provisional items resolve, with the contractor absorbing anything over the cap. A cost-plus arrangement — less common for private residential work, but not unheard of — bills your actual costs plus an agreed contractor fee, with no fixed figure at all. Each shifts risk differently between you and the contractor, and it should be stated clearly in your contract rather than assumed from the word “fixed” on the cover page.

Questions to Ask Before You Sign

None of this needs to be adversarial — most contractors are used to these questions and will have straightforward answers. But getting them in writing before you sign costs you nothing, and it heads off exactly the kind of dispute that turns an exciting renovation into a stressful one. Before signing, it's worth getting clear answers to:

• What percentage of the contract sum is provisional, rather than fixed?

• What rates apply when a provisional sum is instructed — are they already agreed, or negotiated at the time?

• Who has authority to instruct provisional work, and does it need your sign-off first?

• How are variations valued, and by whom, if there's a disagreement?

• Is there any cap on how far provisional items can move the total cost?

How a Quantity Surveyor Helps

This is core QS territory: setting provisional allowances that reflect genuine risk rather than guesswork at tender stage, agreeing rates for valuing instructions before they're needed rather than after, and reviewing every instruction and variation before it's actioned — so you're approving a number, not receiving one.