There are 3 terms that are in almost every landscaping contract of any size. And we can bet that almost nobody will ever explain them to you before they ask you to sign the contract. Provisional sums. Prime costs. Variations. All three of them sound like small details that belong in the fine print. But the reality is, these 3 items will ultimately decide whether your final invoice comes anywhere near the number you had in your head, or ends up being well above it.
Here’s a simple explanation of what these items actually means. Plus how they can lead to variations of costs in your contract. (The term ‘variation’ is also defined). In short, the next few paragraphs are what you really need to understand before you sign any landscaping, or even building, contract.
When reading these, keep in mind that your contract will be drawn up based on your approved Master Plan. This is a very detailed plan containing all the specifications for your garden, such as types of plants, hardscape items, pool, decking, outdoor kitchen, etc
All of these items will have been discussed and approved with you before preparing the contract but some of the items might not yet be fully finalised. These are what Prime Costs and Provisional Sums actually are.
What is a Prime Cost item?
A Prime Cost item, often written as PC in the contract, is an allowance for something that you haven’t chosen yet, or whose exact price isn’t known at the time of signing. It generally applies to a specific product, fixture or fitting, the item itself, but not the labour to install it.
Say you want a large feature tree planted as the centrepiece of your new garden, but you haven’t picked the species yet. Your landscaper can’t quote an exact figure for something that you haven’t yet made a final selection on. So they include a Prime Cost allowance instead, based on a reasonable estimate. If that allowance is $2,500 and the tree you eventually fall in love with actually costs $3,250, you’re invoiced the real amount once it’s known. The labour to plant it, which was never in question, stays the same.
What is a Provisional Sum?
A Provisional Sum, often written as PS, works a little differently. It’s an estimate for a piece of work where the scope or cost genuinely can’t be pinned down yet, even after reasonable enquiries have been made, rather than a product you simply haven’t picked.
A common example is a front fence with an intercom running to the house. The installer hasn’t confirmed which model intercom yet, so the contract includes a Provisional Sum, say $1,500, as a placeholder. Once the exact intercom is chosen and it comes in at $1,670, a variation is raised for the $170 difference.
There is a difference between the Prime Cost and Provisional Sum. A Prime Cost is just the material cost whereas a Provisional Sum will include both materials and labour.
When either of these costs have to be varied from the amount allowed for them in the contract you have what is known as a variation.
How these costs leads to a variation
Both Prime Cost items and Provisional Sums exist only because a genuine final decision on an item hasn’t been made yet, not because anyone is trying to hide something. The variation simply reconciles the allowance in the contract against the real, final cost.
If the actual cost of the item in question comes in higher than the allowance, you’re invoiced the difference. If it comes in lower, then you should receive a credit. And if something changes altogether, an item gets added, removed, or the scope shifts mid-project, that’s also handled as a variation. All variations should be agreed and documented before the extra work proceeds, not billed as a surprise afterwards.
Common items that may need to be adjusted in a contract include things such as soil or mulch. We estimate the amount required at the time of creating the contract but the final amount needed on the job might have to be adjusted upwards or downwards. The amount of time a bobcat operator or plumber is required for a particular job is also usually estimated based on hourly rates, but this can go longer than anticipated.
What to know before you get to the contractual stage
It’s important you understand what these things are before you sign anything with Prime Cost items or Provisional Sums in it.
In Victoria, a domestic building contract requires these to be spelt out in writing, as specific, itemised allowances, not all buried together as a single vague lump sum. If you can’t see clearly what each allowance covers and roughly how it was arrived at, ask.
Is a contract with a lot of Prime Costs & Provisional Sums a worry?
A quote with a reasonable number of PC and PS items isn’t a red flag on its own. Given the vast amounts of individual items that can be listed on a major landscaping contract, they are quite common.
They exist just an honest reflection of decisions you haven’t made yet – a tree you haven’t chosen, a fitting you haven’t picked.
What to do before signing a landscaping contract
Before you sign a landscaping contract, always ask what each allowance is actually based on. You need to know whether it reflects current market pricing for the quality you expect, or it’s just the cheapest version of the item available.
You must always ask how variations will be raised by the contractor and if they will have to be agreed with you, ideally in writing, before the extra work goes ahead. You don’t want to be hit with unexpected bills after the work is already done. This is an unacceptable form of behaviour because you can’t reject the work after it’s been completed.
Why this matters more than it seems
None of this seems complicated now it’s been explained to you. Which is exactly the point. A contract full of unexplained PC and PS line items can look intimidating. But it’s this gap in understanding wheretrust in a project is mostly like to either build or break down.
Understood properly, Prime Costs & Provisional Sums are simply an honest way of pricing the things that can’t be pinned down on day one. Misunderstood, or left unexplained, they’re why budgets drift silently and disagreements start
