What Are Provisional Sums? A Guide for First-Time Homebuyers

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Jan 19, 2024
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Let’s delve into this crucial aspect of home construction and unravel the mysteries surrounding it.

What Are Provisional Sums? A Guide for First-Time Homebuyers

Purchasing your first home can be an exciting yet complex journey. As you embark on this adventure, you’ll likely come across the term “Provisional Sums” in your building contract. What exactly are Provisional Sums, and how does Fraemohs Homes manage them? Let’s delve into this crucial aspect of home construction and unravel the mysteries surrounding it.

What are Provisional Sums?

In the realm of construction, Provisional Sums are placeholder pricing for parts of the project where decisions are pending or where costs cannot be accurately determined at the contract’s outset. Fraemohs, handles Provisional Sums with transparency and foresight by letting you know upfront where the project may encounter such discrepancies. These sums often cover items like consent fees, earthworks and freight, allowing for flexibility in the budget based on real-time costs during the construction process.

What’s Included? Earthworks and More

Provisional Sums typically encompass elements such as earthworks—tasks that are integral to the construction process but challenging to precisely quantify initially. These are educated estimates at the time of contract signing, reflecting the best guess based on industry knowledge. Anything that cannot be precisely calculated at the contract’s start finds a place in the Provisional Sums.

Managing Material Cost Increases

One might wonder, how do we manage material cost increases over the project’s duration? The company’s proactive approach involves locking in material prices for a specified duration, often up to six months. This foresight allows for accurate budgeting, helping homeowners navigate potential price fluctuations. However, as witnessed during the challenges posed by COVID-19, instant and unexpected price increases can sometimes catch builders off guard, impacting the agreed-upon budget.

Navigating Provisional Sum & Variations

When a Provisional Sum is spent, it triggers a variation in the contract. The final cost may differ from the initial allowance, leading to adjustments in the Contract Price. Fraemohs ensures a fair and transparent process:

  • If the final cost aligns with the allowance, the homeowner pays that allowance.
  • If the final cost exceeds the allowance, additional payments are made, including the difference and Fraemohs’ margin.
  • If the final cost is less than the allowance, the homeowner pays the allowance, with a credit for the difference.


In conclusion, Provisional Sums are an integral part of the construction journey, providing flexibility and transparency. For first-time homebuyers in New Zealand, understanding how Fraemohs Homes manages Provisional Sums ensures a smoother and more informed entry into homeownership. If you have questions or concerns about Provisional Sums, don’t hesitate to reach out to Fraemohs Homes—your trusted guide in the exciting world of building your dream home.




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