Generally, in a builder's tender/quote, you will see some items marked as Provisional. This means an estimate has been calculated and included. This sum is an allowance for an element of work that cannot yet be calculated accurately or fixed in price.
On a provisional item, you will pay the actual cost, whether it be more or less than the amount allowed for.
A good example is the sub concrete slab piering. A slab needs to be supported by piers below the ground to prevent movement and increase its strength.
A soil test or geotechnical report is completed on the development site. This will determine the soil type and show the depth that had to reached before solid ground was reached. There is usually about three or four holes drilled over the area where the slab will be located.
The engineer uses the data from the geotechnical report to design the slab. The slab plan will show the number of piers required to structurally support the slab and their location.
As part of the slab preparation works, the concreter will drill each pier hole and then fill it with concrete. Each hole may vary slightly or considerably depending on what is beneath the surface and how far they've needed to drill.
The cost for the concrete piering is based on the volume of concrete required to fill the holes. The builder won't know this until the concreter issues his invoice or reports this information to the builder from site.
As part of the builder's contract amount, an estimate or provisional sum is used by the builder. In Property Bloom's experience, our builder almost always over estimates the amount required. This is a good safety net technique to ensure that there are no nasty surprises and additional funding required. We love to report back to our clients that they have received a credit on this provisional amount.
It's easy to cross check so you know what the actual cost was. Just ask your builders for a copy of their concreters invoice, add the builder's margin to this and you'll be able to see the exact cost of the piering.
Most provisional allowances are around the initial site works. Once your site is cut, site works, retaining walls and slabs are laid, then the rest of the construction works are far easier for the builder to calculate and can be included as fixed costs.