/4 min read/Updated
How to Read a Cost Plan
In short
How to read a cost plan properly, which means reading the assumptions before the total. The exclusions list tells you what the number is not. Provisional sums stand for work not yet designed; PC sums for items not yet chosen, and a PC sum set unrealistically low is the commonest way a tender is made to look cheaper than it is. Contingency is a probabilistic allowance for genuine unknowns, not spare money for upgrades. Includes the questions to ask of any plan, and how to compare two.
In this article
Topics
- Cost
- Process
Exclusions are the whole document
The exclusions list tells you what the number is not. Demolition, professional fees, authority submissions and long-lead items are the usual candidates, and any of them can move a total materially. The Hidden Costs of Building puts figures on each.
Read it before the total, and read it twice. A plan that excludes the interior fit-out and the landscape is not cheaper than one that includes them; it is a different scope with a smaller number.
Two kinds of placeholder
A cost plan written before a house is fully designed carries placeholders, and there are two kinds. They look alike in a table and mean different things.
| Provisional sum | PC (prime cost) sum | |
|---|---|---|
| Stands for | Work not yet designed or defined | An item not yet chosen, to be supplied by a specialist or selected by the client |
| Typical examples | Ground works below the house, a basement's earth retaining before the soil is known | Sanitaryware, tiles and stone, kitchen appliances, ironmongery, light fittings |
| What it tells you | The design is not resolved there | The selection has not been made there |
| How it settles | Re-measured once the work is designed or done | Adjusted to the actual price of what you choose |
A plan with many large provisional sums is not a cost plan; it is an estimate with a table. The work they stand for still has to be designed, and until it is, the total is a hope.
The low PC sum
PC sums are where cheap tenders are made. A contractor who carries S$20,000 for sanitaryware in a house whose owner will choose S$45,000 of it has not saved anyone S$25,000. They have moved it: the difference comes back as an adjustment once the selection is made, often with a margin on top, and long after the contract was signed on the lower number.
The example is illustrative, but the pattern is not. When one tender is noticeably lower than the others, the PC sums are the first place to look. Set them against what you actually intend to buy — a showroom visit and a rough selection is enough — and the gap between tenders often closes.
Contingency is not spare money
It is a probabilistic allowance for things that are genuinely unknown, most of which live underground. Spending it on specification upgrades in month three is how projects end up funding their own surprises.
As a guide, our own estimating tool carries 10 per cent on a rebuild and 15 on a difficult site; on an A&A it carries 15 per cent, and 20 on an old house of unknown condition, because an existing building hides more than an empty plot does.
The questions to ask of any cost plan
- What specification level is assumed — and is it written down, room by room?
- What is excluded, and who is pricing the excluded items?
- Which lines are provisional sums, and when will each be designed?
- Which lines are PC sums, and do they match what I intend to choose?
- What contingency is carried, and on what?
- Is GST included, and on which lines?
Comparing two plans
Two plans for the same house can differ by a third and both be honest, because they rest on different assumptions. Compare them line by line on the same scope, with the PC sums set to the same allowances and the exclusions priced back in, and only then compare the totals.
The discipline that makes this unnecessary is testing cost against the drawings at D2 and locking it at D4, so that by the time a plan is tendered there are few placeholders left in it. The Complete Landed Rebuild Guide shows where those stages fall.
Key takeaways
- Read the exclusions, the provisional sums and the PC sums before the total.
- A provisional sum is undesigned work; a PC sum is an unchosen item.
- A PC sum below what you will actually choose is a variation already waiting.
- Contingency covers unknowns, not upgrades.
- Compare two plans line by line on the same assumptions, never total to total.
On this site
First published in the KAPA Journal, written with KAPA Design Collective, the practice that designs and builds our residences.
Published by TMB Development at tmbdevelopment.com/journal/reading-a-cost-plan. Quoting a passage with a link back is welcome; republishing it is not — see the terms.
