What does provisional sum mean?
A provisional sum is an amount of money included in the contract sum to cover work or materials, or both, the extent of which cannot be specifically detailed when entering a contract. Typically, builders will include a PS for sitework costs.
How does provisional sum work?
What are Provisional Sums? A PS is a monetary allowance for works that will be carried out, but cannot be priced exactly at the time of signing the contract. They often include a combination of items, materials, labour and plant hire.
What is provisional sum and contingency sum?
Contingency sum A contingency sum is an item found within a bill of quantities (BoQ). The item refers to unforeseeable cost likely to be incurred during the contract. B : The term Provisional Sum is generally understood as a set-aside money included in contract price.
Why provisional sum is important?
A provisional sum is an allowance (or best guess), usually estimated by a cost consultant, that is inserted into tender documents for a specific element of the works that is not yet defined in enough detail for tenderers to accurately price.
How is the high-low method used?
The high-low method is used to calculate the variable and fixed cost of a product or entity with mixed costs. It considers the total dollars of the mixed costs at the highest volume of activity and the total dollars of the mixed costs at the lowest volume of activity.
What is the high-low method?
The high-low method is an accounting technique used to separate out fixed and variable costs in a limited set of data. It involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.
What is high-low method formula?
Fixed cost = Highest activity cost − (Variable cost per unit x Highest activity units) or. Fixed cost − Lowest activity cost − (Variable cost per unit x Lowest activity units) Then use all the results to calculate the high–low cost using this formula: High-low cost = Fixed cost + (Variable cost + Unit activity)
What are the high-low method?