June 2026

If you’re building a new home, you’ll almost certainly see the terms Prime Cost (PC) and Provisional Sum (PS) in your builder’s quote.

They’re often misunderstood — and they’re one of the biggest reasons why build costs can change during construction.

Understanding the difference is critical if you want to:

• Compare quotes properly

• Avoid budget blowouts

• Know what you’re actually paying for

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What is a Prime Cost (PC)?

A Prime Cost (PC) is an allowance for an item that hasn’t been selected yet.

It usually covers supply only (not installation).

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Common PC items include:

• Kitchen appliances

• Bathroom fixtures (toilets, taps, vanities)

• Tiles and flooring

• Lighting fittings

Example:

Your builder includes:

Kitchen appliances – PC allowance: $15,000

If you later choose appliances worth:

• $15,000 → no change

• $20,000 → you pay the extra $5,000

• $12,000 → you save $3,000

Key Point:

PC sums are placeholders, not fixed costs.

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What is a Provisional Sum (PS)?

A Provisional Sum (PS) is an estimate for work where the scope is not fully known.

It usually covers both labour and materials.

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Common PS items include:

• Earthworks and excavation

• Drainage

• Foundations (on unknown ground conditions)

• Retaining walls

Example:

Your builder includes:

Earthworks – PS: $40,000

If the actual cost ends up:

• $40,000 → no change

• $65,000 → you pay an extra $25,000

• $30,000 → you save $10,000

Key Point:

PS sums are uncertain costs, not just unselected items.

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Why This Matters

PCs and PSs are one of the biggest reasons quotes can vary — and why costs increase during a build.

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1. They Can Make Quotes Look Cheaper

A builder may:

• Use low PC allowances

• Include high PS estimates

This can reduce the upfront quote — but increase the final cost later.

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2. They Hide the Real Cost of Your Build

Two quotes may look similar — but:

• One has realistic allowances

• One is heavily reliant on PCs and PSs

The second quote carries more risk.

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3. They Transfer Risk to You

• Fixed price = builder takes risk

• PCs/PSs = homeowner takes risk

Builder Variations

Even with a fixed-price contract, PC and PS items are where variations still occur.

A variation is any change to the contract price after signing — and they are one of the most common causes of budget increases.

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How variations happen

Variations are typically triggered when:

• A PC allowance is exceeded
  → You choose higher-spec finishes than allowed

• A PS estimate is inaccurate
  → Actual work costs more than expected

• The scope changes during the build
  → Design changes, upgrades, or unforeseen issues

Example:

• Kitchen PC allowance: $20,000

• Final kitchen selection: $28,000

Variation: +$8,000

Why this matters:

• Variations are added on top of your contract price

• They often occur mid-build, when decisions are harder to change

• Multiple small variations can quickly add up

Key takeaway:

PCs and PSs don’t just affect your estimate — they directly drive variations during construction.

How to Manage PC and PS Items

1. Select as much as possible upfront

The more items you choose before signing your contract, the fewer PC and PS allowances are needed.

This reduces uncertainty and helps keep your budget predictable.

2. Make sure allowances are realistic

Allowances should reflect what you actually intend to build — not just basic or entry-level specifications.

Always ask your builder:

• How were these allowances calculated?

• Do they reflect current market pricing?

3. Understand what could change

For every PS item, ask:

• What assumptions have been made?

• What factors could increase the cost?

This helps you identify risk before construction starts.

4. Minimise Provisional Sums where possible

PS items carry the most uncertainty.

The fewer PS items in your contract, the lower your risk of cost increases.

5. Compare quotes beyond the total price

When reviewing quotes, look at:

• The number of PC items

• The size of allowances

• The number and value of PS items

A lower quote with more allowances may carry higher risk.

Key Insight

The more that is fixed upfront, the more control you have over your final build cost.

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Build Better makes it easier to understand and compare:

• Prime Cost allowances

• Provisional Sums

• What’s included (and what’s not)

So you can see the real cost of each builder — not just the headline number.

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Build Better

Compare quotes from trusted builders

www.buildbetter.co.nz

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