What Is a Cost Proposal?
A cost proposal (also known as a quote) outlines the anticipated costs of your building or renovation project. It includes materials, labor, and other expenses. Some of these costs are fixed and final, while others are provisional and may change as the project progresses.
Fixed Price Costing
Fixed Price means a specific, agreed-upon amount for certain parts of the work. This price won’t change unless you alter the scope of work.
Benefits of Fixed Pricing
- Predictable and easy to budget
- No unexpected cost increases
- Preferred by banks and lenders
Example:
Your cost proposal includes $15,000 for kitchen installation. This covers all specified materials and labor. Unless you request changes, this price remains fixed.
Provisional Sum Costing
A Provisional Sum is an estimated cost for a part of the project that hasn’t been fully specified. It acts as an allowance and can be adjusted once the final details are known.
Reasons for using Provisional Sum
- For aspects of your build that can’t be measured until the work begins.
Things to Keep in Mind
- The final cost may be higher or lower than the provisional sum
- Multiple provisional sums can add up, impacting your total cost
- Experience matters—especially when estimating provisional sums
Example:
Your cost proposal includes a provisional sum of $15,000 allocated for excavation. Due to the variable nature of excavation work, such as soil conditions, underground obstructions, weather and site accessibility, this amount is subject to change. These variables are beyond your builder’s control and may affect the final cost once work is underway.
Why It Matters
Understanding these terms helps you:
- Accurately compare cost proposals between builders
- Identify which parts of your proposal are subject to change
- Avoid budget overruns caused by underestimated provisional sums
Tips for Managing Your Budget
- Ask your builder to clearly list which costs are fixed and which are provisional
- Make as many selections as possible before signing the contract
- Set aside a contingency buffer in your budget for provisional sums
- Clarify what is included in each allowance to prevent misunderstandings
At Ardour, we take great pride in the time and attention to detail we dedicate to every Cost Proposal. From sourcing quality materials to securing competitive trade pricing and accurately estimating labour costs, our goal is to provide transparent, reliable figures. We work hard to minimise provisional sums wherever possible, giving our clients the best opportunity to stay on budget and plan with confidence.