Provisional sums package
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Francis Moyalan, PMP,PMI-SPMember for 21 years 8 months
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Hi,
This thread is something related to the commercial side of the project management...My query is hovering around the concept of provisional sum package(PSUM package) in a project and lumpsum contract...
1.Suppose a project is valued around 1bn Dhirams and out of that mep package worth 180 mn is a PSUM package, external cladding worth around 200 mn is a PSUM pakage, landscaping package is a PSUM pakage worth around 80mn so cumulatively almost 460 mn Dms goes as PSUM pakage and only half of the project value that is 540 mn Dms rests with the main contarctor, so what is the advantage for the main contractor taking the project where almost 50% of the contract value is syphoned out by the nominated sub contractors?????
2.If the contarct is awarded on lumpsum basis, then if design changes come in between the execution , can these variations be claimed ???
Kindly anybody ponder your valuable insights on these issues......
Thanks,
Francis
This thread is something related to the commercial side of the project management...My query is hovering around the concept of provisional sum package(PSUM package) in a project and lumpsum contract...
1.Suppose a project is valued around 1bn Dhirams and out of that mep package worth 180 mn is a PSUM package, external cladding worth around 200 mn is a PSUM pakage, landscaping package is a PSUM pakage worth around 80mn so cumulatively almost 460 mn Dms goes as PSUM pakage and only half of the project value that is 540 mn Dms rests with the main contarctor, so what is the advantage for the main contractor taking the project where almost 50% of the contract value is syphoned out by the nominated sub contractors?????
2.If the contarct is awarded on lumpsum basis, then if design changes come in between the execution , can these variations be claimed ???
Kindly anybody ponder your valuable insights on these issues......
Thanks,
Francis
1 reply
Oldest first- 0John Lawson ·Hi,
Regarding projects with a large nominated sub contract content, these can often be turned to a contractors advantageit all depends in what has been agreed and priced in the contract.
If items such as provision of support trades are not included in the price, then the hiring of scaffold / scaffolders, cranages, accomodation, transport, labour to assist etc etc, which can be very beneficial to the contractor. In addition if the Nominated part of the work is a disaster, i.e. massive increase in scope, faulting nominated contractors then possible claims can result. Its all in the words!!
A fixed price is usually for an identifed specification and identified set of drawings. Any changes should normally be part of a contract variation. There again it all depends on what is written into the contract.
regards
John
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