Contract Sum Definition
The consideration which the employer pays the contractor for the works, and for the completion of any design.
The contract sum is usually stated in the articles of agreement in the building contract. However, it can be changed up or down by variations, ascertained direct loss and/or damage, liquidated and ascertained damages, and other contractually permitted adjustments.
Prime cost forms of contract (such as the management contract) do not state the contract sum in the articles of agreement because it cannot be ascertained when the building contract is signed.
The contract sum is usually payable by monthly instalments. Under traditional contracting the quantity surveyor produces a (usually monthly) "valuation" of the work properly executed to date. By "valuing" the work the quantity surveyor is calculating the proportion of the contract sum which is attributable to the work done. The contract administrator then issues a (monthly) interim certificate stating the appropriate payment to the contractor, which is the quantity surveyor's valuation less (a) sums previously certified and (b) retention.
