USE OF PROVISIONAL SUMS IN THE UAE CONSTRUCTION INDUSTRY: AN EMPIRICAL STUDY

Abstract

Provisional sums are widely used in the FIDIC (Red Book) forms of contract in the UAE construction industry. The practices on dealing with provisional sums have exposed the contracting parties to a number of risks. Therefore, this research aimed at identifying such risks and mitigation measures to limit such risks in using provisional sums in the UAE. The research started with a comprehensive literature review followed by a questionnaire survey among the UAE construction industry professionals. Based on the survey findings, six semi-structured interviews were conducted with expertise in the construction industry to verify the survey findings and close any gaps in the data. The study found that provisional sums are mainly used in the FIDIC (Red Book) forms of contract in the UAE for special works, contingencies, the works which can be only defined in the site, facilitating the appointment of nominated subcontractors and overlapping design and construction. The most common risks of using provisional sums are related to claims, variations and conflicts among the contracting parties. Defining the scope of provisional sums before tendering, incorporating the provisional sums into the project programme and limit the value of provisional sums in the contract are suggested as the key measures to minimize the risk of provisional measures.