Contract Sum Analysis

Section 1

Purpose

Note on JCT editions: JCT has published the 2024 Edition. This guidance cites JCT SBC/Q 2016 clause references; the commercial and payment mechanisms are substantively unchanged in the 2024 edition, but specific clause references should be verified against the contract edition in use on any given project.

A Contract Sum Analysis (CSA) is the pricing document used in Design and Build contracts in place of a Bill of Quantities. Submitted by the contractor as part of their Contractor's Proposals in response to the Employer's Requirements, the CSA breaks down the lump-sum contract price into elements or components, enabling the employer's agent to assess interim payment applications, value employer-instructed changes, and audit the reasonableness of the contractor's pricing build-up.

Under the JCT Design and Build Contract (DB 2016), the CSA is a contract document. Its format must be specified by the employer in the Employer's Requirements — if the employer does not prescribe the CSA format, the contractor may submit it in any format they choose, which may not support effective post-contract cost management. The employer's agent (typically the QS) should specify the required CSA structure in the Employer's Requirements before tenders are issued.

For NEC4 contracts under Option A (Priced Contract with Activity Schedule), the equivalent document is the Activity Schedule — a list of activities with associated prices. Under NEC4 Option B (Priced Contract with Bill of Quantities), a traditional BQ is used. The QS must confirm which NEC4 option applies and prepare the appropriate pricing document accordingly.

Section 2

Key Principles

JCT Design and Build Contract (DB 2016): the CSA is a Schedule to the Contract and a contract document; it governs the basis for interim payment (valued against completed CSA elements) and the calculation of the adjusted contract sum following employer changes.
RICS Employer's Agent: Design and Build (1st edition, 2017, effective January 2018): the employer's agent is responsible for reviewing the CSA submitted with Contractor's Proposals, assessing its completeness, and using it as the basis for post-contract payment assessment and change valuation.
NRM 1: RICS New Rules of Measurement (2nd edition, 2012): even for D&B contracts, RICS recommends structuring the CSA using NRM 1 Group Elements to facilitate benchmarking and cost management; some employers specify an NRM 1-structured CSA in the Employer's Requirements.
RICS Developing a Construction Procurement Strategy (2nd edition, 2024): confirms that under D&B procurement, the employer commits to a concept design at an early stage; the CSA must reflect the full scope of the Employer's Requirements, including all CDP obligations.
NEC4 Engineering and Construction Contract (2017) — Options A and B: Activity Schedule (Option A) is the nearest NEC4 equivalent to a CSA; BOQ (Option B) uses NRM 2 measurement rules.

Section 3

Practical Application

Step 1

Specify the CSA format in the Employer's Requirements before issue. The required format should mirror the employer's cost management needs: NRM 1 Group Elements (for benchmarking and change valuation); trade/subcontract packages (for payment scheduling); or a hybrid. State the minimum level of element breakdown and confirm that a separate preliminaries allocation is required.

Step 2

Review the CSA submitted with the Contractor's Proposals at tender return. Check: is the CSA in the prescribed format? Are all elements of the Employer's Requirements priced? Is the CSA total consistent with the Form of Tender lump sum? Are any items omitted, duplicated or attributed to provisional allowances?

Step 3

Assess the CSA against the employer's internal elemental cost plan (if available) or BCIS benchmarks. Identify any elements where the contractor's allowance appears materially low — this may signal a risk of under-provision that will lead to post-contract disputes or requests for additional payment.

Step 4

Clarify any material discrepancies in the CSA during post-tender clarifications. If the CSA does not reflect the full scope of the Employer's Requirements, require the contractor to revise it before contract execution — an under-priced CSA cannot be corrected post-execution without a formal change.

Step 5

Confirm the CSA treatment of provisional sums: any provisional sums in the CSA must be for genuinely undefined items. If the Employer's Requirements define the scope sufficiently, the contractor should have priced a fixed lump sum, not a provisional sum.

Step 6

After contract execution, use the CSA as the basis for interim payment assessment: calculate the percentage complete for each CSA element; apply the percentage to the CSA element value; sum across all elements to derive the gross valuation for the interim certificate.

Step 7

Use the CSA for change valuation: where the employer instructs a change to the Employer's Requirements, the CSA element rates provide the basis for valuing the addition or omission. For work outside the CSA structure, use a fair rate or daywork (as specified in the contract).

Step 8

At final account stage, reconcile the adjusted contract sum against the original CSA: list all employer changes (additions and omissions by CSA element), provisional sum expenditure, and any loss and expense or other adjustments. The final account schedule should mirror the CSA structure.

Step 9

Correct arithmetic errors in the priced document in line with the contract procedure. Under the JCT default (Practice Note 6 / JCT tender procedure Alternative 2), the tenderer is given the option to stand by or withdraw the tender — where the tender stands, individual rates are adjusted so the priced items reconcile to the arithmetic total but the original tender total is preserved. Do not unilaterally alter the contract total; any change to the total must be agreed with the tenderer before contract execution.

Section 4

Common Mistakes to Avoid

Not prescribing the CSA format in the Employer's Requirements — without a specified format, the contractor may submit an insufficiently detailed or non-standard breakdown that makes post-contract cost management difficult.
Accepting a CSA that does not reconcile to the Form of Tender lump sum — any discrepancy between the CSA total and the Form of Tender must be resolved before contract execution; a discrepancy creates ambiguity about the contract sum.
Not checking the CSA against the full scope of the Employer's Requirements — items in the ER that are not reflected in the CSA are not priced; claiming them as employer-instructed changes post-contract will be contested by the contractor.
Using the CSA for change valuation without confirming the element rates are reasonable — a contractor who has under-priced an element in the CSA will resist using those rates for additions; over-priced elements will be used by the contractor to their advantage.
Not updating the CSA schedule during the contract to reflect agreed changes — a CSA that does not reflect the current adjusted contract sum becomes unreliable as a management tool.
Unilaterally adjusting the contract total to correct arithmetic errors in the priced document — under most contract forms the default rule preserves the tender total and adjusts individual rates. Changing the total without the tenderer's written agreement creates a dispute over the contract sum and may invalidate the award.

Section 5

APC Competency & Quick Reference

APC Competencies: Procurement & Tendering (L2) | Cost Management (L2) | Commercial Management (L2) | Design Economics & Cost Planning (L1)

What is a Contract Sum Analysis and how does it differ from a Bill of Quantities?

A CSA is the D&B equivalent of a BQ: it breaks the contractor's lump sum into elements to support payment and change valuation. Unlike a BQ, the CSA does not contain measured quantities — it allocates the lump sum to defined categories. There is no RICS measurement standard for CSAs (unlike NRM 2 for BQs); the format must be prescribed by the employer in the Employer's Requirements.

How is a CSA used for interim payment assessment under JCT DB 2016?

The employer's agent assesses the percentage completion of each CSA element and applies it to the CSA element value. The gross valuation is the sum of all element values × percentage complete. Retention is deducted at the contract rate; any advance payment, materials on/off site, and contractor's design fees are added or deducted as applicable. The net certified amount is the interim payment due.

What is the NEC4 Activity Schedule and how does it differ from a CSA?

An NEC4 Activity Schedule (Option A) is a list of activities with lump-sum prices. Payment is made for completed activities only — no part-payment for partially complete activities (unlike a CSA where percentage completions are assessed). This creates different cash flow implications: the contractor is incentivised to complete activities quickly but may have cash flow gaps for long-duration activities. Under NEC4 Option B, a BOQ is used with remeasurement.

Section 6

Contract Sum Analysis Checklist

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CSA format prescribed in Employer's Requirements (NRM 1 elements; separate prelims; trade packages as required)

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CSA reviewed at tender return: format compliance, all ER items priced, total reconciles to Form of Tender

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CSA assessed against employer's cost plan / BCIS benchmarks; materially low elements flagged

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CSA discrepancies resolved in post-tender clarifications before contract execution

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Provisional sums in CSA confirmed as genuinely undefined (not scope avoidance)

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CSA executed as a contract document (Schedule to JCT DB 2016 contract)

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CSA used as basis for interim payment assessment (% complete × element value)

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CSA used for change valuation (additions/omissions at CSA element rates)

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CSA schedule maintained and updated for all agreed employer changes

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Final account reconciled against CSA structure

Section 7

CPD Learning Outcomes

Specify an appropriate Contract Sum Analysis format in Employer's Requirements, review a CSA submitted with Contractor's Proposals, and identify discrepancies requiring resolution before contract execution.
Apply a CSA for interim payment assessment under JCT DB 2016 (percentage complete × element value) and for change valuation, and distinguish this approach from BQ-based interim valuation under JCT SBC/Q.
Compare the Contract Sum Analysis (JCT DB) with the NEC4 Activity Schedule (Option A) in terms of format, payment mechanism and cash flow implications.

Section 8