Commercial & Contract · Mandatory · Pre-Construction

Contract Sum Analysis and Schedule of Rates

A breakdown of the contract sum into its constituent elements for valuations and variations.

Last reviewed: 29 March 2026 — This guide reflects UK law as of this date. JCT / NEC / Contract remains current with no amendments enacted as of 29 March 2026. Next scheduled review: 29 March 2027.

Legal basis	JCT Suite of Contracts / NEC4 Suite of Contracts / Contract Law
Contract sum analysis	A breakdown of the lump sum contract price into its constituent work package elements, used for interim valuations, variation valuation, and financial management of the project
Schedule of rates	Provides unit rates for measured work items, used for valuing variations and for remeasurement where the contract allows
Bills of quantities	Used under JCT Standard Building Contract (SBC) where the contract sum is based on measured quantities of work priced at tendered rates
NEC4 activity schedule	Under NEC4 Option A (priced contract with activity schedule), the contractor is paid on completion of defined activities — the activity schedule is a contract document

1. Contract Sum Analysis

The contract sum analysis (CSA) is the financial anatomy of the project. It takes the single lump sum contract price and breaks it down into its constituent elements — preliminaries, design fees, work packages, specialist packages, provisional sums, and overheads and profit. This breakdown is essential for the proper financial management of the project, including interim valuations, variation valuation, loss and expense assessment, and final account preparation.

The quality of a contract sum analysis depends almost entirely on the quality of the tender preparation. A well-prepared CSA, with a detailed breakdown of each work package and clear allocation of preliminaries, design fees, and overheads, provides the commercial team with the tools they need to manage the project finances effectively. A poorly prepared CSA — with high-level lump sums, insufficient detail, and unclear allocation of costs — creates ambiguity and dispute at every stage of the project.

Under JCT Design and Build contracts, the CSA is not a contract document — it is a tool used for valuation purposes. Under JCT Standard Building Contract (SBC), bills of quantities may be used instead, and these are contract documents. Under NEC4 Option A, the activity schedule is a contract document that defines how and when the contractor is paid for completing defined activities.

Maintain the CSA as a live document

The contract sum analysis should not be treated as a static document produced at tender stage and then filed away. It should be maintained as a live financial management tool throughout the project, updated to reflect confirmed subcontract values, agreed variations, and reallocations. The CSA is the foundation of the interim valuation process and the final account — if it is not kept current, the commercial team will be working from outdated information and disputes over valuation will follow.

2. Typical Structure

The following table sets out the typical structure and content of a contract sum analysis. The level of detail within each section will vary depending on the procurement route, the contract form, and the complexity of the project.

Element	Detail
Preliminaries	Site establishment, running costs, management, supervision, temporary works, scaffolding, hoisting, temporary services, insurances, and all other time-related and fixed charges. Preliminaries are typically broken down into fixed charges and time-related charges for valuation purposes.
Design	Design fees for all disciplines carried by the contractor under a design and build contract — including architectural, structural, mechanical, electrical, and specialist design. Design fees should be programmed against the design deliverable milestones.
Work packages	The main construction work packages, each broken down by trade or element. Typical packages include substructure, frame, upper floors, roof, external walls, windows and doors, internal walls and partitions, floor finishes, wall finishes, ceiling finishes, and external works.
Specialist packages	Specialist or nominated subcontract packages that require particular expertise or proprietary systems — including mechanical services, electrical services, lift installations, fire protection, and building management systems.
Provisional sums	Allowances included in the contract sum for work that is not yet sufficiently defined to be priced at tender stage. Provisional sums may be defined (where the scope is described) or undefined (where the scope is not described). The treatment of provisional sums differs between JCT and NEC.
Overheads and profit	The contractor's head office overheads (a percentage applied to cover the cost of running the business) and profit (the contractor's margin on the project). These are typically expressed as a combined percentage of the net construction cost.
Contract sum total	The total of all the above elements, which must reconcile exactly to the contract sum stated in the contract agreement. Any discrepancy between the CSA total and the contract sum must be identified and resolved before contract execution.
Schedule of rates	A separate schedule of unit rates for measured work items, typically used for valuing variations. The schedule of rates may be derived from the CSA breakdown or may be a standalone document appended to the contract.

3. Common Mistakes

Too high-level for variation valuation

A contract sum analysis that consists of a handful of high-level lump sums provides almost no useful information for valuing variations. When a variation is instructed and the commercial team needs to value the omission of original work and the addition of new work, they need a sufficiently detailed breakdown to identify the relevant rates and quantities. A CSA that shows a single lump sum for "external envelope" is useless for valuing a change from one cladding system to another. The CSA must be broken down to a level of detail that supports variation valuation — typically to individual trade or element level, with rates and quantities where possible.

Not reconciling the CSA total to the contract sum

The total of the contract sum analysis must reconcile exactly to the contract sum stated in the contract agreement. If the CSA total does not match the contract sum, there is an unresolved discrepancy that will cause problems at every interim valuation and at final account. The discrepancy may be the result of a rounding error, an omission, a duplication, or an intentional adjustment that was not properly recorded. Whatever the cause, it must be identified and resolved before the contract is executed. A CSA that does not reconcile to the contract sum is not fit for purpose.

4. Frequently Asked Questions

Is the CSA a contract document?▾

Under JCT Design and Build contracts, the contract sum analysis is not a contract document. It is a valuation tool used for interim valuations and variation valuation, but it does not form part of the contract itself. This means that if there is a discrepancy between the CSA and the contract agreement, the contract agreement prevails. Under JCT Standard Building Contract (SBC), bills of quantities may be used instead of a CSA, and bills of quantities are contract documents. Under NEC4 Option A, the activity schedule is a contract document — it defines the activities for which the contractor is paid and forms part of the contract data. The contractual status of the financial breakdown depends entirely on the contract form being used, and the commercial team must understand this distinction.

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