Notified Sum Explained: What Subcontractors Need to Know

If you have worked on construction projects in the UK, you have probably come across the term notified sum on a payment application or valuation certificate. But what exactly is it, and why does it matter?

In this guide, we explain what a notified sum is, how it works under the Construction Act, and why getting it right can make a real difference to your cash flow.

What Is a Notified Sum?

A notified sum is the amount that the paying party (typically the main contractor or client) states they intend to pay in their payment notice. This figure may differ from the amount the subcontractor applied for in their payment application.

Under the Housing Grants, Construction and Regeneration Act 1996 (commonly called the Construction Act), the paying party must issue a payment notice within a set period after the due date. The amount stated in that notice is the notified sum.

How the Notified Sum Differs from the Applied Amount

When a subcontractor submits a payment application, they state the amount they believe is due based on work completed, materials on site, and any variations. This is the applied amount.

The client or main contractor reviews this application and issues a payment notice with the amount they agree is due. This is the notified sum. The two figures often differ because of:

• Disagreements over the percentage of work completed
• Disputed variations or scope changes
• Deductions for defects or contra charges
• Retention held back from the gross valuation
• Discount percentages applied to the contract

Why the Notified Sum Matters

Legal Protection Under the Construction Act

The Construction Act gives the notified sum legal significance. If the paying party fails to issue a valid payment notice, the applied amount becomes the notified sum by default. This means the payer must pay the full amount the subcontractor applied for, unless they issue a valid pay-less notice before the final date for payment.

Cash Flow Visibility

Tracking both the applied amount and the notified sum on each payment application gives you a clear picture of:

• How much you expected to receive versus what was approved
• The cumulative gap between claims and payments over the project
• Whether the paying party is consistently undervaluing your work
• Your grounds for adjudication if disputes escalate

Dispute Resolution

If you are considering adjudication or need to challenge a payment decision, having a clear record of notified sums versus applied amounts is essential evidence. In 2023/24, there were 2,264 construction adjudication referrals in the UK, a 9% increase year on year.

When Should You Use the Notified Sum Field?

Not every project needs to track notified sums separately. Consider enabling it when:

• Your contract requires formal payment notices under the Construction Act
• The main contractor regularly adjusts your claimed amounts
• You want a clear audit trail for each application cycle
• You are working under JCT or NEC contract forms with defined payment timescales
• You want to monitor the gap between what you claim and what gets approved

For smaller, straightforward projects where the client typically pays the full applied amount, you may not need this field enabled.

How BuildQS Handles the Notified Sum

In BuildQS, the notified sum is a company-wide setting that can be toggled on or off:

1. Go to Settings and open the Company Preferences card
2. Toggle Show Notified Sum on
3. All new payment applications will now include a Notified Sum field
4. You can also override this setting per project if needed

When enabled, each payment application shows both the applied amount and the notified sum side by side, and the notified sum appears on your PDF exports and valuation certificates.

The Payment Notice Timeline

Understanding when the notified sum gets set helps you manage your cash flow:

1. Due date arrives (defined by contract, typically 7 days after application)
2. Payment notice must be issued within the notice period (5-7 days depending on contract form)
3. The amount on this notice is the notified sum
4. If the payer wants to pay less, they must issue a pay-less notice before the final date
5. Final date for payment arrives (14-21 days depending on contract form)

If no payment notice is issued, the subcontractor's applied amount becomes the default notified sum, and the full amount is legally due.

Frequently Asked Questions

What happens if no payment notice is issued?

Under the Construction Act, if the paying party fails to issue a payment notice within the required period, the amount stated in the subcontractor's payment application becomes the notified sum. The payer must then pay this amount in full unless they issue a valid pay-less notice.

Can the notified sum be higher than the applied amount?

In theory, yes. The paying party could agree that more work has been completed than the subcontractor claimed. In practice, the notified sum is almost always equal to or less than the applied amount.

Is the notified sum the same as the certified amount?

They serve a similar purpose but are technically different. A certified amount typically comes from a contract administrator or quantity surveyor. The notified sum is the amount stated in the payer's payment notice under the Construction Act. In many contracts, they align.

Should I enable notified sum tracking for every project?

Not necessarily. It is most useful on projects with formal contract arrangements (JCT, NEC) where payment notices are part of the process. For informal or small-scale work, the extra field may add unnecessary complexity.