Prime Cost Sum
A fitting or item that is part of the contract (of works), but the specific type, model or brand of the item has either not been selected, or its price cannot be confirmed at the time the contract is entered into.
The Builder is also to make a reasonable allowance for the supply, storage, supervision, installation and delivery of these items, as appropriate, within the contract price.
Not fully worked out, agreed upon or final and is provided to serve or act as sufficient for the time being, and is subject to review, adjustment or change.
A reasonable estimate of the cost (or price) of certain works, if the builder, after making reasonable inquiries, cannot give a definite price when the contract is signed
Prime Cost (PC) Sums, or Items, (as well as Provisional items, costs & quantities) can be used as allowances for items of work required and are to be included in the contract, but that are yet to be specified, identified, confirmed, quoted, fully determined or documented. If used wisely, they are a handy tool for cost management.
Prime Cost Sum items need to be carefully thought through and clearly documented. They should be well described and the $ allowances allocated to them should be credible.
Ensure that GST, if applicable, is clearly noted (i.e. included or excluded) in the amount specified.
Ensure that Supply Only or Supply & Install are clearly noted.
The amount specified should also be Nett Cost (i.e. supply or sub-contract price) and should not include builder’s overheads and preliminaries, which the builder should add separately in their tender.
Prime Cost and Provisional Sums may be used for both supply only and for supply and installation. The following are some examples:
Supply only :
- Kitchen whitegoods – ovens etc.,
- Light fittings,
- Wall and floor tiles,
- Letter boxes,
- Sanitary fittings and tap sets,
- Hot water service.
Supply and install:
- Hydronic heating,
- Air conditioning,
- Repairs ,
- Damp-proofing courses in existing masonry walls where the extent of the problem is yet to be uncovered or determined.
Note: It is not wise to blindly accept PC sums proposed by a builder at the time of tendering, or signing a contract, without investigating their validity (i.e. accuracy) … These PC’s, if inadequate and if not checked, can be the cause of many problems, cost blow-outs, variations and ultimately, dispute.