Prime cost in construction contracts
In general terms, the ‘prime cost’ is the sum of the direct cost of materials and labour associated with a production process. It is the direct cost of the inputs to a process that are necessary to create the output. If the prime cost can be lowered, the process may become more profitable.
In construction, the term ‘prime cost sum’ (PC sum) is an allowance for the supply of labour, plant and materials to be provided by a contractor or supplier that will be nominated by the client. The allowance is exclusive of any profit mark up or attendance (such as material handling, scaffolding and rubbish clearance etc) by the main contractor. See prime cost sum for more information.
Prime cost contracts (sometimes referred to as cost plus contracts or cost reimbursement contracts) are contracts in which the contractor is paid the prime cost (the actual cost of labour, plant and materials) and a fee for profit and overheads.
Prime cost contracts are used where an early or immediate start on site is required even though design information is not complete, for example for urgent alteration or repair work. See Prime cost contract for more information.
Adjustments may be permitted to prime costs during the period of a contract to allow for inflation (fluctuations).
[edit] Related articles on Designing Buildings Wiki
Featured articles
Check out some of the best features and news from Designing Buildings as well as key stories from around the web.
Construction Management, 8 July
NEETs crisis drives interest in trades, but apprenticeships barriers remain.
Passive fire protection webinar
MEP services penetration seals.
Where its at podcast (and video) - The role of the Architectural Technologist as an Expert Witness.
More than 200 remarkable buildings added to SAVE’s Buildings at Risk register.
Government scraps pre-application consultation for Nationally Significant Infrastructure Projects.
Historic England and infrastructure
New projects offer opportunities for the historic environment and local communities.
Construction Management, 2 July
Construction deaths halve in two years.
Green Book changes to drive investment in all parts of UK.
Minimum energy efficiency standards (MEES)
CIAT briefing on response to consultations for privately rented non-domestic properties.
Connect, collaborate, shape the future
Registration now live for UK Construction Week Birmingham.
CIOB announces Saul Humphrey FCIOB as new President for 26/27 term.
A quick, simple, and zero-bills solution to prevent overheating.
Comments
Construction on this page has been spelt incorrectly! - well spotted, this has been fixed