- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 10 Sep 2020
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.
 Related articles on Designing Buildings Wiki
Featured articles and news
Chancellor announces latest Winter Support packages.
Tapping technology to boost infrastructure and create jobs.
4 ways to ensure certificates are valid.
White elephant construction projects.
How Paul Williams bent over backwards to overcome racial barriers.
Organisation revises actions around dealing with COVID-19.
CIOB, NFCC, RIBA, RICS call for changes ahead of Building Safety Bill.
Developments in the Future Homes Standard.
An American chimney feature with a colourful past.
Homes based on need, not ability to pay.
Historic England adds 216 entries to the 'at risk' register.
Will cycling and walking provisions be preserved?
Assembly point levels range from relative to ultimate.
Signs are pointing to a recovery for the construction industry.