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] Find out more
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
British Columbia and construction
A blueprint for the construction industry from Canada's west coast.
China's elaborate idea for a mass-transport system has been abandoned.
Read this article about the theories that characterise life in the hyperreal post-modern city.
Polyisocyanurate (PIR) insulation and how it was tested.
"We can’t sustain low density suburbs, density isn't a choice, it's a necessity." - Read our interview with the award-winning social housing architect Peter Barber.
Conservation area designation can be crucial, but treatment of individual parks varies considerably.
ICE publish new NEC4 Design, Build and Operate contract.
America's failing infrastructure
Report states $2 trillion is needed over the next 10 years to fix American roads.
What is the client's strategic brief for construction projects?
Read the story behind the world's most iconic festival stage, Glastonbury's Pyramid Stage.
First ever BREEAM Communities innovation credit is claimed by Temple Farm Development.
Read the story of Ronan Point, another disastrous event which had profound consequences for the construction industry.
CIOB to help conservation specialists gain recognition for their expertise with launch of new Certification Scheme.
BIM and the future of construction
A brief introduction to Building Information Modelling - is it the future of construction?
What is ACM cladding, what is it used for, and is it banned?
Comments
Construction on this page has been spelt incorrectly! - well spotted, this has been fixed