Prime Costs and Provisional Sum
A Prime Cost (PC) is an estimate, agreed to by you and the builder, for materials (fixtures & fittings) which have not been selected at the time of signing the contract. Generally they are ‘one off’ items. The best quotes have few or no PC allowances in them.
Some PC items may be unavoidable but should never include basic items such as frames and trusses, windows, roofing etc.
A Provisional Sum is an estimate given by the builder for materials and labour, for a particular part of the project where a fixed sum cannot be provided. The cost must be estimated with care and skill. The builder should always retain his suppliers and subcontractors quotes and written estimates for these items as proof of reasonable enquires having been made. If the builder wishes to increase the cost of a Provisional Sum or Prime cost item, the homeowner can request the builder to quantify the extra claim when claiming payment for that item. A builder who has a ‘guess’ at the likely cost for these items invariably prices them too low. When the builder seeks to recover a higher sum from the owner, they will inevitably face a dispute. Estimating PC’s & PS’s is not always done well by the builder.
The homeowner can also limit or reduce their risks when dealing with provisional sums. The contract may expressly state that the estimated provisional sums are a cap for that item of work. Therefore, the building contractor must administer the contract so that quotes from subcontractors are reviewed and approved prior to the commencement of work which relates to provisional sums.
