What is a prime cost?

A prime cost, also known as a prime cost sum or prime cost item, is a type of budget item in construction projects that refers to the cost of a specific item or service that is procured separately from the main contract. It is typically used for items or services that are not included in the main contract but are required for the completion of the project.

Prime cost items typically include items such as:

  • Specialised equipment
  • Furniture
  • Loose equipment
  • Plant
  • Minor works.

These items are typically procured separately from the main contract and are included in the tender documents as prime cost items. The cost of the items is included in the tender as an estimate. The Contractor then procures these items and the actual cost is paid to the contractor.

When preparing a prime cost sum, the cost of the item or service is usually based on an estimate and the cost is usually subject to change based on the actual cost of the item or service. These sums are often used for items or services that are difficult to estimate, such as specialized equipment or unique materials.

Prime cost sums are often used in conjunction with a Bill of Quantities (BoQ) in construction projects, in which the BoQ itemizes the cost of materials and labour, while the prime cost sum itemises the cost of specific items or services that are procured separately from the main contract.

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