Construction Law/Prime cost


Please what is the definition of the prime cost and what is the benefits and damage for the contracts of using PC in his contract. also is the prices of prime cost supersede any specification or drawings in the contract. Thank you

Dear Ahmed,

Thanks for your question.

Prime Cost sums are actually sums provided for works (works or materials or services) to be executed by either a specialist / nominated subcontractor or supplier under the contract. The unique thing about PC Sums is that, usually, it is stated as a sum which is already pre-defined or pre-determined and inserted in the contract for such specified works, materials or services. The benefit of PC Sums is that, it affords the employer to regulate the cost of the services, materials or the works from the source he may  have investigated and bargained with ( vendors) upon which, he may also have negotiated allowable discounts. In such instance, the name or such vendors are expressly mentioned along with the cost (price) as the case may be in the contract. Most PC Sums are well detailed in their specification and as such, it is scarcely difficult for materials, works or services  under PC Sums to be at conflict with the specification except where there are deviations in such specification during execution and that will automatically results to variation. Again, if there is no change in PC Sums but peradventure, the named vendor changed its price or cost, then, automatically, the PC Sums will be adjusted accordingly. Where the Contractor deviated (with approval) on his own to use alternative specification whether in type, kind or character or make on the described materials, works or services, the Client may not adjust the PCsums upwards (in case higher specification is used) but downwards adjustment may be warranted when there is apparent cost savings identified by the Engineer or the Client.

One of the negative impact of PC Sums (i wont call it damage) is if not carefully used by experienced Consultants or Clients who has done his research or have reserved negotiation agreement with the preferred vendor prior to indicated such sums under the contract, there could be "artificial cost change to the increase" which the client may not be able to control particularly, if the materials, works or services involved are specialist type in nature.

Again, it is viewed that PCsums has not placed any risk on price on the Contractor as the Contractor would be paid whatever he pays with his mark up.

Hope i sounded clear?


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Femi Alofe


I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts


Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

1. AACEI RP on Estimating, 2010

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