Construction Law/Prime Cost Item


Dear Sir,

In one of our Contract which is based on FIDIC MDB 2010 Conditions of Contract, an item ‘provisions of performance security/ guarantee’ has been included as a prime cost item (provisional sum). The following provision is contained in preamble of the Bill of Quantities;

“For items shown as ‘Prime Cost’ the Contractor shall provide evidence of the exact amount of the direst cost paid for the item by the Contractor and that the item has been procured at a competitive market price. This amount shall be paid by the Employer. The provisional Sum shown fir these items is indicative only”

We (The Contractor) have provided performance security to the Employer covering the period upto the end of Defect Notification Period. We have incurred cost for arranging performance security more than the prices stated in the BoQ.

My questions are as follows;

(i)   Are we entitled to recover actual cost in arranging performance security as this cost is priced at the risk of the Employer?

(ii)   Is it possible that provisional sum exceed the cost provided in the Contract and how this exceeded cost can be covered in the Contract price?


Umer Shabbir

Dear Umer,

There is no provision in FIDIC for Prime Cost sums, only Provisional Sums, so I do not know how to deal with Prime Cost Sums.  

1. you are entitled to recover actual cost if the item was described as a provisional sum and you received an Engineer's instruction to spend the money.  

2. It is possible for the expenditure on a provisional sum to exceed the sum allocated in the BoQ, if there is an Engineer's Instruction.  The Accepted Contract Sum is fixed, but the Contract Price is adjusted to match the sum due to the Contractor, usually by reducing the contingencies.  

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


Value . . .
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Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

B Sc(Hons) in Civil Engineering

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