A Prime Cost (PC) item is an allowance in a building contract for an item that has not been selected when the contract price is prepared. It usually applies to the supply of a fixture or fitting excluding the labour to install it.
Common PC items include taps, toilets, basins, tiles, appliances, door hardware, and light fittings.
How Prime Cost items work
A builder includes a dollar allowance for each PC item in the contract. Once the actual product is chosen, the final contract price is adjusted up or down depending on the real purchase cost.
For example, if the contract allows $500 for a toilet and the selected model costs $750, the difference is added to the contract price. If the selected item costs less, the contract price should be reduced accordingly.
Why Prime Cost items matter
PC items affect the final build cost because the allowance may not match the products eventually selected. A contract can look competitive at the start, but if the allowances are too low, the total cost can quickly rise once selections are made.
This matters on both residential and commercial projects, especially where finishes and fixtures have a wide price range.
Prime Cost items vs Provisional Sums
A Prime Cost item is usually an allowance for the supply of a product. A Provisional Sum is an allowance for a part of the work where the full cost cannot be accurately determined at the time of contract, often including labour and materials.
In simple terms:
- PC item = allowance for an item not yet selected
- Provisional sum = allowance for work not yet fully defined
What to check before signing
Before signing a contract, review the PC schedule carefully and check:
- what items are listed as Prime Cost
- the allowance amount for each item
- whether the allowance is realistic for the standard of finish expected
- whether GST and any builder’s margin are treated separately or included
Low allowances can lead to extra costs later, even if the initial contract price looks attractive.
Conclusion
Prime Cost items are normal in construction, but they should be clear and realistic. The more selections made before signing, the more accurate the contract price will be.
If you’re planning a home or commercial build in Perth, IQ Construction can guide you through the full construction process, from early budgeting and PC item allowances through to selections, pricing clarity, and delivery on site, so your project stays aligned with both your finish expectations and your overall budget.
Contact IQ Construction for more information today!