Costing

A section in the specification will deal with ‘provisional sums’ and ‘prime costs’. Provisional sum items are such things as the oven, bath, toilet suite, tiles and so on, which may not have been selected by the time the contract is signed. In that case, the builder will allow a certain amount in the contract (perhaps $600 for the oven and $40 per square metre for the ceramic tiles). When these items are eventually selected by the client, the contract price will be adjusted up or down according to the actual cost.

Prime costs are those costs that the builder can’t reasonably be expected to put an exact figure on when tendering for the job. For example, in certain areas the builder may allow a prime cost of so much per cubic metre if rock is encountered during the excavation work. If none is found, then the client doesn’t pay any extra, but if it is, the builder will be reimbursed for any extra costs that may arise.