mimno17 > ‘Prime cost contract - Designing Buildings Wik) esigning Buildings Wiki Newseter | Register | Signin construction industry knowledge base Sen Categories Toots Last ete 27 Feb 2017 See tthetoy Create an article Prime cost contract share Fallow ame cost contracts (suchas JCT PPC 11) are soraimes called cost pis contracts or cost Related articles tembursemen contacts Consracton contac = Prime cost contracts ae used where an eat orimetiae star onsite isrequred eventhough Contract. design eration ' nat complet. Cost eimbursabe contract Cost pis contact ‘nis metnod of procurement i not general recommended, butican be useful under parila’ utine specication, cizcumstances where an immediate start on ste is necessary (or example for wgentaeraton of paceman route repair wor, rifthee has ben a buiing fale oe, egtnginmatiatereconsiucion or replacement of a building so that the client can continue to operate their business). Sub-contractor. a e Tendering proceeds based on an outline speciation, any drawings and an estimate of costs. ‘Tne Contactar is paid the ri cost (he actual cost of labour, plant and materials) and fee for ‘overheads and profit. The fee can be agreed by negotiation or by competition, and may bea lump ‘sum (which it may be possible to adjust ithe actual cost is diferent fom the estimate), or a percentage of the prime cost (which i may be possible to revise ifthe client changes the nature of the works) ‘Other basis for payment are possible, inlucing combinations ef lump sum and percentage fees. For example, it might be possible to fx some elements of overheads whist applying a perceniage te other elements and to profit “This is a high rsk form of procurement forthe cllnt as they are reliant on the contractor working ficiendy and procuring sub-contracts economical. Sub contracts may be procured compettvely, but there may be litle incentive forthe contractor to Secure or select economic bids. Some of these dificult can be mitigated if a partnering relatonship has been established betwoon the clont and the contractor [NB Some people consider that cost reimbursable contractor cost plus contacts one in which ‘he cont takes all th risk, whereas a prime cost contract is one in which the cost ofthe works packages (the prime cost are reimbursed but the main contractor lakes a risk on sling, ‘overhead costs an proft which might be tendered ona fixed price. ind out more Related articles on Designing Bulldings Wiki = Construction contact, htps:lwww designingbuildings.co.ukwikiPrime_cost_conract How to write an article Te er ond CELT hd CITT EIT PEs CoE) el] = Subscribe Featured articles and news Builcing ofthe wook 6