Prime cost meaning

This Checklist sets out actions that can be taken—some at procurement stage and others during the life of a project—to help minimise the chance of disputes emerging on construction projects... During the procurement process Select the right procurement route Ensure the procurement method fits the specific context. For instance, where the employer wants to maintain control of the design or specified materials, a traditional contract may suit better than design and build. Conversely, if an earlier start on site is essential, design and build might be the preferred choice. See Practice Note: Choosing the right procurement method—construction projects. Adopt the correct pricing structure Choose a pricing approach that aligns with the employer’s objectives. If price certainty is a priority, a lump sum contract is generally more suitable than a prime cost arrangement. Where a lump sum is used, avoid inserting an excessive number of provisional sums, as these can undermine the desired cost certainty. See Practice Notes:...

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R v Hayes; R v Palombo [2025] UKSC 29 Background The appellants, Tom Hayes and Carlo Palombo, challenged their convictions for conspiracy to defraud, in August 2015 and March 2019 respectively. The allegation was that, together with others, they sought to influence crucial benchmark interest rates underpinning financial markets: for Mr Hayes, the London Inter‑bank Offered Rate (LIBOR); and for Mr Palombo, the Euro Inter‑bank Offered Rate (EURIBOR). A benchmark is an interest rate designed to mirror the prevailing cost of borrowing within a market, providing an indicative snapshot at a given moment. Such a rate serves as a reference for numerous transactions, among them financial derivatives and similar arrangements. Contributing banks were required to provide the rate at which that institution (for LIBOR) – or a prime bank (for EURIBOR) – could obtain funds at a particular time. The submissions were then averaged and trimmed to produce the figure released for that day, which served as the published benchmark...

Construction contract pricing structures This Practice Note contrasts the pricing models most often used on construction projects, considering lump sum, remeasurement, prime cost and target cost contracts. Lump sum Also referred to as: Fixed price In brief: the contract sum is settled before any works begin. Features At the outset, employer and contractor agree the total amount payable for the project, prior to commencement. The price is not remeasured as the works proceed, so adequate tender information is essential for accurate pricing. Where the contractor is not responsible for design, pricing is typically based on drawings and: a bill of quantities prepared by a quantity surveyor in line with a published standard method of measurement, listing the work items, labour and materials needed to complete the works. During tendering, the contractor inserts rates against each item in the bills of quantities, and the product of the quantities...

This document provides searchable quick links to PDF file versions of the JCT 2005 standard-form contracts...

What is a prime cost contract? Put simply, where a deal is let on a ‘prime cost’ basis, the contractor recovers the expenditure it incurs in delivering the works — such as labour and materials (including those supplied by sub‑contractors) — plus a management fee on top to cover overheads and profit. This differs from the usual lump sum arrangement, under which the employer and contractor fix the total contract price payable to the contractor at the outset (subject to any clauses permitting adjustments as the works proceed) and the contractor bears the risk of any rise in the cost of the works. Management contracting is a common setting for prime costs in practice. The management contractor is remunerated with a fee for its services plus the prime costs it incurs in performing its functions. Those costs include amounts paid to the works contractors for the works they carry out. See Practice Note: Management contracting. A prime cost arrangement is generally viewed as equivalent to a ‘cost plus’...

Schedule of amendments to the jct MANAGEMENT building contract 2016 This Contract consists of the completed and finalised Management Building Contract 2016 published by the JCT, to which the following changes apply: Recitals The Articles Article 2: [Article 2] [See drafting note] Article 6 – Principal Designer: After the words ‘for the purposes of the CDM Regulations’, insert ‘and the Dutyholder Regulations’. Article 7: After the words ‘for the purposes of the CDM Regulations’, insert ‘and the Dutyholder Regulations’. At the end, insert: ‘The Prime Cost and/or Management Fee includes the Management Contractor’s price for fulfilling the duties of Principal Contractor’. Article 11 – Arbitration: Delete Article 11 and instead provide: ‘All references to arbitration in this Contract are deleted.’ Article 13: Insert a new Article 13 [To be added on the face of the contract]: ‘Schedule of Amendments The Employer and the Management Contractor agree that the alterations contained in the Schedule of Amendments attached hereto (as initialled by...