Quick Answer: What Are Prime Cost Items?

What does BoQ mean?

bill of quantitiesThe bill of quantities (sometimes referred to as ‘BoQ’ or ‘BQ’) is a document prepared by the cost consultant (often a quantity surveyor) that provides project specific measured quantities of the items of work identified by the drawings and specifications in the tender documentation..

What does lump sum contract mean?

stipulated sumA lump sum contract, sometimes called stipulated sum, is the most basic form of agreement between a contractor and a customer. A lump sum contract or a stipulated sum contract will require that the contractor agree to provide specified services for a stipulated or fixed price.

What is prime cost in a restaurant?

Prime cost includes the products and the people that keep your restaurant in business. You can calculate your prime cost using the following prime cost formula: Total Cost of Goods Sold + Total Labor Costs = Prime Cost.

What is profit and overhead in construction?

General Contractors charge for Overhead and Profit (“O & P“) as line items on repair or rebuild estimates. … Overhead costs are operating expenses for necessary equipment and facilities. Profit is what allows the GC to earn their living.

What is prime cost in building contract?

Most building contracts include provision for prime cost items and provisional sums. A prime cost item is an allowance in the contract for the supply of necessary items not yet finally selected, for example taps or door furniture.

What is Prime cost depreciation?

The prime cost depreciation method, also known as the simplified depreciation method, calculates the decrease in value of an asset over its effective life at a fixed rate each year. The prime cost formula is as follows: Asset’s cost x (days held ÷ 365) x (100% ÷ asset’s effective life)

Why it is called prime cost?

Prime costs are a firm’s expenses directly related to the materials and labor used in production. It refers to a manufactured product’s costs, which are calculated to ensure the best profit margin for a company. … Direct costs do not include indirect expenses, such as advertising and administrative costs.

What is profit and attendance?

The main contractor is permitted to make a profit from the use of nominated subcontractors on site, but must provide “attendance” (usually the provision of water, power, restrooms, and other services to enable the nominated subcontractor to do his job). … Essentially this contractor is employed by the main contractor.

Is overhead a prime cost?

Prime costs include direct material and direct labor costs. Conversion costs include direct labor and overhead expenses. Both are a metric used to determine the efficiency of production.

What does the word provisional mean?

providing or serving for the time being only; existing only until permanently or properly replaced; temporary: a provisional government. accepted or adopted tentatively; conditional; probationary. (usually initial capital letter) of or being the wing of the Irish Republican Army that follows a policy of violence.

What is a provisional sum in construction contracts?

Provisional sums are generally an allowance or estimate (often described as a “best guess”) included within the contract price of a construction contract for works that are: not sufficiently defined, designed or detailed to allow an accurate determination of its cost at the time the contract is entered; and/or.

What is prime cost and provisional sum?

Traditionally, a prime cost is limited to the cost of supplying the relevant item, and does not include the cost of any work that relates to it (such as its installation). In contrast, provisional sums include allowances for both the supply item and all related work to be performed by the contractor.

What is a prime cost sum?

A prime cost sum (PC or PC sum) is an allowance, usually calculated by the cost consultant, for the supply of work or materials to be provided by a contractor or supplier that will be nominated by the client (that is, a supplier that is selected by the client to carry out an element of the works and imposed on the main …

What is a provisional item?

Provisional Item means an item describing work, the requirement for which is uncertain at the time the tender documents are issued and which can only be carried out on the instruction of the Engineer for the Contract.

What is contingency sum?

A contingency sum is an amount of money, usually expressed as a percentage, included in the project budget to allow for the unknown or unresolved aspects of a design. It is usual for the initial allowance to be as much as 25% to 30%.

What is meant by day work?

Daywork is a means by which a contractor is paid for specifically instructed work on the basis of the cost of labour, materials and plant plus a mark up for overheads and profit. It is generally used when work cannot be priced in the normal way.

What is Prime cost example?

Examples of Prime Costs Direct materials. This is the raw materials used to construct a product. … This is the cost of billed labor, such as the cost of consulting labor billed to a client. Commission. If there is a salesperson commission associated with a specific sale, then that is a prime cost.

What is provisional cost?

A provisional sum is an amount of money included in the contract sum to cover work or materials, or both, the extent of which cannot be specifically detailed when entering a contract. Typically, builders will include a PS for sitework costs.

What is builder’s margin?

A builders margin is the percentage added to the cost price of a building project and can vary from builder to builder depending on the size of the business or type of building service offered. This margin covers all of the business running costs including the profit for the builder.

Does a provisional sum include margin?

Provisional Sums The actual amount that the relevant works cost, plus the builder’s margin, will replace the provisional sum. … If the works actually cost less than the provisional sum allowance, your contract price should reduce.