What to be mindful of
The quotes for your project have arrived, now to make sense of all of the costings. It can be overwhelming to be certain that you’ve understood the costs. You’re also likely anxious to know that you’ve understood what costs can change to accurately budget for the build. There should be a quote dictionary to decipher the different meanings. I’ll explain the three main costs you’re likely to see on your quote and share with you what to look out for.
It’s important to understand this is only really helpful when you’re signing a fixed-price contract. As all quoted categories in a cost plus contract are variable.
Quoted items that aren’t flagged as PC or PS sums are fixed. Meaning that unless you change your mind on a particular item specified in the documents then the quoted cost won’t change. They won’t increase or decrease.
Prime Cost (PC)
When a provision for prime cost (PC) items is in your quote this represents an allowance for the supply of items not yet selected. For example, an allowance can be made for porcelain tiles based on a m2 rate for the purpose of quoting, then at a later date once the specific tile has been selected and a variation can be prepared to take into account the PC budget vs what the actual cost is. A labour cost is quoted for installing the yet-to-be-determined finished product, leaving just the item TBC. It’s dependent on what is specified at quoting,
Provisional Sums (PS)
In contrast, provisional sums include allowances for both the supply item and all related work to be performed by the contractor. A provisional sum is an amount of money included in the quote to cover both work and materials which cannot be specifically detailed at the quoting stage. For example, if it’s determined that a client would like a stone fireplace, but is yet to select a stone, then a provisional allowance is made for the supply of materials in installation based on an m2 rate and will be adjusted as a variation once the final stone finish is selected.
Finally, though this isn’t a costing it’s definitely worthy of a mention. Exclusions are items that aren’t budgeted for. For example, this might be removing excess spoils from screw piles and underground works. Be fastidious with your quote review and look out for any items that are excluded and quiz your builder on how to budget for these costs.
You can get a better understanding of the difference between a fixed price and cost-plus contract here.
For more of our latest projects, follow along on instagram at @lrccustombuilders. Here you can see projects come to life every step of the way.
A nice blend of old and new.
barwon heads, VIC