What is a prime cost item?
A prime cost (PC) item is a line in a building contract that sets aside a budget allowance for materials or fixtures (such as tapware, tiles, or light fittings) that will be selected and confirmed later in the build process.
A prime cost (PC) item is a fixed allowance written into a building contract for specific materials, fixtures, or fittings that the builder has not yet selected or priced at the time of contract. Common examples include tapware, floor tiles, wall tiles, light fittings, kitchen cabinetry, and door hardware. Instead of choosing these items upfront, the builder estimates a reasonable budget for each category and includes it in the contract price.
Prime cost items serve two practical purposes. For the homeowner, they allow flexibility to make selections later without holding up the building contract or construction schedule. For the builder, they provide a clear framework for cost control: if your actual selection costs less than the PC allowance, you receive a credit; if you exceed it, you pay the difference as a variation to the contract.
This approach is standard in custom home building because it acknowledges that fixture and finishes choices often evolve during design or early construction phases. Rather than delaying contracts while decisions are made, prime costs let work proceed with a provisional budget in place. When you select your specific items (colour, brand, grade), the actual cost is reconciled against the allowance and the contract is adjusted accordingly.
Understanding your prime cost items and their allowances is essential when reviewing a building contract. Custom home builders should clearly itemise each PC allowance so you know what budget is set aside for each material category and can plan your selections with confidence.