PC sum (Prime cost sum)

An allowance in a building contract for an item or product that the owner will choose later. The contract specifies a budgeted amount; the actual cost is reconciled against that amount when the item is selected.

Definition

A PC sum (prime cost sum) is an allowance in a building contract for the supply of a specific item that the owner will choose later. The contract includes a budgeted amount for the item; the actual cost is determined when the item is selected and the difference (positive or negative) adjusts the contract price.

PC sums commonly cover taps, light fittings, kitchen appliances, door handles, and other selection-driven items.

Why it matters

PC sums are a flexible mechanism that lets builders price a contract before the owner has finalised every product selection. The downside is that PC sums can be a major source of cost overrun if the owner's eventual selections cost significantly more than the allowance assumed.

How it works in practice

The contract identifies which items are covered by PC sums and the budgeted amount for each. As the build progresses, the owner selects the actual products. When the actual cost is known, the difference between the allowance and the actual cost is added to or subtracted from the contract price.

If the allowance was $2,000 for kitchen taps and the owner selects taps that cost $3,500, the contract price increases by $1,500. If they select taps that cost $1,500, the contract price decreases by $500.

The PC sum amount usually covers the item only, not the labour to install it. Installation labour is part of the main contract price.

Common misconceptions

PC sum amounts represent typical product costs

Not necessarily. Some builders set PC sums low to make the original contract price look more competitive, knowing the eventual cost will be higher. Owners should review PC sum amounts critically and ask whether they reflect the kind of products the owner will actually choose.

PC sums and provisional sums are the same

They're related but different. PC sums cover specific items. Provisional sums cover work where the scope itself is uncertain.

The owner can choose any product within the PC sum

Yes, but check whether the contract specifies any constraints (must be locally available, must be of equivalent quality grade, etc.).