When a nominated sub-contract is intended but not yet chosen, a prime cost item can be inserted in the bill of quantities by the engineer to cover the work and/or materials to be supplied by the nominated sub-contractor. The sum entered by the engineer is that which he estimates will cover the sub-contractors charges; the actual charge made by the sub-contractor being refunded to the main contractor. Two additional items are added which tenderers can price.
One consists of a lump sum to cover the general facilities the contractor is to provide for the sub-contractor; the other, expressed as a percentage of the prime cost, is to cover all the contractors other charges and his profit.
The general facilities as defined in CESMM are deemed to cover access;
use of scaffolding, hoists, contractors messrooms and sanitation; space for any office and storage the sub-contractor sets up; together with light and water. If more facilities than this are required, the CESMM requires this to be expressly stated. Such extra facilities are often required, such as provision of power, labouring assistance, use of crane, etc., and these have to be defined.
If, however, the sub-contractor supplies materials only, the lump sum is deemed to include the contractors unloading, storing and hoisting of materials delivered.
One practice to be avoided is to permit a sub-contractor chosen by the contractor to submit his quotation only to the contractor. This could lead to the sub-contractor including in his quotation for doing some work that is paid for elsewhere in the contractors contract, resulting in double payment to the contractor.
A preferable approach is for the engineer to call for quotations from sub-contractors to be submitted to him.