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📄 Guide 8 min read

Understanding Building Contracts in Australia

Signing a building contract is one of the most significant financial commitments you'll make. Most homeowners sign without fully understanding what they're agreeing to.

Standard Contracts in Australia

Most residential builders use industry-standard contracts from the HIA or Master Builders Australia. Be cautious of builders who present their own 'custom' contracts.

Key Contract Elements to Review

  • 1 Scope of work: exactly what's included and excluded
  • 2 Contract price and GST: confirm price is GST-inclusive
  • 3 Progress payment schedule: payments tied to construction stages
  • 4 Provisional sums (PS): allowances for items not yet known
  • 5 Prime cost (PC) items: allowances for owner-selected items
  • 6 Variations: how changes to scope are priced and authorised

Provisional Sums and PC Items

Low provisional sums and PC items are the most common way a building contract looks cheap and ends up expensive.

⚠️ Watch out: Compare PC and PS items carefully across multiple quotes.

Variations

Any change to scope after contract signing is a variation. Insist on a written variation order for every single change, no matter how small.

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