New dwelling prices were up 5.4 per cent over the year to August 2026, according to ABS, as a result of rising costs of labour and materials that have been passed on by builders. It means that the small print in a building contract becomes vitally important.
It may sound tempting to engage a building company Sydney people know well, but there will be many things to consider after signing the contract.
Fixed Price or Cost-Plus: Whose Risk Is It?
In case of a fixed-price contract, the total price for a specific amount of work is agreed upon. Thus, the owner gets the security while the contractor bears additional expenses. However, the latter will soon turn out to be very fragile if the scope of work is poorly defined.
In case of a cost-plus contract, one pays the actual costs plus a margin or fee. This solution seems appropriate in case of complex renovations due to uncertainties of the conditions that make firm pricing impossible. Here the owner assumes the risk, so a clear invoice is extremely important.
Thus, there is no universal advantage. Everything depends on the predictability of the project.
Prime Cost Items and Provisional Sums
Many budget blow-outs are related to two small words that are usually used in the quote. Prime cost items are the allowances for those items which have not been determined yet, such as tapware, ovens, and tiles. Provisional sums refer to the works which cannot be priced at the moment since they are still unknown. Thus, low allowances make the quote seem lower and conceal the actual expenses. The allowance of $15 for tiles per square metre will hardly cover those tiles which the owner wishes to use. It means that it is necessary to check every allowance in terms of the retail price.
Ask for a separate allowance schedule and the way in which the amounts were calculated.
Latent Conditions: The Contract Clause Nobody Ever Bothered to Read
Most residential contracts include a clause about latent conditions, the type of problem that’s impossible to spot before work starts, buried rock, old foundations or contaminated soil, for example. If these turn up, the extra cost usually lands on the homeowner.
Taking the time to carefully read this clause, and asking your builder about how they will notify and price up such discoveries will save you from nasty surprises further down the line. Doing some site tests and investigations before signing can chop down the list of unknowns quite a bit.
Variations: Why You Don’t Want to Be Avoiding the Arguments
Changes happen on almost every renovation. Owners have a change of heart, builders come across rotten framing, and suppliers pull products mid-job.
In NSW, changes have to be agreed in writing, a rule that protects both parties from nasty miscommunications. A good record of variations should include:
- A clear description of what’s changed and why it’s needed.
- The actual cost impact, including any builder’s knocks.
- The time impact, so you know exactly how many days the change adds.
- And finally, signatures from both parties to confirm before the work starts.
Keeping a running record of variations can prevent those nasty end-of-job shocks. A total that grows right in front of you is much easier to manage than some massive surprise invoice that lands out of the blue.
Delays, Extensions and Who Should Pay
Most contracts allow the builder a bit more time for certain events, like bad weather, variations or delays caused by the homeowner. These extensions of time should be claimed in writing as they happen, not all bunched up at the very end.
Some contracts also set a figure for how much the builder has to pay for each day of unjustified delay, often called liquidated damages. The amount is usually pretty small, but its presence makes builders more keen to keep the project on track. Homeowners should definitely check if the contract includes it and how it’s worked out.
Inspections, Certifiers and Those Key Milestones
Projects needing approval have a principal certifier who checks key progress points. Inspections usually happen at the footings, frame, waterproofing and final completion. Each one confirms the work matches what’s on the approved plans and meets the National Construction Code.
A certifier’s job is to check compliance, not the finish quality. A wall can pass inspection and still have pretty poor paintwork or wonky joints. Owners should definitely give the place a walk-through at each milestone with their own list of things to check.
Handover, Defects and Those Statutory Warranties
Practical completion means the work is all wrapped up apart from a few minor oversights or defects. Final payment usually depends on this stage, so a careful inspection beforehand is really important.
In NSW, homeowners get statutory warranties that kick in long after the handover. Major defects are covered for six years, minor ones for two years. These protections still apply even if the contract wording says otherwise.
The NSW Guide to Standards and Tolerances is a great resource for nailing down arguments about what’s acceptable workmanship.
The Months After Move In: Fixing the Things You Never Saw Coming
Some defects only show up once a house has been lived in for a full season. Doors start sticking, cracks open up, and sealant pulls away in the wet areas. Keeping a record of each one with dated photos can build a pretty strong case for getting them fixed.
A reliable building company that families recommend will come back to fix any early issues promptly. Keep a record of defects from the first day you move in, and raise it formally while the warranty periods still apply.
