Most building disputes start with a word somebody did not understand. Here are the terms that actually cost people money on a Broome build, in plain English.
Contract and pricing terms
Cost plus contract. You pay the actual cost of the work plus the builder’s margin, which can run up to 15 percent of the total build. You sign without a final price.
Fixed price contract. The price is locked at signing. Worth knowing that fixed price protects you from paying more, not from a builder who cannot afford to finish.
Provisional allowance. A placeholder figure for something you have not chosen yet, such as tiles or taps. Every allowance is a number that will change, and it usually changes upward.
Preliminary building agreement. A paid agreement covering detailed design, site investigation and full pricing. Across the industry it runs $5,000 to $25,000 depending on project size. H&M Tracey does not charge for our initial Free Consultation or for the preparation of our Estimated Price Proposal (EPP). This initial process gives prospective clients the opportunity to discuss their building requirements with our team, review a proposed or selected floor plan, and receive an estimated price to build their new home. If the client is happy with the proposed design and estimate and wishes to proceed, we then request an $8,000 deposit under our Preliminary Building Agreement. This allows H&M Tracey to progress to the next stage, including the preparation of working drawings, selections, required reports and other documentation necessary to prepare the project for Shire Building Approval and final contract pricing.
Variation. A change to the contracted scope. The cost depends heavily on when you raise it. Before the relevant trade starts you pay the price difference. After, you also pay an extension of time, a daily delay cost, the trade’s return visit and a variation fee.
Extension of time, or EOT. Formal approval to extend the build period, usually for weather, variations or supply delays. It moves your completion date legitimately, which is why the grounds for it matter.
Site and structural terms
Rock clause. If rock is found during excavation, removing it is at your cost. This applies even under a fixed price contract, because nobody can price what is under the ground before they dig.
Soil classification. A test that determines how reactive your ground is, which sets the slab design. It is a cost driver, not a formality.
Site costs. Everything required to make your block buildable. Contours, retaining, access for machinery and trucks, service connections. This is the line item that most often surprises people.
Cyclone wind region certification. In Broome your home must be engineered and certified for the wind region it sits in. Roofing and fixings specified for 180 kilometres an hour sustained wind are not interchangeable with material that only meets minimum code at 140.
Stages and completion terms
The five loan stages. A construction loan releases funds across slab or base down, frame up, lock up, fit out, and completion.
Lock up. The point where the home can be locked, so external walls, roof, windows and external doors are in. It is a loan stage, not a finished house.
Practical completion. The build is finished and usable apart from minor items on a defects list. This is normally when handover happens.
Defects liability period. The window after handover in which the builder returns to rectify defects. Following handover of your new home, H&M Tracey provides a 4-month defects liability period, together with a 6-year structural guarantee, subject to the terms and conditions of your building contract.
Home Indemnity Insurance. Cover required in Western Australia that protects you if the builder cannot complete the work. It is illegal for a builder to take a deposit before it is in place.
The one that matters most
If you only remember one, make it provisional allowance. Ask for a list of every provisional item in your contract with a realistic figure beside it rather than the allowance figure. That single question closes the gap between the quote you were shown and the invoice you actually pay.
We are happy to go through a contract from any builder with you before you sign. Call 0483 961 437 or come into 9 Lucas Street, Broome.
For the full picture on costs, timelines, contracts and how to check a builder, read Building or Renovating in Broome, The Complete Guide.
