Under the Contract
Now you have signed the contract with the builder, there are some arrangements you need to make about payment, access and inspection.

Prime cost items

Aim to choose your fittings and appliances before you sign the contract so you can give details of brand names and models to allow accurate pricing.

While it's best to get a fixed price for all work under a contract, certain fixtures such as a stove or special fittings may need to be selected afterwards. Because these items cannot be costed exactly before the work begins they are listed as 'prime cost' items (PCs).
The builder or tradesperson should allow a price, which covers their expected cost.

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Deposit

For minor jobs like changing a power point or unblocking a pipe, it's unlikely you'll be asked to pay a deposit. However, bigger jobs where materials are a large component of the cost, the builder or tradesman may ask for a deposit.

In most States there is a maximum deposit that you can be asked to pay. In NSW for example, 10 per cent is the maximum for jobs under $20,000 and 5 per cent for jobs above that amount.

If the work is required to be covered by home warranty insurance, it's illegal for the contractor to ask for a deposit or other payment unless the insurance has been taken out and a certificate of the insurance is given to you.


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Variations and additions

Before you sign a contract, be confident that you've thought of everything. Changing something later could blow out your budget. Such changes are referred to as an:
  • Addition - This would be something you thought about after signing the original contract and wish to add to the building project.
  • Variation - This is a change or adjustment to what has already been agreed to in the contract.

Addition - This would be something you thought about after signing the original contract and wish to add to the building project.

The builder or tradesperson may need to vary the contract because of a council requirement or unforeseen circumstances.If the reason for variation is the builder's or tradesperson's fault, you do not have to pay for any extra work to rectify the problem. Variations must be in writing and attached to the contract and signed by both of you.

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How to make a variation

Before the work commences on the variation the builder or tradesperson should give you:
  • A written description of the work;
  • Any plans or specifications for the work; and
  • The extra cost, and any extra time required to complete the work.
a written description of the work;

If you agree on the work and the price both of you sign this written notice before starting the work in question.

If the variation is needed because there is likely to be danger to someone or damage to property, there may not be time to put the details in writing. In this case, the written variation may be done after the work has been carried out.  In all other instances, variations must be in writing.

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Progress payments

For minor work the builder or tradesperson will probably be happy if you pay within a week of the job being finished.

However, if the job is several thousand dollars or more, it's reasonable for them to ask you to make progress payments so they can pay for materials and labour as the job progresses.

The rule is you only pay for work that has already been done. Sometimes the bank lending you the money will have special requirements for progress payments. If so, this may need to be included in an additional clause in the contract.

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Progress inspections

For large projects you may consider getting a progress inspection done by an independent building consultant or architect before each payment is made.

If you do, it will be the consultant's job to make sure all the work set out in the contract has been done and meets the appropriate standards.  However, defective work may have been covered up with paint or internal wall cladding and may not be picked up by a building consultant.

Ideally, the consultant should inspect the work at times when problems can be identified. Be prepared to pay between $250 - $500 for each inspection.

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Access to the site

Most contracts allow the builder to be given access to the site for the purpose of carrying out the works. You shouldn't interfere with this because it can delay the work schedule and incur extra costs.

The builder should also give you (or your representative) access to the site for the purpose of inspection. Persons needing access may include lending authorities, inspectors from statutory authorities (gas, electricity and water), council officers or private certifiers.

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Ending the contract

The contract normally contains provisions about ending the contract before the work has been completed. Usually, it would be a last resort and only after careful consideration, reasonable negotiation between both parties and, on your part, obtaining specific legal advice.
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