Master Builders Association
'Q&A -Fixed Price or Costs Plus Contracts'

This Weeks Episode of Home in WA

Contact:
Master Builders Association of WA

Email:
mba@mbawa.com

Website:
http://www.mbawa.com/

Phone:
(08) 9476 9800

Fax:
(08) 9476 9801

Address:
35 Havelock Street
West Perth WA 6005

This Weeks Episode of Home in WA

Kalgoorlie

Geraldton

Bunbury

Albany

Fixed price contracts are the most common form of agreement for building a home, The builder agrees to perform the work for a fixed sum.

This type of contract usually includes a number of estimates or “provisional sums” for items which can't be exactly determined at signing.
    
By law, a builder can't just take a wild guess about those costs, but is required to insert a researched and reasonable figure.
    
Fixed price contracts generally allow for variations during construction and the contract price will be adjusted accordingly. If more work is done, the builder is entitled to be paid and the price will be adjusted upwards. If work is omitted, the owner may be entitled to a price reduction.

Another popular alternative is a ‘costs plus’ contract. Here, a builder obtains materials and services at each stage of the process, passing the actual costs on to the owner and adding an agreed margin to cover overheads and profit. Usually there are agreed hourly labour rates and the builder makes claims at agreed intervals, presenting supplier invoices if required.

Contracts can be seen at the Master builders or check out Master Builders A to Z at their website, mbawa.com