Frequently Asked Questions for New Homes

What is a Provisional Sum?

Provisional Sum, more commonly known as a PS, is an allowance that the builder has made to complete a task. It covers labour only or labour and materials. They are useful when the final selections have not been completed or it is simply not possible to include a quote due to factors that are unknown at the time of the contract signing.

What is a Prime Cost Item?

Much like a Provisional Sum, a prime cost item is a dollar figure allowance used in building quotes and contracts. It’s an allowance for materials such as appliances, sinks, taps etc. Essentially a dollar budget where the final selection of those items is still to be confirmed. Note that the allowance for a Prime Cost item only covers the supply of that item. Any labour associated with the installation of that item should either be included in the contract or listed separately as a provisional sum.

What is a Preliminary Agreement?

A Preliminary Building Agreement or Preliminary Building Contract are also referred to as ‘pre-lims’ by builders. They are a pre-contract document that includes all of the tasks that need to be organised prior to signing a building contract.

What is a EOT (Extension of Time)?

An Extension of Time is simply the amount of days that are added to your building contract. These usually appear once you add a variation to your contract that will delay the completion or it can be due to inclement weather or any other reason outside of the builder’s control. EOT’s simply extend the contract completion date of your new home that was recorded in your building contract.

What is a Variation?

Variations can get introduced for many different reasons. The most popular reason for a variation being raised is when you change your mind on something after the contract has been signed. Variations document what has been changed along with any additional costs that relate to labour, materials and administration fees..

What is a Builders Margin?

Simply put, builder’s margin is the amount of profit added by the builder to cover their expenses. Typically, you’ll see a ‘builders margin’ on any variations raised so that the builder can complete the work.

What is a Rock Clause?

A rock clause is something you’ll find in most building contracts, It is there to protect the builder from unfortunate unforeseen circumstances like hitting rock during the excavation. The rock clause applies to fixed price contracts to be aware. You can’t avoid it, but you can certainly prepare for it.

What is a Estimate?

The first thing to understand is the difference between a quote and an estimate. Even among builders themselves, this term gets used pretty loosely. You know you want 4 bedrooms, 3 bathrooms, a 2 car garage and a swimming pool for the kids would be nice too. Maybe you even have a budget in mind which is extremely helpful for a builder to know, so they can plan the home you want. Armed with all of that, getting the estimate is really just confirming that what you want is roughly within your budget. It’s the starting point in your building process.

Estimates are ballpark figures based on your criteria. They don’t require the builder to go away and calculate every material and fitting. Estimates don’t usually cost you anything and are generally worthless as no detailed work or planning has begun.

One way you can tell if you are getting an estimate instead of a quote, is by how long the actual document you receive is. A one-page estimate is fairly standard, and can easily include all of the necessary information to let you know if your new home is within reach.

What is a Quote?

A detailed quote should be between 25-40 pages and specify every inclusion and can even reference working drawings of your project. A quote details for you and the builder, the amount of materials and labour for the duration of your project.

Creating a detailed (and correct!) quote is a time-consuming process for a builder, often taking more than 50 hours to put together. A quote for your new home involves professional estimators, contacting subcontractors for quotes and creating a lengthy and detailed job schedule. This easily runs up a cost to the builder of several thousand dollars. It’s for this reason that a full quote from a professional builder should never be free. A nominal fee is charged for their time to provide you with a detailed quote for your project.

Builders offering free quotes often rush their process and miss out incredibly important details for your home. Remember that step 1 is to work with a builder and ask for an initial estimate to see if your project can be built within your budget.

Some builders will cut corners and leave out specifics and instead include Provisional Sums (PS’s) and Prime Cost Items (PC’s). If you see either of these on your document it should raise a flag. These are just estimated allowances and so down the road, they can end up costing you significantly more once the real values are known. This is a dead giveaway the builder saved time and gave you an estimate rather than a detailed quote. If you are working with a preferred builder on a quote for your new home, make sure you ask for a copy of the job schedule. This will show you if the builder has quoted the job or guesstimated

Why does a Builder need to know what your BUDGET is?

When a builder asks your budget they are not doing this to save money or rip you off, they are asking because they are concerned if your budget will fulfill your dreams!!

When a builder asks this question he can give you professional information that may save you a lot of money and time before you speak with a Architect or designer or anybody else the builder is more realistic on what can and cannot be achieved they also have contacts in the building industry that can do the work a lot cheaper than doing this process by yourself and can be the middle man making sure you dont get ripped off along the way!!

They also have a better knowledge of different construction methods and how your house shape and size can be orientated which will save you money in the long run. Remember not all builders can do this for you just the good ones!!

Got more questions?

If your question isn’t covered in our FAQ please do not hesitate to contact us and we will try our best to answer all of your questions regarding building a new home.

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