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Common misunderstood contract terms which could cost you tens of thousands of dollars.

If you are looking to build a new home or extension and do not work in the construction industry then certain terms can become confusing and lead to misunderstanding and disappointment. We are going explain the 2 most common terms that are the root cause to a a lot of frustration, disappointment and cost blowouts. These two terms are Prime Costs and Provisional Sum. By reading and understanding these terms, it will ensure when it comes to signing a building contract, you will know exactly what you are paying for and will prevent your budget getting blow out of the water.

What are Prime Costs? Prime costs are an allowance in the building contract for the supply of necessary items not yet finally selected, for example taps or door furniture. The more prime cost allowances you have in your contract, the more likely your project will vary from the original contract price. To avoid this, find a builder who is willing to put the time and effort into working with you to select the items you would like to include in your home before you sign the contract. It is also important you do not just let them choose items that they want to use or set allowances for items which may be substantially lower than the actual price of the items you would like to include.


What are Provisional Sums? A provisional sum is an allowance in the contract for the cost of foreseeable necessary work, including the supply of materials not fully described or detailed at the time that the contract commenced, for example joinery items or a service connection.

The more provisional sums you have in your contract, the more likely your project will vary from the original contract price. To avoid this, find a builder who is willing to put the time and effort into quoting and sourcing the pricing for your project

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