In the building industry, the term "Fixed Price" can be misleading.

While it is important to know that you are getting a "Fixed Price", it is equally important to know "WHAT" is actually fixed.

This could mean that the house is a fixed price but not necessarily the costs associated with the site work - ie excavation, extra foundations or retaining walls to name a few. Some builders will make allowances for the site work, but do not fix the cost.  This is done by making a Provisional Sum (PS) Allowance or a Prime Cost (PC) Allowance. These allowances, known as "guesstimates" in the industry, are basically "I've allowed this much and we'll sort the overs and unders out later".  So don't get caught out by this, as it is still a "Fixed Price" or at least the house part is.

Now that you have an understanding of this, be sure to ask your builder the following questions:

1. Is the site levelling required for my house construction included and a Fixed Price?
2. Is the cost of my slab and/or foundations (including piering if required) included and a Fixed Price no matter what the soil test results are?
3. Does my quoted price include all of the retaining walls required by the Certifier and/or Engineer?
4. Are all the costs associated with the connection of power, sewer and water included regardless of where they are or need to go to on the block?
5. Is site drainage included that is required by the Certifier and/or Engineer and is it a Fixed Price?

If your builder has answered NO to any of the above questions, the price is NOT fixed.

What’s included? Click here to download your personal item checklist to help you establish what is typically included in the “Turn Key” package you are looking at.

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Definition of PS and PC Items

When an amount of material, equipment and/or labour is required and the exact cost to provide these is unknown, an allowance may be allowed. Prime Cost (PC) shall mean "supply only of materials to be delivered to the site" (builder to allow for installation).  Provisional Sum (PS) shall mean "supply and fix of materials, includes total cost of plant and labour hire".  Once the exact cost for this material, equipment and/or labour is known the owners agree to pay this amount along with an administration cost.  If the allowance is less than the actual cost, the owner agrees to pay the builder the additional monies.