Explaining Fixed Price Contract

Explaining Fixed Price Contract

The Fixed Price Contract

With the banks imposing tighter credit conditions this year, it is vital for clients to be able to secure their budget when building a home in 2019.

We asked Stroud Homes Northern Rivers builder Nicky Lowson about the nitty-gritty of a Fixed Price Contract.


Can you explain the basics of a Fixed Price Contract?

This is the most common form of building agreement. We use the standard HIA contract, and drafts are always sent out prior to contract signing so that you can seek advice by a solicitor or other parties.

The fixed sum provides both ourselves and our customers with a degree of certainty and with a few clauses, which are rarely required, for unforeseen circumstances of site conditions, e.g if major rock removal is required once the foundation have been dug, or the site changes conditions under severe weather event etc.

Aside from this, we provide a price with all of the preliminary results for your land, known and quoted for.


Can you explain what the Preliminary Process and Preliminary Testing include prior to signing the fixed price contract?

Soils and Preliminary testing include contours (slope of your land), soil type, wind ratings, and may uncover other issues to investigate (flood, acoustics, bush fire rating). Essentially it includes all things that determine the engineering or materials required to build your home.

A full preliminary fee also covers preliminary drawings of your proposed design based on the information, which ensures correct orientation, and that all known council requirements or estate covenants have been considered too.

It is quite a personalised process to get the design you want onto the land with all of the boxes ticked.

Free site inspection

Often, to get a pre-approval from the bank to move forward with your building project will require a copy of a Fixed Price Contract.

Almost anyone can provide a quote to you that has a “subject to” clause, but this won’t cover the TRUE cost of things, such as knowing soil types, is your block bushfire vulnerable or are there acoustic ratings applied, do you have acid sulphate soil, and much more vital preliminary information which needs to be collected in order to provide the most accurate cost.

When entering a No Obligation Preliminary Agreement with us however, we will get the information needed to give you the Fixed Price Contract you require. Guesswork is not to recommend as you might find out later that tens of thousands worth of extras are required due to earth works or reactive soils, for example.

Instead, start off with ALL the information included in this small Preliminary Deposit, consider your approved finance limit, and then you can start your plan to move forward more securely.

stroud homes contract


Are you up front with all fees and charges, and are the Prime Cost (PC) sums in your quote comparable with all quotes received?

A PC item is an amount of money included in a contract sum to purchase a specified item such as tiles, taps, doors or bathroom fittings. An agreed estimated amount is included at contract signing even if the specific products are not selected until a later stage.

A provisional sum (PS) is an amount of money included in the contract sum to cover the extent of work or materials, or both, which cannot be specifically detailed when entering a contract.  Typically, builders will include a PS for sitework costs.

We believe, wherever possible, PC sums should be avoided. We also believe that there are some builders that, unfortunately, use these PC and PS sums to up the price later or just find it too hard to get quotes for all of the things required if it is out of the standard easy build category.

At Stroud Homes Northern Rivers, we take the time to do the opposite. We encourage you to read your contract thoroughly and question any unknown prices or PC sums.

We advise you to simply not use any builder unwilling to take the time to get all of the prices needed!

calculator and pen


If there will be any additional expenses, what may these include?

There is always the small risk of hitting rock once site prep commences, unfortunately this cannot always be 100% tested for on an entire block.

ground work


Does a Fixed Price Contract allow for variations to the building work during the construction process?

We do not recommend relying on variations during construction as they are inevitably costly to both the customer and the builder.

However we can look at changes on a case by case basis. Due to the workload of processing variations, there is a fee involved.

floor plan


Am I locked into anything when signing a Preliminary Agreement?

NO, all test results are yours, and until the HIA Building Contract is signed, your choice of builder is open.

With Stroud Homes’ Fixed Price Contracts there are no hidden fees, no inflated prices and no gimmicky promotions – just real pricing that everyone can understand.

Your Local Builders
Luke Thornley
Luke Thornley