What your building quote
should actually cover.
A building quote is only as good as the specification behind it. Here is what has to be named, what a provisional sum really means, and the questions that expose a soft number.
A building quote should name every selection, list provisional sums and prime cost items separately, state the progress payment stages, and set out how variations are priced and approved before work starts.
The real problem
The total is not the important part.
Most people compare building quotes by reading the last line. It is the least informative number on the page, because two builders can reach very different totals for the same house by making different assumptions about what they include.
The informative part is the specification behind the total. A quote is a promise about a defined thing. If the thing is loosely defined, the promise is loose, and the number will move. It will not move down.
There are two legitimate mechanisms for pricing what is not yet known: provisional sums and prime cost items.
Used honestly, they cover the handful of things that genuinely cannot be settled at contract. Used as a sales tool, they let a builder publish a competitive total while leaving half the house as an allowance. That is how a quote comes in well under everyone else and finishes well over.
Know the difference
Provisional sum or prime cost item?
They are not interchangeable, and the difference tells you where your risk sits.
Provisional sum
- ✗An allowance for work whose scope is not yet known, such as site works or rock excavation
- ✗Covers labour and materials, so the whole item can move
- ✗Reasonable where the soil report or excavation has not happened yet
- ✗A warning sign when it covers something that could have been specified, like a whole bathroom
- ✗Ask what the allowance is based on, and what happens if the real cost exceeds it
Prime cost item
- ✓An allowance for a product not yet selected, such as tapware, tiles or appliances
- ✓Covers the supply cost, with installation priced separately
- ✓Reasonable early on, when selections are genuinely not made
- ✓A warning sign when the allowance is too low for any real product to meet it
- ✓Ask to see an actual product at the allowance, in a showroom, before you sign
One test settles most of it. Ask the builder to show you a real product or scope at each allowance. If it is honest, that is a five-minute conversation.
The checklist
What a quote has to name.
Print the quote and work down this list. Anything not addressed is either an assumption or a future variation, and it is far cheaper to find it now.
- ✓The drawings and revision number the price is based on, so everyone is pricing the same house
- ✓Site works and excavation, and whether they are a fixed sum or a provisional sum
- ✓The soil classification the price assumes, and what changes if the report is worse
- ✓Every fixture and finish by brand and model, or an allowance you have seen a real product at
- ✓Windows and glazing, including type and any energy requirements that affect them
- ✓Insulation, waterproofing and the certification documentation you keep afterwards
- ✓Driveway, paths, fencing, letterbox, clothesline and landscaping, each in or out
- ✓Service connections and authority charges, and who pays them
- ✓Permit fees, engineering, soil report and energy assessment, in or out
- ✓Site clean, waste removal, temporary fencing, site toilet and power during construction
- ✓How long the quote is valid, and whether prices are subject to rise and fall
Two quotes only become comparable once both have been through that list. The apparent gap often closes entirely, and occasionally reverses.
During the build
Variations and progress payments.
A variation is any change to the contracted scope, whether you asked for it or the site demanded it. The contract should say variations are documented and priced in writing, and approved by you, before the work happens. Verbal variations break budgets and relationships at the same time.
Progress payments are staged against milestones, typically deposit, base, frame, lock-up, fixing and completion. Check the stages are clearly defined and that each payment matches work actually completed. A schedule weighted heavily to the front of the job deserves a hard question.
Victorian domestic building contracts also limit how large a deposit can be. Check the figure in your contract and query anything that looks high. The same goes for the cooling off period, the completion date and the terms covering delays. All of it belongs in the document, not in a conversation.
The contract itself
Before you sign anything.
In Victoria this should be a proper domestic building contract, not a quote with a signature line. We use detailed HIA contracts with the full documentation set behind them, and we walk clients through page by page. Nobody has complained about that meeting taking too long.
Check who you are contracting with. Confirm the builder is a registered building practitioner, that the registration matches the entity on the contract, and that the person who will run your site is the person you have been dealing with. Jarrod Gaget holds Licence No. CDB-U 65544, and he is the one on site.
- ✓A registered building practitioner, with the registration matching the contracting entity
- ✓Domestic building insurance in place for the project, and the certificate given to you
- ✓The full drawing and specification set attached to and named in the contract
- ✓A defects and structural warranty position in writing, covering what and for how long
- ✓A clear process for variations, delays and the final inspection before handover
We hand over with a full-day quality inspection, then keys, manuals, warranties and a 10-year structural guarantee, and return at three months to fix the small things every new home reveals. The custom home builds page sets out what is specified as standard, what a custom home costs covers the budget behind the contract, and our custom home builder Pakenham page shows how site costs are handled before contract.
Straight answers
Contract and quote questions.
What is a provisional sum in a building contract? +
An allowance for work whose scope cannot be fixed at contract, such as site works before the soil report is back. It covers labour and materials, so the final cost can move up or down against the allowance.
What is a prime cost item? +
An allowance for a product you have not yet selected, such as tapware, tiles or appliances. It covers the supply cost only. Ask to see a real product available at that allowance before you sign.
How many provisional sums is too many? +
There is no fixed number, but they should cover only what genuinely cannot be known yet. If whole rooms or major trades sit as allowances, the total is an estimate dressed up as a quote.
Why is one builder's quote so much cheaper? +
Usually because it includes less. Check site works, driveway, landscaping, permit fees, service connections and the allowance levels. Once both quotes cover the same scope, the gap normally shrinks or disappears.
What is a variation, and how should it be handled? +
Any change to the contracted scope. It should be documented and priced in writing and approved by you before the work happens. Never accept a verbal variation, no matter how small it sounds.
How are progress payments structured? +
Typically deposit, base, frame, lock-up, fixing and completion. Each stage should be clearly defined and each payment should match work actually finished. Question any schedule weighted heavily toward the start.
What should I check about the builder before signing? +
That they are a registered building practitioner, that the registration matches the entity on the contract, that domestic building insurance is in place for your project, and that the person quoting is the person running the site.
Got a quote you are not sure about?
Bring it to the site visit. Jarrod will tell you what it covers, what it does not, and where the number is likely to move.