{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Economic research and forecasting Economics Housing outlook Tailored market research Economic reports and data Inspiring Australia's building professionals HOUSING The only place to get your industry news Media releases Member alerts Submissions See all
Business support
Business support $vuetify.icons.faArrowRight
Become an apprentice host Hire an apprentice Why host a HIA apprentice? Apprentice partner program Builder and manufacturer program Industry insurance Construction legal expenses insurance Construction works insurance Home warranty insurance Tradies and tool insurance Planning and safety services Building and planning services How can HIA Safety help you? Independent site inspections Solutions for your business Contracts Online HIA Tradepass HIA SafeScan HR Docs Trusted legal support Legal advice and guidance Professional services Industrial relations
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials and products Concrete, bricks and walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Falls from heights Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects COVID-19 Getting approval to build Sustainable homes
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer Hear what our apprentices say Advice for parents and guardians Study with us Find a course Get your builder's licence Learn with HIA
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Get involved Become an award judge Join a committee Partner with us Get to know us Our members Our people Our partners Mates rates What we do Mental health program Charitable Foundation GreenSmart
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Australian Housing Awards Awards program National Conference Industry networking Events
HIA products
HIA products $vuetify.icons.faArrowRight
Shop @ HIA Digital Australian Standards Contracts Online Shipping and delivery Purchasing terms & conditions Products Building codes and standards Hard copy contracts Guides and manuals Safety and signage See all
About Contact Newsroom
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Change location
{{propApi.text}} {{region}} Change location
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

HIA cost-plus contracts in Western Australia

Cost-plus contracts are commonly used for home alterations or extensions, or high-end new builds, where the cost of the work cannot always be reasonably calculated without some of the work actually being carried out. HIA publishes cost-plus contracts for use, both online and in hardcopy format.

Compliance requirements

A cost-plus contract must be headed ‘Cost-plus Contract’ and must contain a statement in which the parties acknowledge that it is a cost-plus contract and that the Home Building Contracts Act 1991 (‘the Act’) does not apply to it (except in relation to the requirement for you to take out home indemnity insurance).

Accurate estimates

A frequent cause of disputes in cost-plus contracts occurs when the costs of doing the work exceed the owner’s initial expectations. A poorly calculated estimate may expose you to liability as it may be considered misleading and deceptive.

In the event you provide your client with an estimated contract price, ensure that:

  • you define the work to be done and the area where it will be done, especially where renovations are involved
  • the purpose of the estimate is clear (i.e. for the purpose of the owners obtaining finance or the nominated amount for home indemnity insurance purposes)
  • you provide your client with regular updates in relation to the cost of the works calculated progressively
  • where a variation occurs, advise the client of the new contract price estimate
  • the estimate is accurate and you have a good basis for its calculation
  • your estimate is based on the latest known material and labour costs and that you have made allowance for cost increases, and
  • you provide a range of prices.

Scope of works and variation

Ensure that your contract contains a sufficient description of the works you are being contracted to do. Plans and specifications may form part of the contract. If the scope of works is varied at any stage of the job, you must execute a written variation. You should also give your client a warning that the price will increase in accordance with the contract conditions.

Administration of payments

Under the HIA cost-plus contract, there is no provision for acceptance of a deposit prior to commencement of the works. However, you do have the option of electing between periodic progress claims or can instead choose to issue progress claims when a minimum amount in costs has been incurred.

Payments are based on the actual cost of the building works and the builder’s fee which is either a set fee for the whole job or an agreed percentage of the cost of the building works. 

HIA’s cost-plus contract states that the cost of the works includes:

  • the costs of labour and services
  • the net costs of all subcontracts
  • fees payable to statutory authorities
  • fees for professional services (e.g. surveyors, engineers, etc.)
  • premiums payable for insurances
  • net cost of building materials, temporary structures and cartage
  • the cost to rectify any defects as a part of the Defects Liability Period, other than making good faulty materials or workmanship
  • cost for plant, equipment and services (wholly for the Works) 
  • costs to repair, replace and/or rebuild any damage or loss as a result of causes beyond the control of the builder
  • any excessed payable for Insurance claims by the builder, and
  • any GST payable on the supply of works.

The builder’s fee is the money that you are charging the owner on top of the cost of the building works. Your own time on the job is a direct cost and should be charged as a cost of the works, and not come out of the builder’s fee. 

It is also important to ensure that your progress claims are claimed in accordance with the contract. When making a claim it is recommended that you provide your client with a statement together with copies of the invoices/receipts being claimed whether or not they have been requested. In the event of non-payment, there are steps that can be taken under the contract, such as suspending the works.

Calculation of GST

Calculation of progress payments can become complex when applying GST to the cost of the building works and the builder’s fee. Disputes can arise if there are concerns of overcharging GST and it is important to ensure that GST is not undercharged either.

To find out more, contact HIA's Workplace Services team

Email us

Share with your network:

More articles on:

{{ tag.label }} {{ tag.label }} $vuetify.icons.faTimes
Find guides, how-tos, resources and more

Business support


Supporting building professionals with custom built services and products.

  • Legal support
  • Contracts Online
  • Host an apprentice
  • Insurance services
  • Managing safety

Explore Business support

Building it right topics


Can’t find what you need, check out other resources that might be closer to the mark.