Building Contracts in Queensland: Fixed Price, Cost Plus and What the QBCC Requires

Most people building a home in Queensland will sign one of two kinds of contract: a fixed price contract, where the builder commits to a sum for the work described, or a cost plus contract, where you pay the actual cost of the work plus the builder's fee. Both are legal, both are common, and both sit under the same set of Queensland rules about deposits, progress payments and paperwork.

This guide explains how each one works, where the final figure can still move, and what the QBCC requires of any domestic building contract regardless of type.

What Types of Building Contracts Are Used in Queensland?

Residential builders in Queensland generally work with one of two pricing models:

Fixed price: the builder agrees to a set price for the scope shown in the plans and specification. The price can only change through the mechanisms written into the contract.
Cost plus: the builder charges you the actual cost of labour and materials as the job progresses, plus a stated margin or fee. There is an estimate, but not a fixed total.

Which one you are offered depends on the builder, the project and how much of the scope is known when the contract is signed. It is worth asking early which model a builder uses, because it changes how you compare quotes.

How Does a Fixed Price Contract Work?

A fixed price contract locks in the price for the work described in the contract documents. If a material or a trade ends up costing the builder more than expected, the contract price for that scope does not change.

What it does not lock in is anything the contract leaves open. The final figure can still move through:

Prime cost items: allowances for products you have not chosen yet, such as tapware or tiles. Choose something above the allowance and the difference, plus the builder's stated margin, is added.
Provisional sums: allowances for work that could not be priced exactly at signing, most often rock excavation or retaining. The contract sum is adjusted once the real cost is known.
Variations: any change you ask for after signing. These should be documented in writing with the cost and time impact before the work proceeds.
Latent conditions: site conditions that could not reasonably have been foreseen, where the contract allows the extra cost to be claimed.
Price validity: most contracts fix the price for a set period. If construction is delayed beyond it, some contracts allow an adjustment.

A fixed price contract with a long list of allowances is not as fixed as it looks. The allowances are where to spend your reading time.

How Does a Cost Plus Contract Work?

Under a cost plus contract, you pay for the actual labour, materials and subcontractor costs as the build progresses, plus the builder's fee, which is usually a percentage of those costs or a fixed amount. The builder provides an estimate at the start, but the final price is whatever the work costs.

Queensland's domestic building contract rules allow cost plus contracts but require them to include a fair and reasonable estimate of the total cost. The QBCC's consumer building guide sets out the conditions in full.

Cost plus tends to suit projects where the scope cannot be pinned down at the start: complex renovations, unusual sites, or high-end homes where selections will be made as the build progresses. The trade-off is that you carry the cost risk rather than the builder, so it relies on:

Detailed cost reporting from the builder, with invoices you can check against each claim.
A clear fee structure so you know what the margin is applied to.
A realistic estimate that you treat as a floor, not a ceiling.

Fixed Price vs Cost Plus at a Glance

	Fixed price	Cost plus
What you pay	The contract sum, adjusted only through allowances, variations and latent conditions	Actual costs plus the builder's fee
Who carries cost risk on the contracted scope	The builder	The owner
Certainty at signing	High, subject to the allowance schedules	Estimate only
Suits	Well-documented projects with site investigation done	Projects where scope or selections will evolve
What to read closely	Prime cost and provisional sum schedules, exclusions, variation terms	The estimate, the fee basis, and how costs are reported

What Does the QBCC Require in Any Contract?

Queensland's domestic building contract rules sit in Schedule 1B of the QBCC Act and apply whichever pricing model you use. The QBCC's deposits and progress payments page sets them out in plain terms. The main ones:

A written contract is required for domestic building work over $3,300.
The consumer building guide must be given to you before you sign a contract of $20,000 or more.
Deposits are capped: 10% for contracts under $20,000, 5% for contracts of $20,000 or more, and 20% only where more than half the work happens off site.
Progress payments must reflect work done. The number and timing of claims is agreed between you and the builder, but each claim has to match the value of work completed at that point. Tying claims to named construction stages makes them easier to check.
Paperwork deadlines: you should receive a copy of the signed contract within five business days, and a commencement notice within ten business days of work starting on site.
Home warranty cover: for work over $3,300, the builder pays the Queensland Home Warranty Scheme premium to the QBCC before starting. Our guide to QBCC home warranty insurance covers what that protects.

Which Contract Forms Do Builders Use?

Most Queensland builders use one of three standard contract forms: the QBCC's own new home construction contract pack, which is free, or the industry contracts published by the HIA and Master Builders Queensland. All three are written to comply with Schedule 1B, but their clauses on variations, delays and allowances are worded differently, so it helps to know which one you are being handed.

Whichever form it is, the QBCC's one-page contract checklist is a good companion when you sit down to read it.

What Should You Read Before Signing?

The plans and specification the contract refers to. If a finish or detail is not drawn or specified, it is not in the price.
The exclusions. Site costs, service connections, driveways and landscaping are the items most often listed as "by owner".
The allowance schedules and the builder's margin on any difference.
The variation clause, including how changes are priced and whether they need your signature first.
The progress payment schedule and what each stage includes.
The price validity period and what happens if the start date slips.

For a sense of what drives the numbers inside the contract, our guide to the cost to build a house in Brisbane walks through the main cost centres, and our custom vs volume builder comparison explains why two quotes for similar homes can look so different.

Frequently Asked Questions

What is a fixed price building contract? A contract where the builder commits to a set price for the scope shown in the plans and specification. The final figure can still be adjusted through prime cost items, provisional sums, agreed variations and latent site conditions, all of which should be set out in the contract.

What is a cost plus contract? A contract where you pay the actual cost of labour, materials and subcontractors plus the builder's fee, rather than a fixed sum. In Queensland it must include a fair and reasonable estimate of the total cost. It suits projects where the scope will evolve, and it puts the cost risk with the owner.

What is the maximum deposit a builder can ask for in Queensland? 5% of the contract price for contracts of $20,000 or more, 10% for contracts under $20,000, and 20% only where more than half the value of the work is performed off site.

What is an HIA contract? A standard residential building contract published by the Housing Industry Association and widely used by Queensland builders. Master Builders Queensland publishes an equivalent, and the QBCC provides a free contract pack. All are written to comply with Queensland's domestic building contract rules.

If you are comparing builders and want to understand what your block will cost to build on before you get to contract stage, request a free feasibility check.