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Contract Warning - Perth Custom Home Builder Explains What Home Buyers Should Know About the Building Contract for a New Home


PERTH, Western Australia May, 2013 – Kim March, Managing Director at Perth custom home builder David Reid Homes Perth, grew up around builders. Her father was a builder, he ran his business from home and often took her to work sites, so she literally grew up in the construction industry. But she understands that many people didn’t, and they can find the process of building a new home confusing and time-consuming.

That’s why Kim has released a FREE eGuide – to guide people through the building process by revealing all the information a new homebuyer needs to know about the involved and often confusing process of building their very own dream home. Her eGuide, available online at, is the first home builder’s guide to a hassle-free design and build process. Kim has been generous enough to share some of the insider tips here:

The building contract begins when stage two of the approval’s process (see full eGuide at begins. Not all the selections need to have been made at contract stage, but an appropriate allowance should have been made for the type/style and budget of the home.
The contract will typically contain

  • 3 copies of the plans.
  • 3 copies of engineering plans.
  • 3 copies of the specification/addenda.
  • Finance approval if required.
  • Deposit, so that the building license can be applied for and the appropriate fees paid.

There are two types of contracts that may be utilised in the build process, as Perth custom home builder Kim explains. A fixed price contract is where the builder gives a price to complete all the works in the contract documents. The only variables are the adjustment of the PC or PS sums - please see explanation of these terms below. This is usually the preferred option for the banks. Alternatively, a ‘cost plus’ contract is calculated based on the actual costs to build the home plus a percentage or a fixed fee for the builder. The final cost for the home is an unknown and could go up or down from the estimate given at the start of the job.
“PS or provisional sums are amounts which have been allowed for items to be supplied and installed where the item is unknown at this stage,” explains Kim, who is passionate about truly integrating the dreams of new home owners when she’s building custom homes in Perth. “Typically earthworks are a provisional sum, until the earth is dug up nobody knows what we are really dealing with. Another example of this is cabinet work, where the exact layout or materials used have not yet been decided and are typically decided during the build. Prime costs are associated with amounts allowed only for supply materials where the item is unknown at this stage. This is more for tiles where the size or colour may as yet be unknown, or kitchen appliances. Installation of these items will have been allowed for in the contract sum.”
According to Kim, another term new home owners should understand before entering the design and build process is ‘variation’, which is when a change to contract documents (whether it be a selection or the plan itself) such as the addition of a doorway or making a different selection of a tap, may have a cost or refund associated with it depending on the item varied.
David Reid Homes Perth’s professional team of designers, home builders and interior decorators are passionate about building custom homes in Perth. They help home buyers to design their own dream luxury home and ensure it is built on time and within budget. The Perth custom home builder’s motto is Raising the Standard and their award-winning display homes and numerous satisfied clients are testament to their proven ability to deliver – time and time again. Visit to find out more.


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