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GLOSSARY OF TERMS

Builders use lots of industry jargon and acronyms, which can be intimidating if you’ve never come across these terms before. Like any industry, there’s certain terminology we use on a daily basis. Below are some common terms that are useful to familiarise yourself with and that I’ll be referring to in the coming pages.

Builder

There are 2 types of building professionals:

A licensed builder (supervisor) is an individual who has obtained a builder’s licence.

This type of builder can supervise building works for a principal contractor or be a direct employee of the principal contractor. This type of builder can carry out works up to the value of $20 000.

A licensed builder (principal contractor) is either an individual or a proprietary limited that has met the requirements of the home-building compensation fund and are allowed to contract for works valued above $20 000.

CC (Construction Certificate)

This can be applied for at the same time as the Development Application (see below). It certifies that the construction methods and materials are fit for purpose and compliant with the NCC (National Construction Code) and Australian standards.

CDC (Complying Development Certificate)

A fast-track approval process for straightforward residential, commercial and industrial developments. If the application meets specific criteria, it can be determined by a council or accredited certifier. Commonly what a residential renovation will apply for.

DA (Development Application)

Usually lodged with your local council, this is a request for development approval, which is more complex than a CDC and should be applied for if your project doesn’t meet the CDC criteria. This type of application consists of standard application forms, plus supporting technical reports and plans.

EOT (Extension of Time)

Simply put, the number of days added to a building contract if a variation has been made to your contract which will delay the completion. This delay can be due to inclement weather or any other reason outside of the builder’s control. An EOT extends the contract completion date of your project and is recorded in your building contract.

Estimate

The first thing to understand is the difference between a quote and an estimate.

Even amongst builders, this term gets used loosely. Step one is always to start with the estimate. You’ve likely been planning your dream home for some time. You know you want four bedrooms, three bathrooms, a two-car garage and a swimming pool for the kids. Maybe you even have a budget in mind. This is extremely helpful for a builder to know.

Armed with this information, getting an estimate is simply confirming that what you want is roughly within your budget. It’s the starting point in the building process.

Estimates are ballpark figures based on your criteria. They don’t require the builder to go away and calculate every material and fitting. Estimates don’t usually cost you anything and are a basis for understanding roughly what the works will cost before detailed work or planning has begun.

One way you can tell if you are getting an estimate instead of a quote is by how long the actual document you receive is. A one-page estimate is fairly standard and has necessary information to let you know if your renovation is within reach or not.

NCC (National Construction Code)

This series of volumes is the bible of Australia’s construction world. They are used by builders, engineers and other relevant tradespeople, and provide the necessary requirements for safety, health, amenity and sustainability in the design and construction of new buildings (and new buildings in existing buildings) throughout Australia.

PBA (Preliminary Building Agreement)

A Preliminary Building Agreement or Preliminary Building Contract, also referred to as “pre-lims”, are pre-contract documents which include all of the tasks that need to be organised prior to signing a building contract.

Structural engineering, geotechnical engineering, hydraulic engineering, soil tests and drafting working drawings all need to be completed in order to produce a fixed-price contract and a professional builder will undertake these for you as part of a PBA before committing to a full building contract. For a detailed preliminary building agreement, you can expect

to pay a custom-home builder between $5000–$25 000 depending on the size of your project. Signing a PBA also does not wed you to that builder. As a PBA is completed before proper quoting can be complete, you are free to seek quotes from other contractors.

PCA (Private Certifying Authority)

These individuals are regulated by the Building Professionals Board in each state and are subject to strict accreditation criteria and legislative requirements. Alternatively, a PCA may be your local council. Regardless, a PCA can issue your CC and CDC to confirm that the development satisfies the legislative requirements. During construction they also carry out inspections at key stages, which can differ for every project.

PC (Prime Cost item)

A Prime Cost item is a dollar-figure allowance used in estimates, formal quotes and contracts. It’s an allowance for materials such as appliances, sinks and taps –­ essentially a budget where the final selection of those items is still to be confirmed. Note that the allowance for a Prime Cost item only covers the supply of that item. Any labour associated with installation should either be included in the building contract or listed separately as a Provisional Sum (see below).

Just like a Provisional Sum, a Prime Cost item can change depending on your final selection, and therefore can incur additional costs. In order to minimise your exposure to budget overruns, where possible, make your selection choices before signing a building contract.

PS (Provisional Sum)

An allowance that the builder has made to complete a task. It can cover labour only or labour and materials. A PS is useful when the final selections have not been made or when it’s not possible to include in a quote due to unknown factors at the time of signing the contract. For example, if you require rock excavation this will usually be done on rates.

A PS is an estimate, which mean they often change when the final cost of the tasks is calculated. Be wary if your builder has filled your building contract with lots of provisional sums as you could find your contract price increases dramatically throughout the build.

If your builder is experienced and has reviewed your drawings, there shouldn’t be any need for a PS. Your builder will generally know exactly what’s required. Builders who rely on using provisional sums in their quotes are typically disorganised and are not prepared to put in the time to quote your job properly. It’s a big red flag and the chances are you’ll be taken advantage of for two reasons:

1 Typically they include unrealistically low PS allowances in their quote so that their price appears much lower than their competitors – in the hope you’ll make a decision purely based on the price

2 These builders know that if there was any error in the final costs, they will be passed directly onto you, the client, which means they have no risk or responsibility

Quotation

A detailed quote is between 25–40 pages and specifies every inclusion. It should reference working drawings of your project. A quote details the number of materials and the amount of labour required for the duration of your project.

Creating a detailed (and correct!) quote is a time-consuming process for a builder, often taking more than 50 hours to complete. A quote for your new home or renovation involves professional estimators, contacting subcontractors for quotes and creating a lengthy and detailed job schedule. This can easily run up a cost to the builder of several thousand dollars. It’s for this reason that a fixed-price quote from a professional builder should never be free. A nominal fee is charged for their time to provide you with a detailed quote for your project. Be wary of builders offering free quotes. They’re able to do this as they’re often rushing the process and are likely missing incredibly important details about your home. Remember that step one is to work with a builder and ask for an initial estimate to see if your project can be built within your budget.

If you are working with a preferred builder on a quote for your project, make sure you ask for a copy of the job schedule. This will also show you if the builder has quoted the job or guesstimated it.

Subcontractors

Like builders, these general traders are also required to be licensed. Subcontractors usually work in the following trades: bricklaying; carpentry; decorating; dry plastering; excavating; fencing; general concreting; glazing; installation of security doors, grilles and equipment; joinery; metal fabrication; minor maintenance/cleaning; minor tradework; painting; roof plumbing; roof slating; roof tiling, stonemasonry; swimming pool repairs and servicing; underpinning/piering; wall and floor tiling; waterproofing; and wet plastering.

Specialist trades include air conditioning and refrigeration; electrical; disconnection and reconnection of fixed electrical equipment; plumbing; draining; and gasfitting.

Variation

Variations happen for many different reasons, most commonly when you change your mind about something after the contract has been signed. Variations document what has been changed along with any additional costs that relate to labour, materials and administration fees. You could also incur variations when any unforeseen work arises. This is typical of renovations and/or extensions.

If there was no way of knowing about the issues at the time of quoting your project, it’s simply an unforeseen variation that needs to be raised so the builder can do the necessary work. Every time a variation is raised, it typically comes with an Extension of Time attached. Make sure you are happy with everything in your contract before signing it to avoid changing your mind and causing serious delays.