What does a fixed-price building contract leave out?

Start with the inclusions and exclusions. Then add the other costs, check how much loan and cash will actually be available, and confirm who pays each amount and when. That order makes it easier to find a shortfall while you can still change the plans.

This guide covers a home built by a licensed builder. Your solicitor should explain what the contract legally requires; our role is to check how the proposed work and costs fit the finance.

It covers the work described in the contract, subject to its terms. Do not read the headline price without the plans, specifications, allowance schedules and exclusions that sit behind it.

A driveway may be included in one quote and left for you to arrange in another. The same can apply to retaining walls, service connections, fencing, landscaping and window coverings. Comparing the headline prices alone can make the less complete quote look cheaper.

Three terms are worth understanding before you compare quotes:

Prime cost items and provisional sums are not the same thing. HIA's Queensland guidance distinguishes unselected items from broader work and labour allowances. The exact adjustment and margin depend on the contract. HIA: Prime cost and provisional sums.

I would ask for the allowance amount beside the item you actually intend to choose. A generous total contract price does not tell you whether a particular allowance is enough.

Ask what the quote assumes about soil, slope, excavation, rock, drainage, access and retaining. Then ask whether the necessary reports have been completed and whether their findings are reflected in the price.

Your builder and relevant building specialists need to answer the scope and technical questions. If the answer changes the cost, send the updated documents to the broker or lender before relying on the original finance figures.

Add up the costs first, then compare them with the funding. Include land and purchase costs, the building contract, essential work outside the contract, and a separate amount for uncertainty. Keep household living costs in view too.

The example below shows why a project can fit the headline funding figures and still need another check.

The proposed loan and cash cover the listed $895k. There is no spare amount in that calculation for an unpriced item or a later increase. If the $195k also includes money you need for rent or emergencies, less is available for the project and a gap opens.

Example only. These figures are not a Brisbane building-cost estimate, a loan approval or a recommended deposit. They assume the loan and cash have not already been counted elsewhere, and exclude any additional contingency.

Count a deposit paid to the land seller or builder once in the project cost. Deduct it from the cash you still have available.

Use one consistent view:

• For the whole project, include all costs and all funding, including amounts already paid.
• For what remains, subtract costs already paid and compare the balance with undrawn loan funds and cash still available.

Do not compare the whole loan with only the unpaid bills, or count a paid deposit as both money spent and cash still available. If you already have a land loan, identify its balance separately so the proposed total debt is clear.

A balanced budget does not mean every payment can be made on its due date. Ask when your contribution must be used, which costs the lender will fund and what evidence it needs before releasing money.

For example, Westpac's construction guide says borrowers must use their agreed contribution before it makes construction progress payments. Check your own lender's requirements, as payment arrangements differ.

Keep the land deposit, builder deposit and total cash contribution separate in your plan. The word deposit can refer to different payments at different stages.

A property costing $895k to buy and complete is not automatically worth $895k to the lender. The valuation estimates the finished property's value; it does not simply reimburse what you have spent.

In the example above, assume the lender accepts a finished value of $850k. The project costs $45k more than that value. However, the valuation difference is not automatically a $45k funding shortfall.

The proposed $700k loan is about 82.4% of the $850k value. Whether that loan can proceed depends on the lender's permitted loan-to-value ratio, your application, any mortgage-insurance requirements and the other approval conditions.

If the lender instead approved only $680k, the listed project would need $215k in cash. Against the $195k available, that would leave a $20k shortfall before any extra contingency. This is a separate hypothetical calculation, not a statement that the lender will cap the loan at $680k.

I would resolve the actual loan amount before signing up for work that depends on it. Depending on the circumstances, the options may include contributing more cash, revising the scope or checking a different lender before the build starts. Each option needs a fresh check of costs and approval conditions.

If there appears to be a factual problem with the valuation, gather the relevant plans, specifications and comparable sales. Our guide to challenging a bank valuation explains what to prepare. A challenge does not guarantee a higher result.

Get the complete agreement reviewed, including documents incorporated into it. A brochure or preliminary estimate may not contain the work, price adjustments and deadlines that will govern the build.

For the finance review, I would want:

Your solicitor can explain finance conditions, price-adjustment clauses, cancellation rights and deadlines. The builder or an independent building adviser can explain whether the scope and allowances suit the proposed home. The lender decides what it will finance and under which conditions.

For Queensland domestic building contracts of $20,000 or more, the usual maximum builder deposit is 5%. There is a limited exception allowing up to 20% for substantial customised or prefabricated work performed off site that represents more than 50% of the contract price. These are limits on the builder's deposit, not a lender's minimum home-loan deposit. QBCC: Deposits and progress payments.

Ask your solicitor about the applicable contract requirements and your lender about funding that deposit. A deposit permitted under building rules is not automatically payable from the construction loan.

For the wider application and staged-payment process, see how construction finance works. If the land has not settled, also check buying land and building later.

A change agreed with the builder does not automatically increase your approved loan. Before you commit to a variation, ask for its price, any timing change and the effect on the total amount needed to finish.

QBCC says agreed variations generally need to be documented and agreed in writing before the work begins. Its guidance explains what the document needs to say about cost and delay, with a limited urgent-work exception. Ask your solicitor how the requirements apply to the proposed change. QBCC: Contract changes and variations.

Then send the proposed change to your broker or lender. The finance question is whether the revised work, valuation and remaining funds still fit the approval.

CommBank's construction guide says variations may require a new valuation, additional costs may need to come from your savings, and extra borrowing is treated as a new construction-loan application. It also reserves the right not to fund drawings where variations were made without its approval. Confirm the rules for your own lender before work proceeds.

Reducing one contract item does not necessarily leave loan funds available for a different upgrade. The lender may need to accept the replacement work and its value first.

Start with the documents you have, including the signed contract and variations. Separate a known unpaid bill from a possible future cost. Then work out the amount needed to complete the home, rather than asking only for enough money to pay the next invoice.

Contact the broker or lender managing your construction loan. Ask what remains approved, what has already been paid and whether the change requires reassessment. Do not commit to further variations on the assumption the lender will increase the loan.

If the issue is whether the builder can charge an amount or whether you can change the work, ask your solicitor. A finance assessment cannot decide a contract dispute.