The 'Prime Cost' Trap
One of the biggest causes of budget blowouts in construction is the misunderstanding of 'Prime Cost' (PC) items. These are allowances in your contract for fixtures and fittings that haven't been finally selected yet.
What is a PC Item?
A PC item might be your kitchen tap. The builder might allow $200 for it. However, if you fall in love with a designer brass tap that costs $800, you have to pay the $600 difference plus potentially a builder's margin.
How to Avoid the Trap
Select as many items as possible BEFORE signing the contract. If you haven't selected them, ensure the builder's allowance is realistic. Ask them: 'Does this $2,000 allowance cover a stone benchtop or just laminate?'
The Margin Game
Check your contract for how variations on PC items are handled. Most builders charge a 10-20% margin on top of any price increase, so realistic allowances are your best friend.
Expert Tip
Always consult with your builder early in the design phase. Their practical knowledge can save you time and money by avoiding designs that are difficult or expensive to build.