Why your new home build keeps going over budget (and how your contract could have stopped it)

21 Jan

Written By Build Together Project Management

You think the key to avoiding budget blowouts is setting a realistic budget upfront.

But actually, most budget disasters happen because of what's written in your building contract, not what's missing from your spreadsheet.

Here's what I see all the time:

Someone comes to me six months into their build. They've done everything right. They researched builders, got three quotes, added a 10% contingency buffer. They even created a detailed budget breakdown in Excel.

But now they're $40,000 over budget and the walls aren't even up yet.

What they wanted vs what actually happened

They wanted a smooth build that stayed on budget. They tried setting a total budget and tracking every expense carefully. They assumed that if they were organized and did their homework, they'd be protected.

But it didn't work.

Why? Because while they were busy managing their budget, their building contract was quietly allowing cost increases they never saw coming.

The thing everyone gets wrong about building costs

Most people think budget control happens in the planning stage. Pick the right finishes, don't go overboard on upgrades, keep a buffer for surprises.

But the real cost control happens in your contract.

Your building contract determines whether your builder can add provisional sum markups of 15-20%. It controls whether price rises get passed on to you or absorbed by the builder. It decides if delays cost you money or just time.

I learned this the hard way watching client after client come to me after signing, frustrated that their "fixed price contract" kept getting more expensive.

What actually protects you from cost blowouts

Last month, I reviewed a contract for a couple building in Melbourne. Standard HIA template. The builder seemed great. The price felt right.

But buried in the contract were clauses that would have let the builder:

Pass on any price rises for materials with just 5 days notice
Charge them $200 per day if they were late responding to any request

These weren't shady tactics. They were standard clauses in an industry standard contract.

We spent two hours going through their contract together. We identified eight clauses that created budget risk. We negotiated changes to four of them and created a communication plan for managing the others.

They're now three months into their build, and they've had zero surprise costs.

Not because they're better at budgeting than anyone else. But because their contract doesn't allow the builder to add costs without clear justification and approval.

The false assumption that's costing you thousands

Everyone assumes a "standard" contract means it's balanced and fair.

But standard just means commonly used. And most standard building contracts are written to protect the builder, not you.

The couples who stay on budget aren't the ones with the biggest contingency funds. They're the ones who understood their contract before signing it.

What to do before you sign anything

If you're about to start a build, the most important thing you can do isn't setting a bigger budget or choosing cheaper finishes.

It's understanding exactly where your contract allows costs to increase and making sure you're protected.

I work with people just like you to review their building contracts before they sign. We go through every clause that affects cost, timeline and quality. You'll walk away knowing exactly what you're agreeing to and where the risks are.

Most people save thousands just by catching these issues early.

Get a Building Contract Health Check before you sign