Owner Builder Agreement

An Owner Builder is a home owner who has done an "Owner Builder Course" and holds a Permit and performs the traditional role of a licensed builder to manage and insure construction work that is being carried out on his or her own residential premises.  As part of the project, you will be sourcing building materials and engaging contractors directly to carry out construction work. 

MI Constructions have happily worked with many clients who have preferred the "Owner Builder" Agreement and carries many benefits if you have the time to project manage your own build.  Generally "Owner Builder" works well on small, straight forward renovations and MI Constructions acts as a contractor for building works.

Cost Plus Construction Agreement

A Cost Plus building contract has an estimated price based on the agreed “scope of works” which is made up of the cost of building works plus a nominated builder’s margin percentage. Throughout the project, all the building costs are provided with the progress invoice. This type of building contract is often used if it is too difficult to establish a “fixed price” at the time of quoting due to unforeseen cost items, demolition issues or very complex design details. For a property owner, this can be helpful in maintaining a tight budget, however we recommend regular discussions and budget reviews throughout the build.  MI Constructions prefer to use a Cost Plus Agreement and have successfully completed many builds with this in place.  The benefits in our opinion, outweigh the negatives as not many large projects go according to the original plan and owners almost always make adjustments and changes to the original scope of works.  Benefits of a cost plus agreement are:

• It is an “open- book process” as it allows owners to receive progress payment claims with invoices for each expense/direct cost for the works.
• More incentive for owners to be involved in the build, but not as stressful as "Owner Builder".
• A builder is less likely to cut costs on materials and workmanship to increase their profit margin, as the builder's margin is guaranteed before commencing the job.
• Allows for more flexibility to owners with the constant monitoring of costs and expenditures.

Fixed Price Construction Agreement

A Fixed Price Building Contract has a fixed lump sum price for all specified building works including the builder’s margin and G.S.T.  This is a widely used form of building contract because it gives you a fixed end price to budget for. However, the fixed price can change due to building variations, time delays outside the control of the builder and any costs that have been excluded from the contract price.  A fixed price contract is only as good as the plans and specifications. If there are lots of gaps in the documentations, the contract price won’t be fixed for very long.

In our opinion, a Fixed Price only works well on a project where the owners know exactly what they want from the beginning, make no variations to the scope of works and are thoroughly organised and consistent.  Generally, Fixed Price Contracts are perfect for New Builds or smaller renovations on a house that has a sound structure with no known problems with water, pests or wanting major structural changes.