Fixed price or cost-plus:
what do builders mean, and which protects you?

Part of a bigger picture: the whole checklist for choosing a builder in Queensland.

What is a fixed price contract, really?

It's the standard Queensland domestic building contract, level 2 for work of $20,000 or more, with a price on the front page.

The price can only move in ways the contract names: a variation you agree to in writing, an allowance that comes in above or below its estimate, or a provisional sum for work that couldn't be priced yet. Everything else is the builder's problem. If the framing timber goes up, that's on them.

That's the protection. It's also why a careful builder spends time on the block and the soil test before signing one: the more they know, the fewer allowances they need.

What is a cost-plus contract?

The builder charges the actual cost of labour, materials and subcontractors, plus a percentage or a fee. There's no fixed total. There's an estimate, and the estimate isn't a promise.

Cost-plus exists for jobs that genuinely can't be priced: a heritage restoration where nobody knows what's behind the walls, or work that has to start before the design is finished. For a new house on a cleared block, where the design is done and the ground is tested, there's much less reason for it.

What does the QBCC say about cost-plus?

This much, on its own pages:

“QBCC strongly recommends home owners obtain formal legal advice before signing either of these types of contracts which increase your legal risk, reduce your Home Warranty Scheme protection and often result in disputes and cost overruns.”

Queensland Building and Construction Commission, Consumer Building Guide, version 3, effective July 2023, on cost-plus and construction management contracts.

Cost-plus contracts carry a lack of price certainty, a high incidence of serious disputes, and a disincentive for the contractor to minimise costs because payment is proportionate to them. The QBCC says reports show final costs “often considerably higher at 50% to 100% greater than anticipated,” and that protection for non-completion under the Queensland Home Warranty Scheme is not available.

Queensland Building and Construction Commission, Contracts and agreement types, reviewed 27 June 2025. The regulator's summary, not ours.

That last point is the one to hold onto. If a builder on a cost-plus contract can't finish, the scheme that would otherwise help you complete the house doesn't apply to that contract.

Where does a fixed price stop being fixed?

At the allowances, and it pays to count them.

An allowance is an item the price can't fix yet because you haven't chosen it or nobody's checked it: tiles, tapware, sometimes the site works. The QBCC's guide says allowances should be kept to a minimum because the final cost often exceeds the estimate. A fixed price with a long list of allowances behaves a lot like a cost-plus contract for those items.

Ask for each allowance to be pointed at, and ask why it's there. A builder who has done the soil test and walked the block should have very few on the site side.

What should you check before signing either?

• The contract type, in words, on the front. Fixed price, cost-plus or construction management.
• The price and its allowances. The QBCC checklist asks you to check what proportion of the total is allowances.
• The deposit. For a contract of $20,000 or more the maximum before work starts on site is 5%, with an exception up to 20% where more than half the work is done off site.
• The start and practical completion dates, and how the completion date moves.
• The Consumer Building Guide. The builder must give it to you before you sign a contract at or over $20,000. If you haven't got it, don't sign.
• The cooling-off period. Five business days after you receive the signed contract and the guide, with a small cost to withdraw.
• The licence. Search it on the QBCC's register before anything else. How is here.

Common questions

Sources: Queensland Building and Construction Commission, Consumer Building Guide (version 3, effective July 2023); Contracts and agreement types and Deposits and progress payments (both reviewed 27 June 2025); Schedule 1B, Queensland Building and Construction Commission Act 1991. Read 17 September 2026. Thresholds and rules change; check the QBCC's current pages. This is a plain-English guide, not legal advice.