Home' Homes : Homes 2011 Contents 96 Scoop Publishing | WA’s Best Homes & Design 2011/12
new legislation, administered by the Building
Commission, a division of the Department of
Commerce. It’s expected owner-builders will
require approval from the new Board. There
will be a new requirement for them to show
evidence of land ownership plus evidence they
have sufficient knowledge of the duties and
responsibilities of being an owner-builder. See
www.builders.wa.gov.au for more information.
Clients often visit the site
and request changes during
construction. This can pose
a dilemma for the builder
who is legally required to put the variation
in writing and get it signed by both parties
before making the change.
Builders must fix minor
defects they’ve been
notified of in writing
within four months of the
date of practical completion. Faulty work must be
remedied within six years of completion.
Home Indemnity Insurance
is compulsory for building
work costing more than
$20,000. It covers the
owner, and subsequent owners, for completion
of the work and loss of deposit if the builder
becomes insolvent or stops trading for any other
reason within six years of the date of practical
completion. A builder must take out this cover
before starting and give the owner a copy of the
certificate of insurance. Owner-builders - take
note – you must take this out if there’s a chance
you’ll be selling the property within seven years
of the time your building licence was issued.
The builder’s insurance
policy expires on the date
of practical completion, so
have insurance in place.
Reno insura nce
Check that your home
insurance policy is valid
during a renovation period
because some policies
aren’t - and once the project is complete, alter
the insured value to reflect replacement cost.
Get several quotes and
compare them. Too good
to be true quotes should
raise a red flag that
something isn’t right. There’s no such thing.
Understand the contract
This sets out payment
details – usually made as
progress payments when
the builder fi nishes agreed
stages. Practical completion is worth mentioning
because it leads to misunderstandings. It means
the point where all the building work is complete
(or all but completed) in accordance with the
contract and the building is fit to be occupied. It
doesn’t mean that it’s perfectly complete, nor
that minor defects have been fixed.
Types of contracts
Fixed price. The builder
takes the risk on price
escalation and factors in
a contingency margin.
It provides a level of certainty to both parties,
although there are usually some estimates
(‘provisional sums’) for items such as site work.
It can also allow for variations once building
starts. Builders take out insurance for escalations
in periods of rapidly rising costs.
Cost plus. The builder obtains materials and
services at each stage and passes these actual
costs plus an agreed margin on to the owner.
It usually involves agreed hourly rates for the
supply of a builder’s labour. You, the client,
take a risk by agreeing to pay all costs (often
monthly) plus a fee. However, the industry word
is that cost escalation is fairly low in the current
subdued market so this system may benefit you.
What’s not included?
Pricing is usually quoted
as a base price from which
you add additional features
and upgrades. Check
whether the builder has included council approval
fees, excavation and drainage, driveways and
landscaping, curtains and blinds, and so on. Factor
in these extra costs and extra for furnishing.
At time of publication,
legislation was before
Parliament to repeal the
Act 1939, abolish the Builders’ Registration
Board and establish a Building Services Board.
It’s expected that from late July 2011, builders’
registration, owner-builder applications and
industry compliance will be regulated under
Contracts & Insurance
“There’s a certain
level of sustainability
that doesn’t cost much
extra and saves a lot
in running costs.”
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