What is a fixed price building contract?
A fixed price building contract sets a single, agreed cost for the entire custom home project, including all labour and materials, with the builder bearing the risk of cost overruns unless the owner changes the scope.
In a fixed price (or lump sum) contract, the builder quotes a single total cost to complete your home and is contractually bound to that figure. Once you sign, the price stays the same regardless of whether material costs rise, labour takes longer than estimated, or unforeseen site conditions emerge. The team know exactly what you will pay, and the financial risk of overruns falls on the builder.
This differs fundamentally from cost-plus or time-and-materials arrangements, where you pay for actual costs incurred plus a builder's margin or fee. Those contracts pass cost uncertainty to the owner and can result in bills higher than initial estimates.
the team price contracts include a detailed specification and drawings that define what is included. If you request changes mid-build (design modifications, upgrades to finishes, or additions to scope), these typically trigger variation orders and additional charges. The contract protects both parties: the builder avoids disputes over whether extra work was included, and you avoid surprise invoices for undefined extras.
Many homebuilders in Australia use fixed price contracts for custom builds because they align builder and owner interests around a clear deliverable. However, the contract's strength depends on how thoroughly the specification and drawings capture every detail before work begins. Poorly defined scope in a fixed price contract can lead to disputes if either party disagrees on what "was supposed to be included."