Builders can be confusing with their terminology and industry talk they use on a daily basis.

Building is like any other industry, there is a lot of terminology used and you can feel lost at times. Here are some terms that are often misunderstood, but do become very important when they appear in a building contract. Understanding the proper terms puts you on a level playing field with the builder when it comes time to consider quotes and signing contracts, helps reduce stress and eliminates budget blow-outs.

Below, we will explain what each of the most common terms used in the Building Industry actually mean.

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Provisional Sum (PS):  A Provisional Sum, more commonly known as a PS, is an allowance that the builder has made to complete a task. It covers labour only or labour and materials. They are useful when the final selections have not been completed at the time of signing the contract.

Prime Cost Item (PC): Much like a Provisional Sum, a prime cost item is a dollar figure allowance used in building quotes and contracts. It’s an allowance for materials such as appliances, sinks, taps etc. Note that the allowance for a Prime Cost item only covers the supply of that item. If possible make your selection choices prior to signing a contract.

Preliminary Building Agreement/Contract (PBA): A Preliminary Building Agreement or Preliminary Building Contract are also referred to as ‘pre-lims’ by builders. They are a pre-contract document that includes all of the tasks that need to be organised prior to signing a building contract. Engineering, soil tests and working drawings all need to be completed in order to produce a fixed price contract. A Professional builder will always start with a Preliminary Building Agreement before committing to a full building contract.

Extension Of Time (EOT): An Extension of Time is simply the amount of days that are added to your building contract.

Variations: Variations can get introduced for many different reasons. The most popular reason for a variation being added is when you change your mind on something after the contract has been signed.

Rock Clause: Finally, a rock clause is found on most building contracts. It is there to protect your builder from unfortunate unforeseen circumstances like hitting rock during the excavation.

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To complete this article, make sure you understand, and you are happy with the proposal your builder has put together, for the construction of your new home.