HIA fixed-price contract: builder's guide

TL;DR

The HIA fixed-price contract sets a lump-sum contract price at signing, but the final amount can shift through prime cost and provisional sum adjustments, approved variations, and EOT costs. Builders earn margin on PC/PS excesses only, not on the base allowance. Cooling-off periods apply in all three major states: 5 business days in NSW (contracts over $20,000), 5 business days in VIC (major domestic building contracts over $10,000), and 5 business days in QLD (contracts over $3,300). The most common cost blowout is undercooked PC and PS allowances at signing time.

What the HIA fixed-price contract is

The Housing Industry Association publishes a suite of standardised building contracts for residential work across Australia. The fixed-price (lump-sum) version establishes a single contract price at signing that covers all labour and materials for the described scope of works. It is the dominant contract type for new residential construction in NSW, VIC, and QLD.

The contract name varies by state:

State	Contract name	Common code
NSW	NSW Residential Building Contract for New Dwellings	Commonly called the HIA New Dwellings contract
VIC	Victorian New Homes Contract	Commonly called the HIA New Homes Contract
QLD	New Homes Construction Contract	QC1

A QLD variant called the QC2 (Peace of Mind New Homes Construction Contract) also exists. The QC2 is similar to QC1 but has limited variation rights and no provisions for prime cost or provisional sum items, effectively locking the price harder.

The contracts are designed to comply with each state’s building legislation and are updated when statutory requirements change. Builders are not required to use an HIA contract, but they are the industry standard for residential new builds and are drafted to comply with state-specific mandatory requirements (verified 2026-05-09: HIA Contracts Online, HIA QLD Building Contracts).

Lump-sum mechanics

The contract price at signing represents the builder’s best estimate of the full cost of the described work, plus margin. It is a lump sum: the builder bears cost overruns on work where the scope was clear and priced at signing. The price is fixed except for the following adjustments:

Approved variations: scope changes requested by either party, priced and authorised in writing before the work proceeds
Prime cost (PC) item reconciliation: see below
Provisional sum (PS) reconciliation: see below
Extension of time costs: where the contract allows cost recovery for delays not caused by the builder (state-specific)
Rise and fall clauses: some contracts include an option to allow price adjustments for materials cost increases. In the HIA suite these are optional clauses. If the contract does not include a rise and fall clause, the builder wears materials cost movements.

The fixed-price label means the builder carries the risk on all priced line items. The client carries the risk on PC and PS allowances, which are by definition unresolved at signing.

Prime cost items

A prime cost (PC) item is a fixture, fitting, or individual article where the owner has not yet selected the specific product at the time of signing. The PC allowance in the contract covers supply only, not installation. Typical examples: tapware, door furniture, kitchen appliances, light fittings.

Under HIA contracts, the allowance is the builder’s best estimate of the supply cost at signing time. The builder does not have to disclose the margin embedded in the allowance.

Reconciliation: When the owner selects the product and the actual supply cost is known:

If actual cost is less than the allowance: the contract price reduces by the difference.
If actual cost is more than the allowance: the owner pays the actual cost plus the builder’s margin, applied only to the amount exceeding the allowance (not the full supply price).

The NSW HIA contract lists PC items in Schedule 7. Builders must complete this schedule with reasonable estimates at signing time (verified 2026-05-09: HIA prime cost and provisional sums for NSW).

Provisional sums

A provisional sum (PS) covers work where both materials and installation labour cannot be accurately priced at signing. The PS allowance is an estimate for the total cost of the work, including supply and installation. Typical examples: rock excavation, site fill, swimming pools, tiling to a bathroom not yet designed.

Reconciliation: Same margin rule as PC items, applied to the excess above the PS allowance. The HIA contract (Clause 21.6 in the NSW version) sets out the calculation (verified 2026-05-09: HIA prime cost and provisional sum items).

Key distinction between PC and PS:

Item type	Covers	Installation included?
Prime cost (PC)	Supply only	No
Provisional sum (PS)	Supply and installation	Yes

Using a PC item where a PS is correct (or vice versa) is a common source of contract disputes. If the item involves both product and labour, it is a PS.

Builder’s margin on excesses

The builder earns margin on PC and PS excesses only, not on the base allowance. If the allowance is $5,000 and actual cost is $6,500, the builder claims $1,500 plus margin. If actual cost is $4,200, the builder credits $800 to the owner. The margin percentage is either stated in the contract or defaults to the statutory or industry standard for the state.

This means deliberately undercooked allowances do not give the builder more margin at signing: they only create a claim pathway for excesses later. However, they do shift risk to the owner and inflate the apparent contract price blowout narrative.

Statutory requirements by state

NSW

Legislation: Home Building Act 1989 (NSW) and Home Building Regulation 2014 (NSW).

Requirement	Rule
Written contract threshold	Required for residential building work over $5,000 (incl. GST)
Cooling-off period	5 clear business days after owner receives a signed copy, applies to contracts over $20,000
Deposit limit	Maximum 10% of contract price
PC/PS disclosure	Itemised in Schedule 7 of the HIA NSW New Dwellings contract; must be reasonable estimates

The cooling-off period for NSW: the clock starts when the owner receives the signed contract, not when they sign. The owner must give written notice to exercise the right. Builders cannot commence work or order materials during the cooling-off window. The builder cannot deduct costs if the owner cancels within the period (verified 2026-05-09: NSW Government guide to building contracts, s.7BA Home Building Act 1989 (NSW)).

VIC

Legislation: Domestic Building Contracts Act 1995 (VIC). Note: significant amendments passed in 2025 take effect from 1 December 2026. The table below reflects the rules current to the date of this article.

Requirement	Rule
Written contract threshold	Required for major domestic building contracts (domestic building work over $10,000)
Cooling-off period	5 business days after owner receives a signed copy of the contract
Deposit limit	5% for contracts $20,000 or more; 10% for contracts under $20,000
PC/PS disclosure	Must be clearly identified in the contract
Prohibited clauses	Cost escalation clauses (unless contract over $500,000); cost-plus clauses (unless over $1 million)

On cooling off in VIC: the owner pays $100 plus the builder’s approved out-of-pocket expenses incurred before withdrawal. The builder retains nothing else (verified 2026-05-09: Consumer Affairs Victoria cooling off, Consumer Affairs Victoria deposits).

Heads up on VIC 2026 changes: The Domestic Building Contracts Amendment Bill 2025 (VIC) passed in 2025, with most changes commencing 1 December 2026. The upcoming changes move deposit limits and progress payment percentages from the Act into regulations. Verify current requirements after December 2026 via Consumer Affairs Victoria before quoting these figures in a contract (verified 2026-05-09: Norton Rose Fulbright on VIC DBCA reforms).

QLD

Legislation: Queensland Building and Construction Commission Act 1991 (QLD) and associated Schedule 1B.

Requirement	Rule
Written contract threshold	Required for domestic building work over $3,300
New home construction	Written contract required regardless of price
Cooling-off period	5 business days after owner receives a signed copy of the entire contract (and Consumer Building Guide for contracts over $20,000)
Deposit limit	5% for contracts over $20,000; 10% for contracts $3,301 to $19,999
On withdrawal	Owner pays $100 plus builder’s reasonable out-of-pocket expenses

QLD contract levels: Level 1 ($3,301 to $19,999) and Level 2 ($20,000 and above) apply to renovations and extensions. New home construction requires a written contract regardless of price (verified 2026-05-09: QBCC domestic building contracts, QBCC deposits and progress payments, QBCC cooling-off period).

QC2 note: The QLD QC2 contract has no provisions for provisional sums or prime cost items. If allowances are needed for unresolved items at signing, use QC1.

Mandatory contract content

All three states require certain content in residential building contracts. The HIA suite is designed to include these. Key mandatory elements common across states:

Written contract signed by both parties
Builder’s licence number and name
Description of the work and reference to drawings and specifications
Contract price and payment schedule
Cooling-off notice
Reference to home warranty insurance (where applicable)
Consumer Building Guide (required before signing in VIC and QLD for applicable contracts)

The HIA contracts also include:

Variation procedure and written authorisation requirement
Extension of time (EOT) mechanism and grounds
Practical completion definition and process
Defects liability period length
Dispute resolution process

Progress payment stages

Progress payments under the HIA fixed-price contract are typically stage-based: base/slab, frame, lock-up, fixing, practical completion. The percentage due at each stage is set in the contract (which must comply with statutory limits in VIC). In NSW there is no statutory stage percentage cap, but payments must be against completed work.

VIC statutory stage percentages (for a full build) under the Domestic Building Contracts Act 1995:

Stage	Percentage
Base	10%
Frame	15%
Lock-up	35%
Fixing	25%
Practical completion	15% (balance)

These add to 100% including the deposit. Verify these are current for any contract signed after December 2026 given the pending VIC legislative changes (verified 2026-05-09: Consumer Affairs Victoria deposits and payments).

What can go wrong

The fixed-price label creates a false sense of certainty for clients and sometimes for builders too. Common blowout causes:

Undercooked PC and PS allowances at signing. The builder can only claim excesses. If allowances are set too low (either accidentally or to win the job), the client faces a stream of claims above contract price. On a new home build, PC and PS excesses are the single biggest source of disputes.
PC/PS misclassification. Using a PC item for work that includes installation (which should be a PS) means the installation cost is not in the allowance. The builder then raises a variation to recover it.
No rise and fall clause in a volatile materials market. Builder wears all cost increases. If contracts are signed in a rising market without a rise and fall clause, the builder absorbs the loss or disputes the contract.
Variation creep. Clients changing selections, adding work, or amending specifications. Each variation must be priced and authorised in writing before the work proceeds. Unsigned variations are a common hold at practical completion.
Cooling-off miscalculated. Business days only, excluding weekends and public holidays. In NSW, December 27-31 are also excluded. Missing the deadline means the owner cannot rescind without the builder’s agreement.
Deposit demanded before home warranty insurance is in place. In NSW, VIC, and QLD, builders cannot request a deposit until applicable home warranty insurance (HBCF, DBI, QBCC Home Warranty Scheme) is in place and a certificate given to the owner.

References

HIA Contracts Online (Housing Industry Association) (verified 2026-05-09)
HIA NSW building contracts and related documents (verified 2026-05-09)
HIA QLD building contracts and related documents (verified 2026-05-09)
HIA prime cost and provisional sums for NSW (verified 2026-05-09)
HIA prime cost and provisional sum items (VIC) (verified 2026-05-09)
NSW Government: contracts for residential building work (verified 2026-05-09)
NSW Government: guide to providing home building contracts (verified 2026-05-09)
Home Building Act 1989 (NSW) (verified 2026-05-09)
Consumer Affairs Victoria: cooling off on a building contract (verified 2026-05-09)
Consumer Affairs Victoria: deposits and payments for domestic building (verified 2026-05-09)
Consumer Affairs Victoria: preparing a major domestic building contract (verified 2026-05-09)
Domestic Building Contracts Act 1995 (VIC) (verified 2026-05-09)
Norton Rose Fulbright: VIC Domestic Building Contracts Amendment Bill 2025 (verified 2026-05-09)
QBCC: domestic building contracts (verified 2026-05-09)
QBCC: cooling-off period (verified 2026-05-09)
QBCC: deposits and progress payments (verified 2026-05-09)