Builders margin
Builders margin is the percentage a builder adds to direct cost on a variation or PC/PS excess. Under HIA it defaults to 20% on excess and must be set in the contract.
Ask Chalkline about this →Builders margin is the percentage uplift a builder adds to the direct cost of work (labour, materials, and sub-trades) when pricing a variation or a PC or PS item adjustment, to cover overheads and profit on that extra work. It is not the same as the builder’s overall gross margin on the job: it is the specific markup applied to a cost-plus item or a change, on top of the fixed contract price.
The key rule is that the margin has to be in the contract. On PC and PS items, the builder’s margin on the allowance is already embedded in the fixed contract price; at reconciliation the margin applies only to the excess over the allowance, and under HIA residential contracts it defaults to 20% if no other rate is specified in the contract schedule. The exact rate, and the margin on variations, is whatever the contract states, so the percentage is a matter for the schedule, not a fixed industry number. Set it at signing and write it in; a variation or excess priced with a margin the contract never agreed is hard to enforce.
Document the margin and the underlying cost. A variation or PC/PS claim backed by a stated contract rate and the actual supplier or sub-trade cost is defensible; one priced on a round number with no margin basis is vulnerable if the owner disputes it or it reaches adjudication. Keep the dockets and the contract margin rate together. See allowances vs PC vs PS and variations process.
Also known as: Margin, builder’s markup, contract margin.
Category: Contracts / Cost and pricing.
Related
See also
References
- HIA: Prime cost and provisional sums, don’t forget your margin (verified 2026-05-09)
- NSW Fair Trading: Guide to home building contracts (verified 2026-05-09)
Last updated: 2026-05-30. Verified: 2026-05-09. Quarterly review for currency.