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How to prevent this
You should make allowances in your budget for unforeseen costs, such as design changes or inflation. This is called contingency. A general rule of thumb is 10-20% of the total cost.
Plan well at the start so you can avoid making changes mid-project. Builders generally use standard fittings, such as plain white plastic power points and generic taps. The costs of upgrading these items can add up quickly if not planned for. If you want different colours, styles or qualities of fittings or materials, state them in the contract or supply them yourself.
Check what’s in the contract rather than assuming what’s included. For example, flyscreens might not be supplied with new windows and a new house build might not include landscaping. There are many websites that offer checklists that you can use.
You can also protect yourself by using a fixed-price contract, where costs are set at the start. This means that unless the contract includes an agreement for you to cover extra costs, the builder must cover any additional costs if they go over budget.
See Agreements and contracts for more advice about contracts, including the types of contracts, what to include and what look out for.
Read more: CAV | Managing building project costs
What you can do
Always talk to your builder and give them an opportunity to fix the issue before lodging a formal complaint or dispute. See Resolve disputes to understand the process for resolving disputes.
You may end a major domestic building contract if the contract price increases by 15% or more and the builder couldn’t foresee the increase at the time it was signed. To do this, you must give the builder a signed notice stating that you are ending the contract under s41 of the Domestic Building Contracts Act 1995 and give details of why the contract is being ended. You are entitled to a refund of money paid to the builder, minus reasonable costs for work already done. Weigh up the cost of accepting the increase versus cancelling the contract and finding a new builder to complete the work.
If the costs seem unreasonable or breach the terms of the contract, you may be eligible for Domestic Building Dispute Resolution Victoria (DBDRV). DBDRV provides free conciliation services for owners and builders in domestic building disputes. If you are unable to resolve your dispute at DBDRV through conciliation, DBDRV has the power to issue legally binding dispute resolution orders and certificates. Check that you are eligible for this service at Is our service right for you?
If you are unable to resolve the issue through DBDRV, contact Consumer Affairs Victoria’s (CAV) Building Information Line at 1300 55 75 59 for advice before taking the dispute to the Victorian Civil and Administrative Tribunal (VCAT). Consider getting independent legal advice about your options.
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Page last updated: 27/09/22