The term "reasonably foreseeable" refers to the costs that a reasonably competent builder could have anticipated when preparing the contract.
This means that if a cost could have been reasonably predicted or anticipated, the builder should have considered it and included it in the contract.
If the builder failed to include a reasonably foreseeable cost at the time of contract preparation, the client may not be liable for the cost, and the builder may be obligated to cover the additional expense.
The builder, on the other hand, may argue that the cost was not reasonably predictable or that the client was aware of the potential cost and accepted the risk.
In general, it's the builder's job to assess the project requirements, scope of work, risks and costs.
The contract price should include reasonable allowances for every foreseeable cost.
How Queensland Contracts Handle These Costs
In practice, this is where disputes land. Most Queensland home building contracts (the QBCC, HIA and Master Builders contracts) deal with uncertain costs in three ways. Provisional sums are the builder's estimate for work they can't price exactly yet, like rock excavation; if it costs more, you pay the difference (plus the builder's margin). Prime cost (PC) items are allowances for things you haven't selected yet, like tapware. And latent conditions clauses cover site conditions that couldn't reasonably have been found before the contract was signed. Read how your contract handles each one.
Before you sign, ask your builder: which site risks have you allowed for, and which are excluded?
Here are five costs a competent builder should foresee, but which often get missed or underestimated.
1. COSTS OF SITE PREPARATION
Before construction begins, the builder should assess the site for excavation (cut and fill), levelling and other prep work. These costs vary a lot with the site and location, and without a thorough assessment, including enough boreholes for a proper soil test, they're easily missed or underestimated.
2. UNEXPECTED SITE CONDITIONS
Builders must be ready for site conditions like hard-to-dig soil or rock, or unstable ground that needs extra foundation work.
These conditions can significantly increase project costs, and builders who fail to conduct a thorough site assessment may overlook or underestimate the possibility of unexpected site conditions.
3. BUILDING PERMITS AND FEES
Check your contract to see who is responsible for approvals and fees, such as building approval, plumbing approval and any council permits. If the builder takes it on, those costs should be in the price.
These fees vary with location and the size of the job, and builders unfamiliar with local requirements can underestimate them.
4. MATERIAL COSTS
Builders must purchase all construction materials, such as timber, concrete, steel, and other building supplies. These materials' costs can vary depending on market conditions, and builders who fail to negotiate favourable prices or lock pricing in for sufficient periods of time with suppliers may underestimate these costs and attempt to pass them through to you.
5. LABOUR COSTS
Builders must pay for all construction labour, including skilled and unskilled labour, supervisors, and construction managers. Labour costs vary depending on location, project scope, and market conditions, and builders who do not have a regular or loyal trade base may be at risk of fluctuating labour availability and costs.
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