INSIGHT · CONTRACTS & PAYMENTS
Victoria restricts cost-plus,
SA caps its margin, four more states set disclosure rules.
Cost-plus domestic building contracts are treated differently in each state. As read on 25 October 2026: in Victoria a builder must not enter one unless it is of a class the Regulations allow, which for contracts from 1 August 2017 means work reasonably estimated to cost $1,000,000 or more, or a qualifying renovation, and it must contain a fair and reasonable estimate. South Australia allows recovery of actual cost plus an additional amount not exceeding 15% of that cost. Queensland and Tasmania require a method and an estimate; WA requires a cost plus heading and acknowledgment.
Analysed 25 October 2026 · Domestic Building Contracts Act 1995 (Vic), Authorised Version 094 as at 1 July 2026, and Domestic Building Contracts Regulations 2017, Version 004 from 1 July 2021 · Home Building Act 1989 and Home Building Regulation 2014 (NSW), read 9 October 2026 and checked on 25 October 2026 against archived copies · QBCC Act 1991 (Qld), current from 1 February 2026, and QBCC Regulation 2018, current from 1 September 2026 · Building Work Contractors Act 1995 (SA), version 15.1.2026, and Regulations 2026, version 1.9.2026 · Home Building Contracts Act 1991 (WA), as at 5 April 2023, and Regulations 1992, as at 1 September 2025 · Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) · Building Act 2004 (ACT), Republication 56 · Building Act 1993 (NT), as in force at 10 February 2026 · all others read 25 October 2026.
Key takeaways
- Victoria limits when cost-plus may be used: Domestic Building Contracts Act 1995 s 13(1): a builder must not enter into a cost plus contract unless it is of a class allowed by the Regulations, or the work is renovation, restoration or refurbishment of an existing building where the cost of a substantial part cannot be calculated without carrying out some work. Regulation 10 allows contracts entered into on or after 1 August 2017 for work reasonably estimated to cost $1,000,000 or more ($500,000 before that date), and public construction contracts.
- South Australia caps the additional amount: Building Work Contractors Act 1995 s 29(5) makes it lawful to recover the actual cost of specified materials and work together with an additional amount not exceeding 10% of that cost, or a prescribed percentage. Regulation 19(1) of the 2026 Regulations prescribes 15%. Regulation 19(2) adds an hourly rate applied to the work actually performed, where the contract specifies the rate.
- Four states name an estimate: Victoria s 13(2): a fair and reasonable estimate of the total the builder is likely to receive. Queensland Schedule 1B ss 13 and 14: the method for calculating the price, including the contractor's reasonable estimate. South Australia s 29(8): an estimate must be fair and reasonable, marked Estimate Only. Tasmania s 14(1)(f): a method and an estimate that is fair and reasonable.
- WA takes cost-plus out of most of its Act: A cost plus contract is excluded from the definition of a home building work contract (s 3). Section 14 requires the words cost plus contract in a heading and an acknowledgment that the Act, apart from s 14 and Part 3A (home indemnity insurance), does not apply.
- We would store the estimate and the actuals side by side: A system-design recommendation: each cost-plus contract record carries the state rule relied on, the estimate as signed, the margin or fee basis, and each cost and margin claimed against it, so the running total can be compared with the estimate.
The rule in each state,
with its section
The Acts use different words for the same idea: a cost plus contract (Victoria, Queensland, WA), a cost-plus clause (South Australia), a cost-plus contract (Tasmania), and in NSW a contract price that is not known.
Victoria's s 13(3) states the consequence of a breach: the builder cannot enforce the contract against the owner, but VCAT may award the cost of the work plus a reasonable profit if it would not be unfair to the owner. WA's s 14(3) lets the owner terminate under s 19.
| State | Is cost-plus permitted for domestic work? | Threshold or class | Estimate or disclosure required | Instrument and version read |
|---|---|---|---|---|
| Victoria | Only for a class allowed by the Regulations, or a qualifying renovation, restoration or refurbishment (s 13(1)) | Contracts on or after 1 August 2017: work reasonably estimated to cost $1,000,000 or more; before then $500,000 or more; public construction where the Crown or a public entity is a party (reg 10) | A fair and reasonable estimate of the total the builder is likely to receive (s 13(2)); the contract states how the amount to be paid is determined (s 31(1)(j)) | Domestic Building Contracts Act 1995 s 13, Authorised Version 094; Regulations 2017 reg 10, Version 004. Read 25 October 2026 |
| NSW | No cost-plus provision found; s 7 allows for a contract price that is not known | Section 7 applies above $20,000 (inclusive of GST) for contracts from 1 March 2015 (cl 5(1)), measured by contract price or, if not known, the reasonable market cost of labour and materials (s 7(1A)) | The contract price if known (s 7(2)(e)); if not known or variable, a warning and an explanation of the provision allowing variation (s 7(5)) | Home Building Act 1989 s 7, version from 10 June 2026, read 9 October 2026; Regulation 2014 cl 5. Snapshot of the Act (18 January 2026) read 25 October 2026 |
| Queensland | Yes; a cost plus contract is a regulated contract where the total payable is reasonably estimated to be more than the regulated amount (Sch 1B s 5) | Regulated amount $3,300 (Sch 1B s 1 definition); level 2 from $20,000 (Regulation s 45) | The contract price or the method for calculating it, including the contractor's reasonable estimate (Sch 1B ss 13(3)(e), 14(3)(e)); for level 2, the method and allowances in the contract schedule and a warning on its first page if the price may change (s 14(5) to (7)) | QBCC Act 1991 Schedule 1B ss 1, 5 to 7, 13, 14, current from 1 February 2026; QBCC Regulation 2018 s 45. Read 25 October 2026 |
| South Australia | Yes; the starting rule is a fixed price (s 29(1)), and a cost-plus clause is lawful despite it (s 29(5)) | Division 1 does not apply to minor domestic building work: below $20,000 for contracts from 10 November 2025 (s 27(2); reg 4(4)) | This Price May Change or Estimate Only beside each such price, all such prices in a single list, and an estimate that is fair and reasonable (s 29(6) to (8)) | Building Work Contractors Act 1995 s 29, version 15.1.2026; Regulations 2026 regs 4, 19, version 1.9.2026. Read 25 October 2026 |
| WA | Yes; outside the definition of a home building work contract (s 3) | Section 14 does not apply where the stated amount is $7,500 or less or $500,000 or more, or to a builder's subcontract (s 14(2); s 3; reg 2A) | Written contract headed cost plus contract, with an acknowledgment that the Act, apart from s 14 and Part 3A, does not apply (s 14(1)) | Home Building Contracts Act 1991 ss 3, 14, as at 5 April 2023; Regulations 1992 reg 2A, as at 1 September 2025. Read 25 October 2026 |
| Tasmania | Yes; s 4 defines a cost-plus contract and s 41(3) applies the deposit limit to its estimate; no restriction found | The Act does not apply to work for a contract price under $20,000 or a greater prescribed amount (s 9(a)); regulations not read | The contract price, or a method for calculating it and an estimate that is fair and reasonable (s 14(1)(f)) | Residential Building Work Contracts and Dispute Resolution Act 2016 ss 4, 9, 14, authorised version 16 July 2024. Read 25 October 2026 |
| ACT | No cost-plus provision found in either text | Not applicable | Required contract documents are set by a Minister's determination under reg 38A, which we did not read. Not verified (25 October 2026) | Building Act 2004, Republication 56, and Building (General) Regulation 2008, Republication 52, both effective 1 October 2026. Read 25 October 2026 |
| NT | No cost-plus provision found | Not applicable | No residential contract-contents rule found in the Act; other NT instruments not read. Not verified (25 October 2026) | Building Act 1993, as in force at 10 February 2026. Read 25 October 2026 |
What the margin and fee
have to show
South Australia states a number for the builder's additional amount; none of the other texts read does. They regulate the estimate and the disclosure around it, and in Queensland and Tasmania the estimate also sets the deposit limit.
No public regulator source read states a typical or normal builder's margin. The 15% in South Australia is a statutory ceiling on the additional amount, not a market rate.
- South Australia: a percentage of actual cost, or an hourly rate: Section 29(5)(a) allows the actual cost to be incurred in acquiring specified materials and performing specified work, together with an additional amount not exceeding 10% of that cost, or such other percentage as may be prescribed; regulation 19(1) prescribes 15%. Regulation 19(2) allows, where the contract specifies an hourly rate, the rate applied to the work actually performed.
- Queensland and Tasmania: the deposit is measured on the estimate: Queensland Schedule 1B s 33(2) and Tasmania s 41(3) state that, for a cost-plus contract, the contract price used for the deposit limit includes the estimated amount. The estimate is therefore the base for 5% or 10% (or 20% where off-site work is more than 50%).
- Queensland: incomplete-work cover is written for fixed price contracts: Schedule 6 of the QBCC Regulation 2018 defines a fixed price residential contract as one whose price is fixed except for prime cost items, provisional sums and increases for labour, materials or delay costs (sch 6 s 3), and its assistance for incomplete work applies to work under such a contract (sch 6 ss 5, 6). How that applies to any contract is a question for the commission.
- Victoria: how the amount is determined is a contract term: Section 31(1)(j) requires a major domestic building contract to state the contract price or, for a cost plus contract, how the amount the builder is to be paid is to be determined. The estimate in s 13(2) is a separate requirement.
The same job priced two ways,
at the same margin.
Our calculation, for illustration only, excluding GST: a job estimated at $500,000 of cost, priced with a 10% margin both ways. The 10% is chosen for round arithmetic and is not a typical figure.
Our calculation: fixed margin = $550,000 less actual cost; cost-plus amount = actual cost x 1.10. On these numbers the fixed price puts the cost overrun on the builder and the cost-plus contract puts it on the owner. In South Australia a 10% additional amount is within the 15% prescribed by regulation 19(1); in Victoria a contract of this estimate is below the $1,000,000 class in regulation 10. Neither is a determination about any contract.
| Outcome on actual cost | Fixed price contract | Cost-plus contract (cost plus 10%) |
|---|---|---|
| Price agreed or estimated | $550,000 fixed ($500,000 + 10%) | $550,000 estimate ($500,000 + 10%) |
| Actual cost comes in at $560,000 | Owner pays $550,000; builder's margin minus $10,000 | Owner pays $616,000; builder's margin $56,000 |
| Actual cost comes in at $470,000 | Owner pays $550,000; builder's margin $80,000 | Owner pays $517,000; builder's margin $47,000 |
What we would put in a system
For each cost-plus contract, we would test for five fields.
Where agents help here is narrow. A quoting agent can build the estimate from the take-off and rates, and later match supplier invoices and timesheets to the contract's cost lines, apply the stated margin and draft the progress claim; a person confirms. No agent decides whether a cost-plus contract is permitted, whether an estimate is fair and reasonable, or what an owner must pay. Those are questions for the parties, the regulator, a tribunal and your advisers.
| Field | Why it is load-bearing |
|---|---|
| State, contract date and the rule relied on | Victoria's class depends on the contract date (before or after 1 August 2017) and the estimate; South Australia's 15% is in reg 19(1) of the 2026 Regulations, and the same 15% was in reg 16(1) of the 2011 Regulations in their version from 10 November 2025 to 31 August 2026; earlier versions were not checked. |
| The estimate as signed, and how it was built | Victoria, Queensland, South Australia and Tasmania each require an estimate, and Queensland and Tasmania measure the deposit on it. |
| Margin or fee basis, as a rate | South Australia caps the additional amount as a percentage of actual cost, or allows an hourly rate the contract specifies. |
| Each cost claimed, with its evidence and the margin applied | The amount payable is the actual cost plus the stated addition, so each line needs its invoice or timesheet. |
| Running total against the estimate | The disclosure wording (Estimate Only, the price warning) only stays meaningful if the gap is visible. |
Questions worth asking
of your own contracts
For a Victorian builder: does each cost-plus contract record the class of regulation 10 it relies on, or the renovation ground in s 13(1)(b)?
Section 13(1) allows a cost plus contract only in those cases, and s 13(3) states the consequence where the section is not complied with. Recording which ground was relied on, with the estimate, is the evidence. General information as read on 25 October 2026, not legal advice.
For a South Australian builder: is the additional amount stored as a percentage of actual cost, and is it within the prescribed figure?
Regulation 19(1) of the Building Work Contractors Regulations 2026 prescribes 15% for s 29(5)(a). A margin stored as a fixed dollar sum cannot be tested against a percentage of actual cost. General information as read on 25 October 2026, not legal advice.
For a Queensland or Tasmanian builder: was the deposit on each cost-plus contract measured against the estimate?
Both Acts state that the contract price for the deposit limit includes the estimated amount for a cost-plus contract (Queensland Schedule 1B s 33(2); Tasmania s 41(3)). General information as read on 25 October 2026, not legal advice.
For a WA builder: does each cost plus contract carry the heading and the acknowledgment s 14 names?
Section 14(1) requires both in the written contract unless an exclusion in s 14(2) applies. The signed document is the record. General information as read on 25 October 2026, not legal advice.
Questions people ask
about cost plus building contracts
How does a cost plus building contract work?
The builder is paid the actual cost of materials and work plus an addition, so the final amount cannot be known when the contract is signed. WA's Home Building Contracts Act 1991 s 3 describes the addition as a sum calculated as a percentage of that cost, a specified sum, or both. Victoria's Domestic Building Contracts Act 1995 defines it as a contract under which the amount the builder is to receive cannot be determined at the time the contract is made, even if prime cost items and provisional sums are ignored. As read on 25 October 2026; general information, not legal advice.
Are cost plus contracts allowed in Victoria?
Only in the cases s 13(1) of the Domestic Building Contracts Act 1995 allows: a class in regulation 10 of the Domestic Building Contracts Regulations 2017 (for contracts entered into on or after 1 August 2017, work reasonably estimated to cost $1,000,000 or more; or public construction), or renovation, restoration or refurbishment where the cost of a substantial part cannot be calculated without carrying out some work. The contract must contain a fair and reasonable estimate (s 13(2)). As read on 25 October 2026; general information, not legal advice.
What is the maximum builder's margin on a cost plus contract in South Australia?
Section 29(5)(a) of the Building Work Contractors Act 1995 allows the actual cost together with an additional amount not exceeding 10% of that cost or a prescribed percentage, and regulation 19(1) of the Building Work Contractors Regulations 2026 prescribes 15%. That is a statutory ceiling, not a market rate. As read on 25 October 2026; general information, not legal advice.
Cost plus vs fixed price building contract: what is the difference?
In a fixed price contract the builder carries the risk that actual cost exceeds the price; in a cost-plus contract the owner pays actual cost plus the addition. In our illustration excluding GST, a $500,000 cost estimate at a 10% margin is $550,000 either way, and an actual cost of $560,000 makes the cost-plus amount $616,000 while the fixed price stays $550,000 (our calculation). South Australia's s 29(1) starts from a fixed price; Victoria restricts cost-plus by class. General information, not legal advice.
Does a cost plus contract need an estimate?
In Victoria (s 13(2)), Queensland (Schedule 1B ss 13 and 14), South Australia (s 29(8), for any price that is an estimate only) and Tasmania (s 14(1)(f)), the Act requires an estimate or a fair and reasonable estimate. NSW s 7(5) requires a warning and explanation where the price is not known. As read on 25 October 2026 (NSW on 9 October 2026); general information, not legal advice.
What this analysis
does and does not show.
Evidence note
- What it shows
- Whether each state's domestic building legislation permits, restricts or regulates cost-plus contracts, any threshold or class, and the estimate or disclosure it requires, at the versions listed; plus South Australia's statutory ceiling on the additional amount and an illustration of the same job priced fixed and cost-plus, labelled as our calculation.
- Key facts quoted
- Vic s 13(1), (2), reg 10: $1,000,000 or more reasonably estimated for contracts from 1 August 2017, fair and reasonable estimate. SA s 29(5), reg 19(1): additional amount up to 15% of actual cost. Qld Sch 1B ss 13, 14: method and reasonable estimate. Tas s 14(1)(f): method and fair and reasonable estimate. WA s 14: cost plus contract heading and acknowledgment. NSW s 7(2)(e), (5): price if known, warning if not.
- The NSW Act and Regulation were read on 9 October 2026 through a rendering proxy and saved; on 25 October 2026 the register blocked access, and archived copies (Act 18 January 2026, Regulation 1 December 2025) were read as a check. The South Australian texts were read through a rendering proxy.
- Consumer Affairs Victoria guidance was not read. ACT and NT rows record that no cost-plus provision was found in the texts read; the ACT Minister's determination of required documents and other NT instruments were not read.
- Tasmanian regulations, including any prescribed amount above $20,000, were not read.
- The illustration is our calculation with an assumed 10% margin, excluding GST. It is not a typical margin and not a price for any job.
- No public source read states a normal or typical builder's margin, and none is given.
- Nothing here is legal advice, and it does not determine whether any contract is permitted, compliant or enforceable.
Bring us one cost-plus contract and its estimate.
Send us a signed cost-plus contract, its estimate and the last progress claim. We will show you which state rule its wording lines up with, and whether your records can show the running cost against the estimate.
General information about published legislation only. It is not legal advice and it does not determine whether any contract is permitted, compliant or enforceable.
Sources
Suggested citation: Domestic Building Contracts Act 1995 and Regulations 2017 (Vic), Home Building Act 1989 and Regulation 2014 (NSW), QBCC Act 1991 Schedule 1B and Regulation 2018 (Qld), Building Work Contractors Act 1995 and Regulations 2026 (SA), Home Building Contracts Act 1991 and Regulations 1992 (WA), Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas), Building Act 2004 (ACT) and Building Act 1993 (NT), at the versions listed, as read 25 October 2026 (NSW 9 October 2026). Derived figures: the fixed price and cost-plus illustration, our calculation.
- Victorian Legislation - Domestic Building Contracts Act 1995: Authorised Version No. 094, incorporating amendments as at 1 July 2026 · read 25 October 2026 (version list through a rendering proxy) · Legislation register
- Victorian Legislation - Domestic Building Contracts Regulations 2017: Version 004, in force from 1 July 2021 · read 25 October 2026 · Legislation register
- NSW legislation - Home Building Act 1989 No 147: Current version for 10 June 2026 to date, read 9 October 2026 through a rendering proxy; Internet Archive snapshot of 18 January 2026 read 25 October 2026 because the site blocks automated access · Legislation register
- NSW legislation - Home Building Regulation 2014: Current version for 16 May 2025 to date, read 9 October 2026 through a rendering proxy; Internet Archive snapshot of 1 December 2025 read 25 October 2026 · Legislation register
- Queensland Legislation - Queensland Building and Construction Commission Act 1991: Current version from 1 February 2026 · read 25 October 2026 · Legislation register
- Queensland Legislation - Queensland Building and Construction Commission Regulation 2018: Current version from 1 September 2026 · read 25 October 2026 · Legislation register
- South Australian Legislation - Building Work Contractors Act 1995: Version 15.1.2026 · read 25 October 2026 through a rendering proxy because the site blocks automated access · Legislation register
- South Australian Legislation - Building Work Contractors Regulations 2026: Version 1.9.2026 · read 25 October 2026 through a rendering proxy because the site blocks automated access · Legislation register
- Western Australian Legislation - Home Building Contracts Act 1991: As at 5 April 2023, version 04-h0-00 · read 25 October 2026 · Legislation register
- Western Australian Legislation - Home Building Contracts Regulations 1992: As at 1 September 2025, version 03-k0-00 · read 25 October 2026 · Legislation register
- Tasmanian Legislation - Residential Building Work Contracts and Dispute Resolution Act 2016: Authorised version 16 July 2024, shown as current · read 25 October 2026 · Legislation register
- ACT Legislation Register - Building Act 2004 and Building (General) Regulation 2008: Republication No 56 and No 52, both effective 1 October 2026 · read 25 October 2026 · Legislation register
- NT Legislation - Building Act 1993: As in force at 10 February 2026 · read 25 October 2026 · Legislation register