Cost-Plus Residential Building Contracts

Cost-plus is a legitimate and often sensible way to procure residential work, where the owner pays the actual cost of the work plus an agreed margin, which suits projects where scope is genuinely hard to fix up front. The trouble may be the contract you reach for. The ABIC CP-2014 C is a commercial cost-plus contract, and a commercial form may not contain the terms required by the residential building regime applying to the project.

Every state and territory regulates residential building work, so the commercial form must be checked against, and where necessary adapted for, the relevant jurisdiction. In New South Wales the unamended ABIC CP-2014 C lacks provisions the Home Building Act 1989 (NSW) requires for residential building work. In Western Australia it lacks the acknowledgment required by section 14 of the Home Building Contracts Act 1991 (WA) for a cost-plus home building contract, and it does not expressly address the home indemnity insurance requirements in Part 3A of that Act.

These Special Conditions adapt the ABIC CP-2014 C for residential use in versions tailored to New South Wales and Western Australia. They are designed to address identified requirements of the Home Building Act 1989 (NSW), or the section 14 acknowledgment and Part 3A home indemnity insurance requirements of the Home Building Contracts Act 1991 (WA), when correctly used with the matching form.

The approach is deliberately light-touch: it adds provisions directed to the identified requirements without rewriting the commercial bargain the parties have chosen. For builders and owners who prefer cost-plus to a fixed price, it provides a practical, balanced alternative to the standard residential cost-plus forms.

Ready-made versions are available now for New South Wales and Western Australia. A cost-plus contract for another state or territory requires a separate check against the legislation and circumstances applying there.