Why Preliminary Building Agreements Are Important When Building A House

by Ryan Stannard | May 1, 2021

Are you familiar with the term “preliminary building agreement” or “preliminary service agreement”?

If the answer is no, don’t worry because many people don’t understand what this building document is and its value when building a new home.

Fundamentally, a preliminary service agreement can help you avoid building defects, delays, conflict and additional unforeseen costs associated with building your new home.

People often overlook this part of the building process and think they’re saving time by deciding not to arrange a preliminary service agreement (PSA), however by cutting corners and not doing their due diligence to understand the importance of these agreements, they end up paying more for their home in the long run.

Additional Level Of Protection For You

Preliminary Service Agreements

Australian owned and operated training organisation, Back To Basics, reported that 10.6% of the cost of a typical home construction project is related to things that can’t be categorized and get stashed in the broad “other” category.

To ensure your contract isn’t riddled with “other” costs, it is important that you consult a professional builder who will provide you with a PSA including all costs associated with the build along with a fixed price quote.

So, what is a preliminary service agreement (PSA)?

In simple  terms… It is an additional level of protection for you and your builder to avoid additional hidden costs throughout the build process.

More specifically, a preliminary service agreement is a document that is drawn up precisely to your custom home and contains the essential reports to determine the process for your build.

Avoid Any Nasty Surprises

The purpose of a PSA is to equip your builder with all of the necessary information to be able to provide you with an accurate fixed cost price for your custom home build, without any nasty surprises along the way.

Preliminary Service Agreements

If you consult a building company for the build of your home, and they don’t provide you with a preliminary service agreement, how can you trust that they have taken into account all of the aspects of building a home, and included these elements in the price?

Builders who don’t provide a PSA and move straight to signing the contract are the ones who end up incorporating additional provisional sums and prime costs into the quote.

Provisional sums/prime costs are the additional costs associated with labour or materials that haven’t been factored into the contract. When you engage a professional builder, who can provide you with a preliminary service agreement, you won’t have to worry about these nasty added costs!

Too Often People Adopt The ‘Us’ vs. ‘Them’ Mentality

Preliminary Service Agreements

It’s important when planning your build and deciding on a builder, to seek a preliminary services agreement before you sign the contract in order to make sure all costs are included and your building contract is a fixed price agreement.

Too often people adopt the ‘us’ vs ‘them’ mentality when it comes to planning the build of their new home. They believe that by working with an architect and involving the builder in the later stages, they are streamlining the process.

However, by not including their builder in the design stage and engaging them in a preliminary service agreement, they often find they have wasted time because they did not factor in the important information and reports that are part of the PSA.

This often means time has been wasted having to go back to the design stage in an attempt to get the design to meet the budget.

What can you expect to receive in a preliminary services agreement?

Professional builders will provide you with an all-encompassing preliminary service agreement covering reporting on things such as soil classification, engineering and a full planning drawing.

You can expect to receive:

  •       A one-on-one consultation with your builder’s design team to work together on the layout of your home, taking into account all of the design features you wish to include in your dream home.
  •       A consultation with your local council and the builder’s designer to ensure that your plans will meet the council’s requirements and forecast any problems that may arise within the building plans.                                 
  •       Detailed documentation on the floor plans and elevations that are ready for council submission, as well as a site plan that precisely documents the areas of the building site to scale.            
  •       A 3D-coloured front elevation image of your home so you can visualise the finished design before the build has begun.                                        
  •       Important documents such as a streetscape plan, site works, preliminary construction report and contour survey will also be provided by your builder.
  •       Additionally, a professional builder will provide storm water calculations and an energy efficiency report so you can be confident you are equipped with all of the reports you need before pricing commences.

It doesn’t matter if you are building your first home or if you have built many times before…

Designing a new home can be very overwhelming and when you hear new things for the first time, it's not easy to remember everything. So that’s why we’ve put together a quick guide for The 7 Things You Must Know Before Designing A New Home. 

It’s completely free, and it will help you to keep your design on budget and avoid any nasty surprises that can sneak up on you when building a custom home.

Click on the link below to download 7 Things You Must Know BEFORE Designing A New Home.

Download Our Free Guide For Building In Adelaide