Fixed Price Contract NZ: What Homeowners Should Check
A fixed price contract in New Zealand sets one agreed price for a clearly defined scope of building work before the work starts. It gives you budget certainty, but only as far as the scope is written down. Variations you request, allowances and some adjustment clauses can still change the final figure. This guide explains what is fixed, what is not, and what to check before you sign.
TL;DR
A fixed price (lump sum) contract agrees one price for a defined scope. It is only as firm as the plans, specifications and wording behind it.
Residential building work worth $30,000 or more including GST needs a written contract, and the contractor must give you a disclosure statement and checklist.
The price can still move through variations you approve, provisional sums, prime-cost allowances and price-adjustment clauses.
Get at least three detailed quotes for the same scope, keep every change in writing, and ask about any clause that lets the price rise.
If a dispute arises, start with your written quote or contract, then use a disputes process if needed.
Table of Contents
What a fixed price contract is
A fixed price contract, also called a lump sum contract, agrees a single price for a defined scope of work before it begins. New Zealand Government Procurement guidance describes it as suited to projects with well-defined requirements, and notes that provisional sums for undefined work can be adjusted as details emerge.
In plain terms: you and the contractor agree what will be built, with which materials and fixtures, and what you will pay for it. The contractor carries the risk of getting the cost of that defined work wrong. You carry the risk of changing your mind.
MBIE’s Building Performance site says a quote is based on detailed specifications and is the expected price for the work, except for matters outside the builder’s reasonable control or extra costs from variations you agree to. Consumer Protection adds that an accepted quote cannot simply be increased unless you agree to extra work or the scope of the job changes. An estimate is different: it is only a best guess.
Fixed price versus charge-up
There are two common ways to price renovation work in NZ.
Fixed price | Charge-up (cost-plus) | |
How the price is set | One agreed price for a defined scope | Actual labour and materials plus an agreed margin |
Budget certainty | High when the scope is clear | Lower, as the final cost is not known upfront |
Best suited to | Work you can describe in detail before starting | Work where the scope cannot be known yet |
What you receive | A price tied to a written scope | Invoices with timesheets and supplier and subcontractor accounts |
BRANZ describes the cost-plus approach as reimbursing actual labour and material costs plus a margin, with invoices that should include timesheets and supplier accounts. A law firm’s guide to residential building contracts explains that a fixed-price basis sets one price including costs and profit, while cost-plus gives flexibility but leaves the final construction cost uncertain.
For most kitchen, bathroom and whole-home renovations in existing houses, the scope can be defined well enough to fix a price. That is why a fixed price is the usual choice for homeowners who want to know the number before they commit.
When you need a written contract
MBIE says a written contract is mandatory for residential building work worth $30,000 or more, including GST. A written contract is recommended for lower-value work too, and it is a good habit for any job where you are paying a trade.
For work at or above that threshold, the contractor must also provide a disclosure statement and consumer-protection checklist before you sign, or provide them if you ask. Read both before you commit.
What the contract should state
MBIE’s guidance says a residential building contract should cover the following:
the parties and the site
the signing date
start and completion dates
the price or the pricing method
the work and materials
who is responsible for consents
who will carry out or supervise the work
how notices are given
the payment process
how defects are handled
dispute resolution
the procedure for variations
If any of these is missing from a draft, ask for it to be added. A contract that is silent on variations or consents is a contract that will be argued about later.
What is fixed and what can still move
This is where most homeowners get caught out. “Fixed” describes the pricing method, not a guarantee that the number on page one is the number you will pay.
Variations
A variation is a change to the agreed work. MBIE’s guidance on tenders and quotes says the final cost can change through variations and matters outside the contractor’s control. If your contract has no variation clause and you request a change affecting price or completion, the contractor must give written notice within 10 working days. That notice describes the work, required approvals and the effect on price and completion date.
BRANZ lists the likely triggers: client changes, concealed damage found during renovation, unavailable specified materials, rising costs and unforeseeable ground conditions.
Provisional sums and prime-cost sums
These two terms look similar and behave differently.
Provisional sum: an allowance for work that lacks enough detail to be fixed at signing. The final figure depends on what the work turns out to need.
Prime-cost sum: a fixed allowance for an item such as a tap set, tiles or an appliance. If you choose something dearer than the allowance, you pay the difference, and installation is excluded unless the contract states otherwise.
Both are explained in MBIE’s tenders and quotes guidance. Neither is a problem in itself. The risk is a contract with many of them and no sense of how realistic the numbers are.
Price-adjustment clauses
BRANZ warns that a contract labelled lump sum may still place price risk on the homeowner through clauses for material or labour increases and unforeseen ground conditions. It advises homeowners to get advice on any clause allowing price adjustments before signing.
Items outside the contract
ANZ’s building and renovating handbook notes that fixed-price contracts may exclude items such as curtains, landscaping and decking. Ask for an explicit list of what is not included, and budget separately for those items.
Why the scope of work decides everything
BRANZ says detailed scope, plans and specifications are critical so both sides can identify what the original price includes. A vague scope is the most common reason a fixed price turns into a series of extras.
A useful scope names the rooms and surfaces, the materials and brands or product codes, who supplies what, what demolition and disposal are included, and what the finished result looks like. It is the same discipline a careful buyer applies when inspecting a new home, and a walkthrough checklist for new builds shows how much easier it is to confirm work against a documented list than against memory. We have set out sample wording in our guide to renovation scope of work clauses.
What to check before you sign
Work through this list with each draft contract in front of you.
Get at least three detailed quotes. MBIE recommends three quotes with labour and material breakdowns, and says to check whether GST is included. Compare like for like: same scope, same materials, same fixtures.
Check the allowances. Ask what each provisional and prime-cost sum covers, and how the figure was reached.
Read the variation clause. It should say how changes are priced, who approves them and when.
Find every price-adjustment clause. Ask what triggers an increase and whether there is a cap.
Confirm who handles consents. The contract should say who applies for building consent and who carries the cost. If your house has older unconsented work, read our guide to legalising unconsented work first.
Look at the payment terms. Consumer Protection says there is no legal requirement to pay a deposit, and advises not paying more than 10% if one is requested. Progress payments should be tied to the contract and the value of work done.
Confirm insurance and warranties. See what renovation insurance and building warranties in NZ cover before work starts.
Keep everything in writing. MBIE stresses written records because changes during construction can affect both price and programme and otherwise lead to misunderstandings. A text message saying “yes, go ahead” is not a substitute for a signed variation.
Worked example: a bathroom with a hidden problem
Say you sign a fixed price contract for a bathroom renovation in a 1960s house. The scope lists the tiles, vanity, shower and fixtures. Once the old lining comes off, the builder finds rotten framing behind the shower.
BRANZ names concealed renovation damage as a likely variation trigger. A well-written contract handles this in advance: it says how hidden defects are assessed, how the extra work is priced and that you approve it in writing before it proceeds. A poorly written one leaves both of you negotiating in a half-demolished room.
The lesson is not to avoid fixed pricing. It is to choose a contractor who inspects thoroughly before quoting, explains what could change and puts that process in the contract.
Our perspective
We price renovations on a fixed-fee basis because most homeowners we meet want one thing before they sign: to know what the job will cost. That only works when the scope is written clearly, so we spend time on the quote before any work starts. Our approach is built around one point of contact. We coordinate the licensed trades, plumbing, electrical, building, plastering, painting and flooring, and we manage the building consent process, so you are not chasing five people for answers. Our kitchens and bathrooms are offered in tiered grades, which lets you see the level of finish you are choosing at the start. When you compare our quote with others, put the scopes side by side. Ask each contractor what is allowed for, what is excluded and how a change would be priced. We are happy to answer those questions, and we think a clear contract is the best start to a stress-free renovation. Rudi
How Sorted Home Solutions can help
If you are planning a renovation in Auckland, we handle the project from start to finish: the trades, the consents and the paperwork, with a fixed-fee quote and a single point of contact. Our kitchen and bathroom packages come in three grades, and our full home renovation and flood restoration service covers larger projects.
For a closer look at the finished result, see our bathroom renovations. For budgeting guidance, read our Auckland kitchen renovation cost guide and our villa renovation guide. If you are weighing up who should run the project, our comparison of design and build versus an architect may help.
If something goes wrong
Start with your paperwork. Consumer Protection advises keeping the quote or estimate and supporting documents, and trying to resolve the issue with the provider first. If that fails, you can consider a disputes scheme, the Disputes Tribunal or the District Court.
The Disputes Tribunal can hear matters such as incomplete or poor work, overcharging and contract disputes.
After the job is finished, MBIE says contractors must fix defects notified in writing within 12 months of completion. Building Act implied warranties can support homeowner action for up to 10 years. For payments, MBIE says a progress payment is payable within 20 working days after a written payment demand is received or deemed received. For a large or complex dispute, speak to a lawyer who specialises in building and construction law.
FAQ
Is a fixed price contract really fixed in NZ?
The price is fixed for the scope written in the contract. It can still change through variations you approve, matters outside the contractor’s control and clauses that allow adjustments. Read those clauses closely before you sign.
Do I need a written contract for a renovation?
Yes, if the residential building work is worth $30,000 or more including GST. MBIE also recommends a written contract for smaller jobs. For work at or above the threshold, the contractor must provide a disclosure statement and consumer-protection checklist.
Can a contractor increase an accepted quote?
Not on their own. Consumer Protection says an accepted quote can only increase if you agree to extra work or the scope of the job changes. An estimate is different, as it is only a best guess, so ask whether you are being given a quote or an estimate.
How much deposit should I pay?
There is no legal requirement to pay a deposit when you accept a quote. If one is requested, Consumer Protection advises paying no more than 10%. Tie any further payments to the contract and the value of work completed.
Is a fixed price or charge-up contract better?
A fixed price suits work you can define in detail before starting, and gives you the most certainty about cost. Charge-up suits work where the scope cannot be known yet, but the final cost is less certain. For most kitchen and bathroom renovations, a clear fixed price is the more common choice.
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