📋 Contracts, Teams, and Consents

Fixed-Price vs Cost-Plus Contracts

The type of contract you sign shapes your entire financial experience of the build.

Fixed-Price Contract:

• What it means: Builder agrees to complete the build for an agreed total price
• Cost certainty: You know what you're committing to financially
• Risk allocation: Builder carries risk of cost increases within scope
• Limitations: Only covers exactly what's specified in contract - variations cost extra
• Specification quality matters: Vague specs mean disputes about what's included
• Not truly "fixed": Variations, site conditions, and specification gaps can add significant cost

Cost-Plus Contract:

• What it means: You pay actual cost of materials and labour plus agreed margin
• Transparency: Can see exactly what you're paying for
• Flexibility: Easier to make changes without formal variation process
• Risk allocation: You carry risk of cost increases, not builder
• Budget uncertainty: Final cost unknown until completion
• Suits complex builds: Where scope is hard to define upfront

The Reality of Both:

No contract fully protects you from cost increases. Fixed-price provides ceiling but variations punch through it. Cost-plus provides transparency but no ceiling. Understanding your contract type - and its implications - is essential before signing anything.

The Role of Key Professionals

Architect / Designer:

• Translates your vision into buildable drawings
• Produces consent documentation
• Specifies materials and construction methods
• May oversee build quality as owner's representative
• Independent from builder - works for you

Builder / Main Contractor:

• Responsible for constructing to specifications
• Manages site and subcontractors
• Licensed Building Practitioner (LBP) required for restricted work
• Your primary point of contact during construction
• Legally responsible for defects in their work

Project Manager:

• Coordinates all parties on your behalf
• Tracks programme, budget, and quality
• Manages communication and problem solving
• Valuable for owner-managed builds or complex projects
• Can save more than they cost through effective coordination

Subcontractors:

• Specialist tradespeople (electricians, plumbers, plasterers, roofers)
• Engaged by builder in most contracts
• In owner-managed builds, may be engaged directly
• Availability and scheduling significantly affects programme
• Quality varies - builder's vetting process matters

Engineer:

• Structural and geotechnical assessment
• Foundation design specific to site conditions
• Required for consent in most cases
• Inspections at key build stages

Building Consent and Council Processes

In New Zealand, you cannot build without a building consent from your local council.

The Consent Process Involves:

• Consent application: Submit plans, specifications, and engineering to council
• Processing period: Council reviews for code compliance - can take weeks
• Requests for information (RFI): Council may request additional documentation
• Consent granted: Council issues building consent with conditions
• Inspections during build: Council inspects at defined stages
• Code Compliance Certificate (CCC): Issued at completion confirming building meets code

Why Consent Matters:

• Legal requirement - building without consent is serious offence
• Required for insurance during and after construction
• Required for construction loan drawdowns
• CCC essential for property value and future sale
• Unpermitted work creates significant problems for any future owner

Resource Consent:

Separate from building consent. May be required if build exceeds district plan rules - height, boundary setbacks, earthworks, stormwater. Check with council early as resource consent can add significant time to project start.

💰 Finance, Payments, and Cost Reality

Progress Payments Explained

Building projects are funded progressively rather than all at once.

How Progress Payments Work:

• Build is divided into defined stages or milestones
• Payment becomes due as each stage is completed
• Bank releases loan funds against completed stages
• Builder cannot demand payment before stage is complete
• You or your bank inspector verifies stage completion before payment

Typical Stages:

• Deposit/contract signing
• Foundation/slab completion
• Frame completion (timber framing erected)
• Lock-up (roof, windows, doors - weathertight)
• Practical completion (interior finished)
• Final payment on Code Compliance Certificate

The Bank's Role:

Construction loans work differently from standard mortgages. You draw funds progressively as stages complete. Interest is typically charged only on drawn funds during construction. Your bank will usually send an independent inspector to verify stages before releasing funds. The process requires active management on your part.

Variations and Change Orders

A variation is any change to the original agreed scope of work.

What Causes Variations:

• You change your mind about design or specifications
• Site conditions require different approach than planned
• Council requires changes to meet code
• Materials originally specified are unavailable
• Errors or omissions in original plans discovered

Why Variations Are Costly:

• Work already done may need to be undone and redone
• Disrupts programme and subcontractor scheduling
• Materials may need to be reordered
• Builder typically charges premium for variations over tender pricing
• Small changes accumulate to significant total amounts

Managing Variations:

• Get every variation in writing before approving
• Understand full cost implication before agreeing
• Minimise changes once construction begins
• Invest time in design phase to reduce mid-build changes
• Have contingency allocated specifically for unavoidable variations

The Difference Between Contract Price and Total Project Cost

The building contract covers construction only. Total project cost is substantially more.

Costs Outside the Building Contract:

• Land purchase: Section cost plus purchase costs
• Design fees: Architect, designer, engineer fees
• Consent costs: Building consent and resource consent fees
• Development contributions: Council infrastructure levies
• Finance costs: Construction loan interest during build
• Insurance: Construction phase insurance
• Services connections: Power, water, wastewater, telecommunications
• Landscaping: Driveway, paths, lawn, gardens, retaining
• Fencing: Boundary and security fencing
• Window treatments: Blinds, curtains
• Appliances: Kitchen appliances, laundry
• Furniture: New furniture for new spaces

Contingency:

Every build needs financial contingency - funds held in reserve for the unexpected. Site surprises, unavoidable variations, cost increases, and delays all create unbudgeted costs. First-time builders consistently underestimate how much contingency is needed. Budget generously for the unknown because something unknown always emerges.

⚠️ Delays, Site Factors, and Insurance

Time Delays and How They Occur

Build delays are not the exception - they are almost universal. Understanding common causes helps you plan realistically.

Common Causes of Delay:

• Weather: Rain, high winds, extreme heat all stop or slow work
• Council processing: Consent or inspection delays can stall build for weeks
• Material supply: Products out of stock, shipping delays, wrong deliveries
• Subcontractor availability: Trades in high demand, scheduling conflicts
• Variations: Changes to design stop and restart work
• Site surprises: Unexpected ground conditions requiring redesign
• Defects requiring remediation: Failed inspections, rework needed
• Builder resourcing: Key staff leaving, builder's own capacity issues

Cashflow Impact of Delays:

Delays extend the construction period, which means longer interest accrual on construction loan, longer period paying rent or two mortgages, and delayed possession of your new home. Build delays have real financial cost beyond inconvenience. Plan your timeline conservatively and budget for the build taking longer than quoted.

Cashflow Planning During the Build

The Cashflow Challenge:

• Many people are simultaneously paying rent and servicing land loan
• Construction loan interest accumulates during build
• Progress payments require funds available on demand
• Variations require immediate payment from reserves
• Delays extend the period of double housing costs

Cashflow Planning Principles:

• Map out all expected payments by stage and date
• Ensure finance facility large enough for all drawdowns plus contingency
• Understand your interest obligations during construction period
• Have liquid reserves for variations and unexpected costs
• Plan for how long you can sustain double housing costs
• Discuss all this with lender and mortgage broker before starting

Site-Specific Factors

Every site is different, and site-specific factors can fundamentally change what your build involves and costs.

Soil and Ground Conditions:

• Geotechnical investigation reveals what's below surface
• Poor soil may require deep foundations, piles, or ground improvement
• Contaminated land requires remediation before building
• High water table affects foundation design
• Slope and instability require engineered solutions

Access:

• Difficult access increases delivery and labour costs
• Narrow site access limits machinery options
• Rural sites may require significant roading
• Steep driveways require specific engineering solutions

Services:

• Connection to reticulated water and wastewater varies by location
• Rural sites may need well, tank, or septic system
• Power connection distance from network affects cost
• Telecommunications infrastructure varies significantly
• These costs can be substantial and are often overlooked

Insurance During Construction

What Coverage Is Required:

• Contract works insurance: Covers the build itself against loss or damage
• Public liability: Covers third-party injury or property damage
• Builder's risk: Often provided by builder, verify coverage

What to Verify:

• Does builder hold adequate insurance? Obtain certificates
• Does coverage include your personal liability as owner?
• What happens if builder's insurance lapses?
• When does your home insurance need to start?

Important Principle:

Never assume insurance is in place. Verify in writing before work begins. Gaps in construction insurance can be catastrophic - fire, storm damage, or theft during construction without adequate coverage can leave you with enormous losses and a construction loan with nothing to show for it.

🧠 Emotions, Decisions, and Common Mistakes

Emotional Pressure During Builds

Building a home creates sustained, intense pressure that affects almost everyone who goes through it. Acknowledging this before you start helps you manage it better.

Common Emotional Challenges:

• Duration stress: Builds take much longer than expected - maintaining enthusiasm and resilience is hard
• Relationship strain: Partners often disagree on decisions; financial pressure creates conflict
• Anxiety about decisions: Many choices are permanent - fear of getting it wrong is constant
• Powerlessness: Feeling like everything is out of your control
• Financial fear: Watching spend grow, worrying about running out of money
• Disappointment: Reality of completed work not always matching vision
• Conflict with builder: Disagreements about quality, timeline, or cost

Managing Emotional Pressure:

• Have honest conversations with partner about expectations and roles
• Agree decision-making process before build starts
• Accept some level of imperfection is inevitable
• Maintain perspective - temporary difficulty for long-term gain
• Keep communication channels open and constructive
• Celebrate milestones along the way

Decision Fatigue and Upgrade Temptation

Decision Fatigue:

A house build requires hundreds of decisions - tiles, taps, floor coverings, lighting, cladding, joinery, kitchen fittings, bathroom fixtures, paint colours, and much more. Each decision feels important. By mid-build, many people are exhausted by the process and either make poor decisions from fatigue or stall, causing delays.

Managing Decision Fatigue:

• Make as many decisions as possible before construction starts
• Create a detailed specification document during design phase
• Set aside dedicated decision-making time rather than responding reactively
• Delegate some decisions to your partner or designer
• Avoid perfectionism - good enough is often fine

Upgrade Temptation:

Once inside a showroom or looking at samples, upgrades are everywhere. Better tiles for not much more. Upgraded tapware. A slightly larger kitchen island. Each upgrade individually seems modest. Collectively they add up to a significant budget blowout. Every upgrade is a choice to spend contingency on something visible rather than keep reserves for something unexpected.

Resisting Upgrade Temptation:

• Set a clear budget for each category before making selections
• Stick to specification unless genuinely important
• Ask for every upgrade cost in writing before agreeing
• Consider whether you'll notice the difference in five years
• Remember contingency exists for problems, not preferences

Communication with Your Builder

Why Communication Matters:

The relationship with your builder is the single most important relationship in your build. Poor communication leads to misunderstandings, errors, delays, disputes, and ultimately poor outcomes. Clear, consistent, respectful communication protects both parties.

Communication Best Practices:

• Everything in writing: Verbal instructions are unenforceable - confirm all decisions via email
• Regular site visits: Inspect progress regularly, not just at payment stages
• Agreed communication channel: Establish preferred method (email, app, weekly meetings)
• Ask questions early: Don't wait until problem is embedded in wall to raise concern
• Stay professional: Emotional or aggressive communication backfires - builder relationship matters
• Respond promptly: Delays in owner responses cause build delays - make yourself available

The Importance of Documentation

What to Keep:

• Signed building contract and all specifications
• All variation approvals and costs
• All email and written communication with builder
• Progress payment records
• Inspection reports and certificates
• Building consent and Code Compliance Certificate
• All producer statements and warranties
• As-built drawings (what was actually built vs what was designed)
• Subcontractor warranties and guarantees

Why Documentation Protects You:

Disputes arise in building projects. When they do, your documentation is your defence. Builders who know you're organised and thorough tend to be more careful about their own documentation. Problems that later affect your home - leaks, structural issues, defects - are easier to pursue if you have complete records of the build process.

✅ Mistakes, Post-Build Costs, and the Big Picture

Common First-Time Builder Mistakes

Mistake 1: Choosing Builder on Price Alone

Lowest tender price is tempting but often misleading. Low price may mean thin specification (many exclusions), builder carrying too much risk and cutting corners, or a builder without the experience to manage complexity. Check references, verify LBP licence, ask about their current workload, and assess their communication style - not just their price.

Mistake 2: Inadequate Specification

Vague specifications lead to disputes about what's included. "Kitchen as discussed" is not a specification. Material selections, brands, finishes, tolerances, and standards should all be defined in writing before contract is signed. What isn't specified becomes subject to builder's interpretation, which may not match yours.

Mistake 3: Starting Without Full Finance Approval

Beginning a build without confirmed construction finance in place is extremely risky. Project may need to halt mid-construction, leaving an incomplete structure exposed to elements and your contract in breach. Confirm finance is fully approved before any work begins or any contracts are signed.

Mistake 4: No Contingency

Budgeting to the last dollar with no reserves is the single most common mistake. Builds almost never come in exactly on budget. Sites reveal surprises. Variations happen. Council requires changes. Material prices move. Building without contingency means any unexpected cost creates a crisis.

Mistake 5: Not Doing Due Diligence on Land

Purchasing a section without geotechnical investigation, services enquiry, or covenant review is gambling. What's beneath the ground, what's attached to the title, and what services must be connected are all critical cost drivers. Discover these before purchase, not during construction.

Mistake 6: Making Mid-Build Changes

Every change during construction creates disruption, cost, and often delay. The golden rule of building: make all your decisions before the shovel hits the ground. Design thoroughly, select everything, and commit. Changes during construction are the number one cause of budget overruns for owner-builders.

Mistake 7: Ignoring Defects List

At practical completion, you create a defects list (or "snag list") of items requiring remediation. Many first-time builders are so relieved to be at completion that they accept a shoddy list or sign off before defects are rectified. Your leverage disappears once final payment is made. Insist on thorough walk-through and have defects fixed before final payment.

Planning for Post-Build Costs

Moving into a new build is the beginning of significant spending, not the end of it.

Common Post-Build Costs:

• Landscaping: Driveway, paths, lawn establishment, garden beds, retaining walls
• Fencing: Boundary fencing, security, pool fencing
• Window treatments: Blinds and curtains for every window
• Appliances: Oven, cooktop, dishwasher, washing machine, dryer
• Outdoor living: Deck furniture, barbecue, shelter
• Garage fit-out: Shelving, workbenches, flooring
• Lighting: Furniture-integrated lighting, outdoor lighting
• Furniture: Rooms in new home often larger than previous - new furniture needed
• Defect remediation: Items that emerge in first year of occupancy

Why This Matters:

Many people exhaust their financial reserves during the build and arrive at move-in with no capacity to complete the property. They live in an unfinished house - no blinds, no driveway, no lawn - for months or years. Budget post-build costs as part of the total project from the beginning, not as an afterthought.

Why Building Is Both Financial and Emotional

Building a home is not purely a financial transaction. It's a deeply personal and emotional undertaking that touches every area of life.

The Financial Dimension:

• Largest financial commitment most people make
• Requires sustained financial discipline over extended period
• Involves complex contract and legal obligations
• Creates financial risk if not carefully managed
• Outcome significantly affects long-term financial position

The Emotional Dimension:

• Creating physical embodiment of dreams and aspirations
• Partnership test - couples discover how they manage stress and disagreement
• Identity connected to home you're creating
• Pride in achievement when complete
• Grief when it doesn't match vision
• Joy when it exceeds it

The Integration:

The most successful builds happen when people approach them with equal rigour on both dimensions. They plan finances meticulously AND acknowledge emotional challenges. They make clear-headed decisions about money AND give themselves space to be human about it. Building a home is a long, hard, rewarding journey. Those who know what they're entering tend to emerge from it proudest of both the house and themselves.

Final insight: Building a house in New Zealand involves far more than design and construction - it encompasses land evaluation, legal contracts, council processes, complex finance, team coordination, and sustained decision-making over many months. Fixed-price and cost-plus contracts each carry different risk profiles - neither eliminates cost uncertainty. Progress payments require careful cashflow planning throughout the build. Variations are expensive and frequent - minimise changes by deciding everything before construction begins. Delays are almost universal - plan time and budget conservatively. Total project cost is substantially more than building contract price - include design, consents, services, landscaping, appliances, and contingency. Site-specific factors (soil, access, services) can dramatically change build complexity and cost - investigate land thoroughly before committing. Insurance during construction is essential and must be verified, not assumed. Emotional pressures - decision fatigue, relationship strain, upgrade temptation - are real and significant. Communication with builder must be clear, consistent, and documented. Common mistakes (choosing on price, vague specs, no contingency, mid-build changes) are costly and largely avoidable with preparation. Post-build costs are substantial and should be budgeted from the start. Building a home is both a financial undertaking requiring rigorous planning and an emotional journey requiring self-awareness and resilience. Those who respect both dimensions enter the process with the best chance of success.