The contract you sign with your builder is one of the most consequential decisions in any construction project — it determines who carries risk, how price changes are handled, and how disputes are resolved. This guide explains the three most common construction contract types in Brisbane: lump sum, cost-plus, and Early Contractor Involvement (ECI). Each has distinct trade-offs.
What is a lump sum construction contract?
A lump sum (sometimes called fixed price) contract sets a single total price for the entire scope of work. The builder commits to delivering the documented scope for the agreed price, regardless of what the work actually costs them. Variations to scope are handled through formal variation orders with separate pricing.
Lump sum suits clients who: have complete documentation upfront, want maximum price certainty, are willing to lock in scope before construction, and don’t anticipate significant changes during the build.
The trade-offs: Reduced flexibility for design changes during construction. Builders typically build contingency into the price to cover risks, which can mean you pay more than the work actually costs them. Variations during construction can be expensive and time-consuming.
What is a cost-plus construction contract?
A cost-plus contract pays the builder for actual costs (materials, labour, subcontractors, permits) plus an agreed margin (typically 10-20%). The builder is reimbursed for what they spend, so they have no incentive to add risk contingency to the price.
Cost-plus suits clients who: have complex or evolving scopes, value flexibility over price certainty, have established trust with their builder, and want maximum transparency on actual costs.
The trade-offs: No price ceiling means cost overruns can occur. Requires strong financial controls and regular reporting. Less suited to clients who need a fixed budget for finance approvals.
What is Early Contractor Involvement (ECI)?
Early Contractor Involvement (ECI) is a delivery model where the builder joins the project at the design stage, before construction begins. The builder provides constructability advice, cost guidance, and risk assessment as the architect develops the design. ECI typically transitions to either a lump sum or cost-plus contract once design is finalised.
ECI suits clients who: want the builder’s cost knowledge during design (not after), prioritise overall project value over rigid contract certainty, are working on complex or unusual projects, and want fewer surprises during construction.
The trade-offs: Higher consultant cost during design phase. Requires strong client trust in the builder. Less suitable for very simple, standard projects where ECI adds complexity without proportional value.
How does Aurum Group decide which contract to use?
Aurum Group offers all three contract types and recommends the right one based on your specific project. We typically recommend ECI for prestige residential, complex commercial, and mixed-use developments where design optimisation delivers significant value. We typically recommend lump sum for clients who need price certainty for finance and have complete documentation. We typically recommend cost-plus for clients with established trust and evolving scopes. Read more about our project management approach.
What about hybrid contracts?
Hybrid contracts combine elements of multiple approaches. A common example is ECI followed by a lump sum contract — the builder uses the design phase to develop a detailed cost model, then commits to a lump sum once scope is locked. Another example is a cost-plus contract with a guaranteed maximum price (GMP), giving the client cost transparency with a price ceiling. Aurum Group can structure hybrid arrangements where they suit the project.
What should every construction contract include?
Regardless of the contract type, every construction contract should clearly specify scope, total price (or pricing mechanism), payment schedule, completion date, variations process, defect liability period, dispute resolution mechanism, insurance requirements, and warranty terms. Always review the contract carefully before signing — and seek independent legal advice for projects above $500,000.
Next steps
If you want to discuss the right contract structure for your Brisbane construction project, book a free consultation with Aurum Group. Explore our construction project management service, our pricing guide, or read our article on how to choose a builder in Brisbane.
