Create one scope for every bidder
Issue the same drawings, selections and measured work description. Ask each bidder to identify fixed work, owner purchases, exclusions, prime cost items and provisional sums. Mark unanswered questions rather than entering zero. Zero means included or unnecessary only when the scope confirms it.
Keep a comparison worksheet separate from the contract. Normalising two quotes helps a choice, but a spreadsheet adjustment is not a contractor’s accepted price. Obtain revised offers before signing. This teaching example concerns a Sydney house renovation; approvals, design and owner accommodation are outside both compared builder packages and will be added to the owner’s separate project budget.
Understand the allowance boundary
A prime cost or PC allowance commonly covers supply of a fixture or fitting not finally selected. A provisional sum or PS covers work whose extent cannot yet be priced definitely. HIA’s NSW explanation distinguishes these and describes the adjustment mechanism in its own contract context. Do not assume all contracts use identical margin or credit rules.
Ask whether each allowance includes labour, delivery, margin and GST, and whether the starting contract price already contains the allowance-related margin. Ask how an increase or decrease is calculated and evidenced. A costlier tile may change supply and laying work; moving a cooktop may change services as well as the PC item. An allowance is already part of the quoted price, not an extra to add again in full.
Normalise the quoted amounts
The invented quotes below are exclusive of GST. They already include their stated PC and PS allowances and the associated original margin. For comparison only, assume both contracts add 15% to a positive net allowance excess, then 10% GST; no second margin applies to the whole replacement value. Use a common PC supply target of AUD 3,000 net and a PS work target of AUD 8,000 net.
| Calculation | Quote A | Quote B |
|---|---|---|
| Headline price excluding GST | 82 000 | 76 000 |
| PC increase including assumed excess margin | 1 150 | 2 300 |
| PS increase including assumed excess margin | 2 300 | 5 750 |
| Confirmed omitted work, net final builder charge | 2 000 | 5 000 |
| Comparable price excluding GST | 87 450 | 89 050 |
| Assumed10% GST | 8 745 | 8 905 |
| Comparable builder total including GST | 96 195 | 97 955 |
| Same separate owner appliances, final | 6 600 | 6 600 |
| Compared funding subtotal | 102 795 | 104 555 |
A starts with PC AUD 2,000 and PS AUD 6,000. B starts with PC AUD 1,000 and PS AUD 3,000. B’s lower headline is outweighed by allowances and exclusions under these stated assumptions: its compared subtotal is AUD 1,760 higher. Neither subtotal is the whole owner budget; professional fees, accommodation and an appropriate contingency remain to be added.
Audit one adjustment from start to finish
| Step | AUD |
|---|---|
| Original net PC supply allowance already included | 1 000 |
| Selected supply cost excluding GST | 3 000 |
| Net excess over original allowance | 2 000 |
| Assumed15% margin on excess only | 300 |
| Increase excluding GST | 2 300 |
| Assumed10% GST on increase | 230 |
| Increase including GST | 2 530 |
The comparison table shows the AUD 2,300 exclusive increase; GST is added once to the overall comparison. Do not insert AUD 2,530 into that exclusive column and tax it again. MoneySmart’s GST method helps distinguish the bases. If an actual item costs less, use the actual contract’s credit mechanism and request the evidence; do not invent a symmetric margin refund.
Check the business and the contract
Use the NSW contract checklist and rules to check the named contracting business, licence, complete documents and payment schedule. A person’s licence does not necessarily authorise their separate company to make the contract. Ask who supervises, who supplies each product, what happens when an investigation changes the scope and how a dispute is handled.
For residential work over AUD 20,000 including GST, SIRA explains HBC cover requirements and exemptions. Check the actual project certificate before work or payment where cover is required. Do not assume a bathroom renovation in an existing taller apartment building is exempt simply because new multi-storey construction can have a different insurance position. Check other insurances separately.
Choose on evidence, then secure the revised offer
- Record the same finished outcome and confirmed exclusions.
- Use realistic selected products or clearly identified comparison assumptions.
- Verify allowance treatment, GST, credits and supporting evidence.
- Check relevant experience, supervision and contracting identity.
- Obtain the final revised scope, price and payment terms in writing.
A more expensive comparable quote can still be preferable if its proposed execution and evidence are stronger. This method identifies price differences; it does not rank quality by a single number. Keep the accepted version and later written changes in the project record so the comparison remains connected to what was actually bought.
Sources, date and scope
- Housing Industry Association — Prime cost and provisional sums for NSW
- ASIC MoneySmart — GST calculator
- Building Commission NSW — Contracts for residential building work
- SIRA, NSW — Home building compensation for builders and tradies
Checked on 19 October 2026. Worked projects are in Sydney, NSW, unless stated otherwise. NSW rules are not national rules. All dollar amounts are Australian dollars (AUD); worked costs, quantities, margins and contingency percentages are invented teaching assumptions, not market prices, quotations or prescribed reserves. Each article describes a separate project. GST treatment is stated for the example; final amounts already include any applicable tax. Check the property, current approvals, insurance and contract with the appropriate professionals.