Last reviewed: August 2026
A fixed price should mean the number does not move unless you change the scope. An estimate is an opinion about what something will probably cost. Between the two sits the document most people are actually given: a fixed price with enough provisional sums and exclusions in it that it behaves like an estimate.
Telling them apart takes about ten minutes and saves a great deal of money.
The three documents
| Estimate | Fixed price with provisional sums | True fixed price | |
| Based on | Similar past jobs | Your block, partly investigated | Your block, fully investigated |
| Site inspection done | Usually not | Sometimes | Yes |
| Soil test done | No | Sometimes | Yes |
| Final cost | Will move | Will probably move | Should not move |
| Useful for | Early budgeting | Comparing, with care | Signing |
All three have a legitimate use. The problem is when an estimate is presented as if it were the third column.
What has to happen before a price can genuinely be fixed
A builder cannot fix a price on information they do not have. For a granny flat that means:
- A site inspection. Slope, access, existing structures, where services run.
- A soil test. Sets the slab design and reveals rock. This is the big one.
- A survey. Boundaries, levels, and what will actually fit.
- The design finalised. Including finishes, because selections carry cost.
- Service locations confirmed. Particularly sewer.
- The approval pathway known. CDC and DA cost different amounts.
If a number arrives before those six things, it is an estimate. That is fine at the budgeting stage. It is not fine as the basis for signing a contract.
Provisional sums, explained plainly
A provisional sum is an allowance for work that cannot be priced exactly yet. The most common one on a granny flat is site works.
Here is how it behaves:
- The quote includes, say, $15,000 for site works
- Excavation begins and hits rock
- The actual cost is $27,000
- You pay the difference
Provisional sums are not dishonest. Sometimes they are unavoidable. But a quote with several large provisional sums is not a fixed price, and it should not be compared against one that is.
The question to ask: which items in this quote are provisional sums, and what happens if they are exceeded?
How to tell what you have been given
Look for these signs.
| Sign | What it means |
| No site inspection happened | It is an estimate |
| No soil test done | Site costs cannot be fixed |
| The words “from” or “starting at” | It is a starting point, not your price |
| A long exclusions list | The real cost is higher than the number |
| Several provisional sums | The price will move |
| “Subject to site conditions” with no detail | Effectively an estimate |
| Site inspection, soil test, itemised inclusions and exclusions | A real fixed price |
That last row is what you want before signing anything.
What a fixed price should still allow to change
Being fair about this matters, because no price can be absolutely immovable.
Two things reasonably change a fixed price:
Variations you request. You change the benchtop, add a window, move a wall. You pay for the change. This is normal and should be documented in writing with a price before the work happens.
Genuinely unforeseeable conditions. Something no reasonable investigation would have found. This is a much narrower category than it is often used for. Rock found after a soil test that showed rock is not unforeseeable. Contamination nobody could have known about might be.
The test of a good contract is how narrowly that second category is defined.
Comparing quotes fairly
- Get every quote against the same written scope
- Mark each item included, excluded or provisional on all of them
- Price the excluded items and add them to that quote’s total
- Add a realistic allowance for each provisional sum being exceeded
- Now compare
Step 4 is the one people skip, and it is where the ranking usually changes.
Frequently asked questions
Is a fixed price contract legally binding?
The contract is binding on its own terms, which is exactly why the terms matter. A contract that says fixed price and then lists broad circumstances allowing adjustment is binding on those terms too. Read what the contract says can change the price, not just the headline.
Can a builder increase a fixed price after I sign?
Only in accordance with the contract, which typically allows for variations you request and for defined unforeseen conditions. Requesting the price before any variation work starts is both reasonable and normal.
What is a reasonable number of provisional sums?
Ideally none by the time you sign, because the investigations should have removed the uncertainty. In practice one or two on genuinely unknowable items can be reasonable. Several large ones mean the price is not really fixed.
Should I pay for a soil test before I get a fixed price?
Someone has to, and it is the only way to fix site costs properly. Ask whether the builder arranges it and whether the cost is credited against the build if you proceed.
Is a cheaper estimate better than a higher fixed price?
Not usually. The estimate is a prediction and the fixed price is a commitment. Comparing them directly compares two different kinds of thing.
Get a price that holds
We quote fixed price after a site assessment, and we manage approvals in-house so the approval costs sit inside the same scope rather than arriving separately.
Book a site assessment, or call BlueGum on 1300 060 651.
BlueGum Granny Flats is a licensed NSW builder, licence number 247388C. This article is general guidance on comparing building quotes and is not legal advice. Have any building contract reviewed before you sign it.
