How to Set a Realistic Building Budget and a Contingency That Works

A realistic building budget has four parts, not one: the building contract sum, the design and approval costs that sit outside that contract, the items you supply yourself, and a contingency of 8 to 12 per cent of the construction cost held in a separate account you control. In our experience, budgets on the Sunshine Coast come unstuck less often because the builder’s price was wrong than because the builder’s price was the only number in the budget. Here is how we set both figures, and a worked example you can copy into a spreadsheet.

What a complete building budget contains

Your builder’s price covers the work described in the contract documents, not everything you will pay for between today and the day you move back in. Write these down as separate lines.

• The building contract sum, including preliminaries, margin and GST.
• Design and consultants. Architect or building designer, structural engineer, a geotechnical report classifying the site under AS 2870 Residential slabs and footings, surveyor and energy assessment. On our projects with K Architecture and Reitsma & Associates, these are contracted by the owner, not by us.
• Approvals and statutory costs. Building certification, plumbing approvals, and any development application to Sunshine Coast Council under the Planning Scheme 2014 or Noosa Shire Council under the Noosa Plan 2020. Sunshine Coast Council adopts and publishes a register of cost-recovery and commercial fees and charges for each financial year, and its Development Services section of that register covers building work, operational work, material change of use, reconfiguring a lot and plumbing and drainage work. Price this line off the current adopted register, not off last year’s.
• Owner-supplied items. Appliances, furniture, window furnishings, landscaping outside the contract scope, AV and security.
• Holding costs. Rent or storage while you are out, loan interest during construction, insurance.
• Contingency. Not a line inside the contract. A separate pool of your own money.

The 8 to 12 per cent contingency rule

Hold between 8 and 12 per cent of the construction cost as contingency, outside the building contract. Be clear about what that band is before you use it: it is builder’s judgement, not a regulated figure, and no authority publishes a required contingency percentage. Where you sit in the band depends on how much of the job is still unknown on the day you sign.

Calculate it on the construction cost, not the whole project cost, because consultants and appliances do not generate surprises the way building work does. And if you cannot fund the contingency, you cannot fund the project at that scope. Reduce the scope until you can.

A worked example

The figures below are arithmetic on a round number. They are not a Roebuck price, a quote or a market average. Substitute your own contract sum and the structure holds.

Now run it the other way, because this is the calculation almost nobody does. If $935,000 is genuinely all you can fund, your contract sum is not $935,000. It is $935,000 divided by 1.10, or roughly $850,000. At 12 per cent it is $935,000 divided by 1.12, about $834,800. Working backwards from what you can fund to what you can sign is the difference between a project that absorbs a surprise and one that stops. Test your scope against that number using our Sunshine Coast build cost guide.

What actually spends a contingency here

Ground conditions. The site classification under AS 2870 Residential slabs and footings drives the footing system, and coastal sand, reactive clay and a high water table all sit within a few kilometres of each other between Coolum Beach and Noosa. A classification that shifts once the geotechnical report lands changes footings, retaining and drainage together.

What is behind the walls. On a renovation, nobody, including your builder, can price what cannot be seen until demolition. Older houses on the Coast routinely turn up undersized bearers, unapproved past alterations and services that are not where the plans say they are.

Coastal exposure. Corrosion protection, fixings, glazing and external finishes close to the surf are specified differently from the same house built well back from it. Your engineer, window supplier and roofing supplier set that from the site’s exposure, so get it specified before you price the job rather than discovering it as a variation.

Your own variations. These are the ones you control. The QBCC requires that, before the variation work starts, the contractor presents the variation to the home owner in writing and the home owner agrees to it in writing. You must receive a written copy before the first of two things happens: the domestic building part of the variation work starts, or 5 business days from the day both parties agreed to the variation. The QBCC also states that a contractor cannot require payment for a variation before the variation work is started. Read how variations work in Queensland before you sign.

Allow for price movement between budgeting and starting

A budget set at concept stage gets spent at construction stage, and the gap is usually months. The ABS Producer Price Indexes for the June quarter 2026 record house construction prices rising 2.0 per cent in the quarter, which the ABS describes as the largest rise since September 2022, and 5.9 per cent over the twelve months. In the same release, Queensland house construction rose 3.1 per cent for the quarter and 8.0 per cent over the year, and New South Wales rose 2.0 per cent for the quarter. Those are published index movements, not a forecast, but they tell you that a figure set today and signed in nine months needs an escalation allowance on top of contingency, kept as its own line. It is also why a fixed price protects you differently from an estimate, covered in fixed price building contracts in Queensland.

The contract terms that protect the budget

The QBCC requires a written contract if you are carrying out domestic building work priced over $3,300 including labour, materials and GST. For renovations, extensions and routine repairs on existing homes, the QBCC describes contracts priced at $3,301 to $19,999 as Level 1 and contracts priced at $20,000 and over as Level 2.

Check the licence behind the contract before you check anything else. Our guide on how to check a QBCC licence walks through it.

Four rules for spending the contingency

1. Keep it in a separate account. Money sitting alongside the construction draw gets spent as construction money.
2. Name one decision-maker. Every draw approved by the same person, in writing, against a signed variation.
3. Log every draw with a running balance. If you cannot say in any week how much is left, you no longer have a contingency.
4. Do not spend it on upgrades early. If half of it goes on tapware in the first third of the build, the rest carries all the structural risk.

The protection that does the most work here is documentation finished before the contract is signed, because unresolved design decisions become variations, and variations are what empty a contingency. That is the reasoning behind our build process. To have a licensed builder test your numbers against your scope, book a consultation with us at Coolum Beach.