Master Builders Queensland has issued guidance for builders navigating sudden material and supply price increases. The message is clear: your options depend entirely on what your contract says.
Events on the other side of the world can change the economics of a building project overnight.
That is not a new observation, but it is one Australian builders are feeling more sharply right now. Global fuel price pressure is driving sudden hikes in building material costs, and the construction industry is absorbing it on top of existing workforce shortages and a busy pipeline of work.
Master Builders Queensland has been fielding a high volume of calls from members trying to understand their options. The organisation’s Members Legal team has published guidance addressing the most common questions coming across their phones.
The core message is simple, and worth understanding clearly before the next cost shock lands.
Can You Pass the Increase On?
The answer depends entirely on what your contract says.
If you are working under a fixed price or agreed rates contract and there is no clause allowing for cost increases, you cannot charge more than the original agreed amount. Full stop. The fact that materials have gone up, that fuel has spiked, or that subcontractors have increased their rates does not automatically give you the right to recover those costs from your client.
Master Builders makes the point plainly: if the contract does not include price flexibility, you are bound to deliver the works at the prices agreed.
Any change to the pricing can only happen if all parties agree to it. That requires a conversation, a written variation, and a client willing to sign off on it. None of that is guaranteed.
What Contract Provisions Actually Help
The good news is that there are contract mechanisms designed for exactly this situation. The question is whether they are in your contract in the first place.
Master Builders identifies three main tools.
The first is a cost escalation or rise and fall clause. These clauses set out a base price from which increases are calculated, a process for claiming the increase, and the point at which the additional amount becomes payable. If this clause is in your contract and drafted properly, it gives you a legitimate pathway to recover cost movements.
The second is prime cost items. These apply where a particular item has not yet been selected or its price is not yet known. An allowance is included in the contract, rather than a fixed price. If the actual cost lands higher than the allowance, you have a basis to recover the difference. Under Queensland’s QBCC Act, the allowances for prime cost items must be calculated with reasonable care and skill, so they need to be realistic, not padded estimates.
The third is provisional sums, used for elements of work where a set amount genuinely cannot be fixed at the time of contracting. Similar principles apply.
A fourth option, which Master Builders recommends approaching carefully, is cost-plus contracting. Under a cost-plus arrangement, the client pays actual costs plus an agreed margin. The cost risk shifts to the client. But these contracts carry their own complexity and risks for both parties, and the advice is to get legal guidance before entering one.
If you overtrade on what your capital is going to give you, if you overtrade on what the number of quality trades are available, you are on a hiding to nothing.
If You Cannot Pass Costs On, What Then?
If your contract has no flexibility provisions, your options narrow considerably.
You can approach your client and request a variation. That requires their agreement. They are not obligated to give it.
You can absorb the cost. That is painful, and depending on the size of the increase and the margin you were working with, it can move a profitable job into loss territory.
What you cannot do is simply invoice for more than the contract allows. That creates a dispute, potentially a legal claim, and a relationship problem that makes the rest of the build harder.
The practical lesson here is not a new one, but it keeps proving relevant. Contracts written before a cost spike do not protect you from that spike unless they were designed to. The time to think about this is before you sign, not after costs move.
Extensions of Time When Materials Are Unavailable
The cost question is one half of the problem. The other is time.
When materials are delayed or unavailable, builds slow down. That creates pressure around contract completion dates, liquidated damages clauses, and client expectations.
Master Builders is clear that whether you can claim an extension of time again comes back to the contract. The contract needs to allow for delays caused by shortages or delays in obtaining materials, labour, or subcontractors.
If it does, you need evidence. Specifically: evidence of the actual delay caused by the shortage, and evidence of your efforts to source the required materials or subcontractors through other means. Documented attempts to find alternatives matter. Simply noting that something was unavailable is not enough.
For domestic building work covered by a regulated contract under Queensland’s QBCC Act, the threshold is tighter. Extensions of time are limited to delays that were not reasonably foreseeable when you entered the contract and that are reasonably outside your control.
Whether a global fuel price shock and its flow-on effects on Australian material costs meets that test will depend on the specific facts and timing. What was reasonably foreseeable when you signed matters. Get advice on your specific situation rather than assuming you are covered.
What Builders Should Be Doing Now
Master Builders Queensland’s guidance is practical and specific. Read across to the situation most builders are facing right now, a few things stand out.
First, review your current contracts. Check whether you have rise and fall clauses, prime cost items, or provisional sums in place. If you do not, understand what that means for jobs where costs are still moving.
Second, document everything. If you are experiencing delays or cost increases, start building a paper trail now. Emails, quotes, supplier communications, evidence of alternative sourcing attempts. If you end up in a dispute, documentation is what decides outcomes.
Third, have the conversation with your client early. Clients who are approached honestly and early, before a problem becomes a crisis, are generally easier to work with than clients who feel blindsided. A proactive conversation about cost pressures is uncomfortable. A dispute about an unpaid variation is worse.
Fourth, if you are writing new contracts right now, include the provisions that give you flexibility. Rise and fall clauses exist precisely for conditions like these. They are not unusual. They are good practice.
Fifth, if you are unsure about your position on a specific contract, get advice. Master Builders Queensland’s Members Legal team is available on 1300 30 50 10. That is what the service is there for.
The Broader Picture
The cost shock builders are absorbing right now is a reminder of something the industry has learned before, most recently during COVID.
Global events do not care about contract timelines. Material prices do not hold still because a project plan says they should. The builders who come through these periods in reasonable shape are generally the ones who had the right contract provisions in place before the pressure arrived, and who moved quickly once they saw it coming.
The guidance from Master Builders Queensland is not designed to alarm anyone. It is designed to give builders a clear picture of where they stand and what their genuine options are.
Understanding your contract is not legal overcaution. Right now, it is basic business management.
DISCLAIMER
This article is general information only and does not constitute legal, financial, or professional advice. Builders with specific contract concerns should seek independent legal advice. In Queensland, the Master Builders Members Legal team can be reached on 1300 30 50 10.
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