Signing a building contract is a major milestone. The plans are taking shape, a builder has been selected, finance may be progressing and attention starts turning towards construction.
But signing the contract does not necessarily mean construction starts immediately. There can still be finance requirements, approvals, engineering, selections and documentation to finalise before work begins. While every project and contract is different, understanding what generally happens next can make the building process much easier to follow.
Your building contract sets the framework
The building contract is one of the key documents governing your project. It generally sets out the agreed price, scope of works, inclusions, payment stages, variations, construction timeframes and responsibilities of the parties involved.
Before construction starts, there may still be conditions that need to be satisfied. These can include finance approval, planning or building approvals, engineering, final selections, insurance requirements and other pre-construction documentation. This is why there can sometimes be a considerable period between signing a building contract and seeing work begin on site.
From finance approval to construction funding
Construction finance generally works differently from finance for an established property. Rather than the entire construction amount being paid at once, funds are typically released progressively as construction advances.
The lender will have its own requirements, which can vary between financiers and projects. Homeowners should understand how much of the project is being funded, what contribution they need to make themselves, what documentation the lender requires and how progress payments will be processed.
It is also important to understand how variations or additional costs will be funded. A change that looks relatively small during construction can still affect the overall project budget.
Construction begins and progress payments start
Once the necessary pre-construction requirements have been satisfied, the project can move towards site commencement. Residential building contracts commonly divide construction into stages. The terminology varies, but homeowners may see stages such as deposit, base or slab, frame, lock-up, fixing and completion.
These stages provide a structure for both construction progress and payment. Instead of paying the entire construction price upfront, payments are generally connected to agreed stages or milestones throughout the build.
When a stage is reached, the builder may issue a progress claim in accordance with the building contract. Depending on the project and finance arrangements, supporting information, approvals and lender requirements may need to be satisfied before funds are released.
The important thing to understand is that construction progress, approval and payment are connected, but they are not necessarily the same event.
The financial side of construction homeowners don’t always see
Homeowners can physically see their house progressing. They can see the slab poured, framing go up and windows, roofing, plasterboard, cabinetry and finishes gradually appear.
What is harder to see is the financial activity occurring underneath that progress. A residential construction project can involve builders, trades, suppliers, manufacturers, contractors and consultants.
This means there are effectively two journeys occurring at the same time: the physical construction of the home and the movement of money supporting that construction. Keeping those two sides connected and visible is an important part of good project administration.
Where PayLocker fits
This is the area PayLocker focuses on.
PayLocker is a construction payment integrity platform designed to create greater visibility around project funding, claims, approvals and payments. Rather than replacing the builder, building contract, lender, certifier or other professionals involved in the project, PayLocker operates around the payment layer.
Within the PayLocker model, relevant project information and payment arrangements can be established within the platform. Claims can be recorded against project activities or stages, supporting information can be provided where appropriate and authorised parties can approve payments according to the project’s existing arrangements.
This creates a clearer record of claims, approvals and payments throughout construction and helps maintain a connection between project funding and the project it relates to.
Importantly, PayLocker does not inspect or certify construction work or determine whether a building stage has been completed correctly. Those responsibilities remain with the relevant parties and professionals involved in the project.
Variations can change more than the contract price
Changes during construction are common. A homeowner may upgrade a product, change a selection, modify part of the design or request additional work. Unexpected site or construction conditions may also result in changes depending on the project and contract.
These are commonly dealt with through variations, and a variation can affect more than the final contract price. It may also affect available finance, personal cash contributions, construction timing, future progress payments and the amount still required to complete the project.
For this reason, homeowners should keep clear records of approved variations and understand how each change affects their overall budget.
Understanding the wider building journey
Progress payments are only one part of building a home. At the same time, homeowners may be dealing with selections, variations, documents, inspections, construction milestones, budgets and decisions about what needs to happen next.
For homeowners wanting to better understand and manage this wider process, BuildPilot is an Australian home-building platform providing information, tools and connections across different stages of building, renovating and improving a home.
BuildPilot helps Australians access information about the building process and better understand the decisions that can arise throughout a home project. While PayLocker focuses specifically on construction payment integrity, BuildPilot looks at the broader project journey surrounding those payments.
Together, these areas highlight an important part of modern residential construction: homeowners increasingly need visibility not only over what is happening on site, but also over the information, decisions and financial processes surrounding their project.
From practical completion to handover
As construction approaches completion, there may still be final works, inspections, outstanding items, documentation and payment requirements to work through.
Homeowners should understand what their building contract requires before final payment becomes due. Where construction finance is involved, the lender may also have requirements before releasing final funds.
Handover is one of the biggest milestones in the project, but homeowners should continue retaining important records after receiving the keys. Contracts, approved variations, payment information, warranties and other project documentation may all be useful well beyond construction.
Better visibility throughout the building process
Building a home involves much more than construction alone. Finance, contracts, approvals, progress payments, variations and handover all interact with one another.
PayLocker focuses on strengthening the construction payment process by creating greater visibility around project funding, claims, approvals and payments. The broader building journey also requires homeowners to understand numerous decisions and processes occurring around those payments.
George Giannakakis, Founder of BuildPilot, an Australian home-building platform providing information and tools for people building, renovating and improving their homes, says one of the biggest challenges for homeowners is understanding how all the moving parts of a build connect.
“Most people only build a home once or twice. Suddenly they’re dealing with contracts, finance, progress payments, selections and variations all at once. Giving people clearer information about what happens next can make the whole process much easier to understand.”
Giving homeowners better information and greater visibility across both the construction and financial sides of their project can make an inherently complex process easier to follow.
Frequently asked questions
What happens after signing a building contract?
There are usually still several steps before construction begins. Depending on the project, these may include finance requirements, approvals, engineering, selections, final documentation and other pre-construction conditions.
How do progress payments work when building a home?
Progress payments are generally linked to stages or milestones set out in the building contract. When the relevant stage is reached, a progress claim may be issued and processed according to the contract and any applicable finance arrangements.
Are progress payment stages the same across Australia?
No. Contracts, terminology, finance requirements and regulatory requirements can vary. Homeowners should always refer to their own building contract and obtain appropriate professional advice where required.
Does PayLocker replace the building contract or inspect the work?
No. PayLocker operates alongside the project’s existing arrangements and focuses on payment integrity and visibility. It does not replace the building contract or certify construction work.
Important information
This article provides general information only. Building contracts, finance arrangements, payment processes and regulatory requirements vary between projects and Australian jurisdictions. Homeowners should review their own documentation and seek appropriate legal, financial, building or other professional advice where required.