Does that look 90% complete to you?

First, the good news: internal linings are done!

It is incredibly exciting to see the internal walls go up and start to better delineate the spaces that we hope to create many happy memories.

The completion of internal linings triggers a progress payment to Eden Brae. Our contract stipulates progress payments at these pre-defined points:

Contract signing 5%
Completion of concrete slab 20%
Erection of frame and trusses 25%
Completion of brickwork 20%
Internal linings 20%
Practical completion 5%

When I got the invoice for the progress payment, I must admit I was a little surprised. I mean, we still don’t have a floor or bathroom tiles. Don’t these things line our interior too?

It turns out that “internal linings” only mean gyprock and cornices according to Eden Brae.

The definition of internal linings is apparently buried somewhere in the 79 page contract we signed, I’m told. I cannot be bothered to confirm that – I am going to assume that the accounts receivable manager at Eden Brae is well versed in all clauses of their grossly inequitable contract.

Now I get the intention of progress payments – it protects both parties from default of the other party.

But in what universe is our home now 90% complete, as would be implied by the pure maths of our payments made to date?

We don’t have floors, stairs, a kitchen, laundry and not one of five bathrooms have been installed.

I once renovated a bathroom – it cost about $25k. That’s $125k of bathrooms alone!

Fair Trading NSW recommends the use of progress payments, but does not go so far as to suggest practical guidance on what milestones those progress points and percentage payments should be. Consumer Affairs Victoria, on the other hand, make useful suggestions like 35% at lock up stage and 25% at the fixing stage. This would suggest that we’ve now overpaid by a whopping 50%!

I never thought I’d say this, but I prefer the Victorian approach. NSW seems like they’re trying to be fair in name only, but then leave it to unequal knowledge base of a builder and a consumer to then agree something fair.

Reflecting on our situation in the same week when our Federal Government announced yet another batch of corporate welfare for the powerful construction industry makes me more than just a little annoyed.

In the interests of full disclosure, I am also equally annoyed at myself for not questioning more during the contract process. I should have at least asked, “What does internal lining mean?” I was an idiot and take full responsibility for not fully understanding the terms of the contract which I bound myself too. And that is why I honoured the payment without complaint to Eden Brae.

Eden Brae for the most part have been great. Our site manager, Mark, especially has been very impressive and I’d happily build with him again. The administration side of this engagement, on the other hand, is not something that I’m loving. Not when the payment profile is now so heavily skewed to us taking risk on them to complete the project.

If Eden Brae fell over tomorrow – and admittedly this is unlikely, but in the current economic environment, it’s not a non-zero probability – the 10% we haven’t paid them might cover only two of our five bathrooms. Remember that we still haven’t got a kitchen, or floors, or doors, or any lights or sockets just yet.

To be fair to Eden Brae, they are not unique in this payment profile. A quick Google of this topic will reveal that many others have posted about this issue with other builders who have identical progress payment profiles. And I get it. Builders simply want to take no credit risk on their clients, and want to ensure that the majority of the build is a cash flow positive endeavour.

But is it right that the customer – often with the weight of their life savings tied to the contract – takes material credit and delivery risk on the builder?

There is no point in calling for more consumer protection in this industry. It’s quite clear which side of the transaction has more influence on our body politic. ($25k renovation subsidy, anyone?) All I can do is hope that someone, somewhere, who may be about to sign a construction contract, learns from the error of my ways.