First Fix vs Second Fix: Understanding Construction Cost Stages

Understanding which work happens at each construction stage — and what you're actually paying for at each progress milestone — is the most effective way to protect your cash flow and avoid disputes with your builder.

How progress payments work

New home construction contracts in Australia are structured around progress payment milestones rather than a single lump sum. You pay a percentage of the total contract price when each defined stage is completed and certified by the builder. In most states, this structure is mandated or strongly guided by legislation — for example, the Home Building Act 1989 in NSW and equivalent consumer-protection frameworks in VIC and QLD set limits on deposit amounts and require payment only on completion of each stage.

The practical implication: you should never pay a milestone in advance, and you should always verify the stage is genuinely complete before releasing funds. A defect caught before payment is leverage; one caught after is a negotiation.

The standard stage breakdown

Deposit — typically 5%

Paid on signing the contract. This covers preliminary costs: development application (DA) or complying development certificate (CDC) lodgement, engineering and architectural drawings, soil testing, and early material procurement. Under NSW law the deposit is capped at 10% for contracts under $20,000 and 5% for larger contracts. Confirm in writing that your deposit is held in a trust account — this is a basic protection, not a given.

Base / Slab stage — typically 10–15%

The site is cleared, levelled, and excavated. Footings are dug, reinforcement is placed, a damp-proof membrane is laid, and the concrete slab is poured. For sites with a timber sub-floor, this stage covers footings, stumps, bearers, and joists. Ready-mix concrete runs at an indicative $220 per m³, and the slab itself is a significant cost centre because any under-engineering here affects every trade that follows. Check for correct dimensions, adequate cover over reinforcement, and the presence of the damp-proof membrane before signing off.

Frame stage — typically 15–20%

The structural frame — timber or steel — is erected. External wall frames, roof trusses or rafters, and internal load-bearing walls go up. The roof structure is in place but not yet clad. Timber framing runs at an indicative $8.40 per lineal metre; structural steel, where used, is approximately $1,850 per tonne — cost differences that reflect why many volume builders default to timber.

Frame stage is arguably the most critical inspection point on the entire build. Frame defects — incorrect spacing, missing noggings, inadequate bracing, non-compliant tie-downs — are expensive to fix once cladding is applied and almost invisible afterwards. Engage an independent licensed building inspector here without exception.

Lock-up / Enclosed stage — typically 20–35%

This is the largest single payment in most contracts and covers a substantial volume of work: external wall cladding (brick, fibre cement, or rendered foam), roof covering (steel roofing at an indicative $38 per m²), sarking, external windows and doors installed and weather-sealed. The building is now "locked up" — secure against weather and access.

Critically, first fix electrical and plumbing also occurs at this stage. First fix is all the work that runs inside wall cavities and floor spaces before they're closed: conduit and cable runs, water supply pipes, drain lines, and rough-in points for outlets, switches, and fixtures. Wall insulation — at an indicative $12 per m² — is also installed before the internal lining goes on. None of this is visible once the walls are closed, which makes a thorough pre-lining inspection valuable.

Fixing stage — typically 10–15%

The internal fit-out begins in earnest. Plasterboard is fixed and set (approximately $24 per sheet at 3 m length), cornices and skirtings are run, internal doors are hung, and cabinetry is installed. Kitchen and bathroom cabinetry in flat-pack form runs at an indicative $420 per lineal metre; engineered stone benchtops add approximately $680 per lineal metre — two line items that commonly blow out budgets when owners upgrade mid-build.

Second fix electrical and plumbing happens here: all the visible fittings and fixtures — power points, light switches, tapware, basins, toilets, shower screens, rangehoods, and electrical board connections. Tiling is also completed at this stage; ceramic floor tiles run at an indicative $45 per m², while engineered timber flooring is approximately $110 per m².

The distinction between first and second fix matters for payment verification: if a milestone references "fixing stage complete," both the linings and the visible fittings should be in place.

Practical Completion — balance of approximately 15–20%

The build is habitable and substantially compliant with the approved plans, the NCC (National Construction Code), and any BASIX commitments. Before releasing the final payment, you are entitled to conduct a Practical Completion Inspection (PCI) with the builder. Walk every room with a checklist and document all defects in writing.

Do not release the final payment until defects are either rectified or a written retention arrangement is agreed. In most states, builders are required to rectify defects identified at this stage under statutory warranty — in NSW, structural defects carry a six-year warranty and non-structural defects two years — but enforcement is far easier when defects are on record before you pay.

Independent inspections: a non-negotiable cost

Builder-issued completion certificates confirm a milestone is reached; they do not constitute independent quality assurance. Engage a licensed independent building inspector at a minimum for the frame stage and practical completion, and ideally at pre-slab, pre-lining (first fix), and fixing stages as well.

Stage	Independent Inspection Priority	Indicative Cost
Pre-slab / Base	Recommended	$400–$600
Frame	Essential	$400–$700
Pre-lining (first fix)	Recommended	$400–$600
Practical Completion	Essential	$500–$800

These are indicative costs only. The total spend across four inspections is modest against the cost of concealed defects that emerge post-handover — or worse, post-warranty-period.

Key things to confirm before each payment

• The stage is genuinely complete — not 90% done with verbal assurances about finishing later.
• Your independent inspector has signed off or their report has been reviewed and any critical items addressed.
• Variations you've agreed to in writing are correctly reflected in the builder's claim.
• Any materials substitutions from the original specification are documented and accepted by you.
• Council or certifier inspections required at that stage (footings, frame, waterproofing) have been passed.

To benchmark your contract's stage percentages against current build costs in your suburb, use the DesignBuildSource cost calculator — or search the professional directory to find licensed independent building inspectors active in your area.