Dealing with delays in New South Wales

Increased building activity resulting in material and labour shortages, ongoing wet weather events and other events outside the builder’s control may cause delays to your building projects.

When should I consider delays?

There will be three stages during a residential building project when you might need to consider how to respond to delays:

1. Before signing the building contract
2. After signing the contract but before commencing building work
3. After building work has commenced

Each stage will present different challenges and, if you do not factor in or respond to delays, you may be liable to compensate your client.

Stage 1. Before signing the building contract

Get the building period right

Ensure you have adequate time under your building period for the completion of the building project. This may mean that you need to:

• Reconsider your usual build times to factor in the current climate.
• Be prepared to explain to your clients why construction may take longer than usual.
• Factor in all foreseeable delays such as annual shut down periods and known delays in the delivery of building materials.
• Be aware of liquidated damages.
  Most contracts provide for a homeowner to be compensated if there are unjustifiable delays during the project.
  Under the contract you and your client can agree to this amount.
  If you do not, a default amount may apply OR if no amount is specified and there is a dispute, a court or tribunal may determine the appropriate amount.

Consider your current workload

While the current level of interest and activity is appealing, and you don’t want to ‘miss out’ on work, making sure you can deliver on what you commit to should be a priority.

When assessing your current workload and future commitments you should consider:

• Any limits on your warranty insurance that may impact on the amount of work you can contract for. Investigating this before signing contracts is strongly recommended.
• The availability of subcontractors.
• Predicted delays in the supply of building materials that may impact your local suppliers.

Stage 2. After signing but before commencing building work

Once you have signed the contract you have entered into a legally binding agreement.

Any changes must be made strictly in accordance with the contract.

When should you commence building work?

Under the HIA NSW New Dwellings, Cost Plus or Renovations and Additions contracts you must commence building works within 20 working days after the day that:

• You receive all necessary building permits and planning approvals; or
• The owner fulfils a number of obligations set out at clause 4. If an owner does not fulfil their obligations by the anticipated start date, clause 4.2 provides that you may end the contract.

Stage 3. After building work has commenced

Delays during construction can be frustrating and cause tension. 

They can also lead to disputes.

Being aware of your rights and obligations regarding extensions of time is critical.

3 ways to manage delays during the building work

1. Monitor the progress of the construction work and track it against contracted timeframes.
2. Communicate any delays or disruptions to the owner as soon as possible.
3. Seek an extension of time as soon as you become aware that a delay will impact construction timeframes.

How to claim an extension of time

Under the HIA NSW New Dwellings, Cost Plus and Renovations and Additions, an extension of time may be available if the delay is:

• caused by something beyond the builder’s sole control, and
• was not reasonably foreseeable at the time the builder entered into the contract.

There is a non-exhaustive list of what may constitute an extension of time under HIA contracts.

To claim an extension of time you must:

• Provide the owner with a written notice for an extension of time detailing:
  • The cause of the delay; and
  • The extension of time.
•  Ensure that the notice is provided within 10 working days of when you became aware of both the cause and the extent of the delay.

If you do not claim the extension of time in accordance with the contract, you may be unable to rely on it. This means you may be liable for any liquidated damages if you do not complete the building works per the contract’s building period.

Generally you cannot claim an extension of time for delays you cause or a delay that was reasonably foreseeable at the time the contract was signed.

The Homeowner is disputing an extension of time – what should you do?

If the homeowner wishes to dispute your entitlement to an extension of time the homeowner must provide you with a written notice within 5 working days of receiving your extension of time claim outlining why they dispute it.

BUT if the homeowner continues to dispute your claim, there are 2 options:

• Provide evidence to support your claim.
  Economic information or correspondence from suppliers may help convince a client that the delay was not foreseeable at the time of signing the contract.
• Refer to the Dispute Resolution clause in your contract.

HIA has extension of time documents available through HIA contracts online.

To find out more, contact HIA's Contracts and Compliance team

Email us