Dealing with delays in Northern Territory

The HomeBuilder grant has exceeded all expectations. HIA is aware that this increase in building activity is leading to delays in both the supply of labour and materials.

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.
  The NT HIA building contracts do not have liquidated damages clauses. However, your client may still be able to pursue you for damages in court if there are unjustifiable delays during the project.

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.

This is particularly important given the current requirements regarding commencement timeframes under the HomeBuilder grant.

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 NT HIA Building Contract for New Homes you must commence building work:

• As soon as reasonable after the start date; or
• If the contract does not stipulate a period in which the building work must be completed, the building work must be completed within a reasonable period.

Commencement has been delayed – what can you do?

If commencement of building work has been delayed you should consider the reasons for the delay and determine whether you are entitled to extend the finish date under clause 10. For example, vandalism or theft, a variation or any delay of the local or statutory authority.

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

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 clause 10 of the NT HIA New Homes Contract.

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 to your client as soon as reasonably practicable after you become aware of both the cause and the extent of the delay.
• Ensure the owner approves the claim in writing.

If you do not claim the extension of time in accordance with the contract you may be unable to rely on it.

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 unhappy about an extension of time – what should you do?

If the homeowner disagrees with the extension of time, 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.
• Conciliation under the HIA contract.
  You or your client may initiate conciliation under the dispute resolution procedures of the contract. Conciliation involves an independent third party, the conciliator, who may help the parties to the dispute identify the issues, develop solutions, options and alternatives to try to reach an agreement.

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

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

Email us