Dealing with delays in Queensland

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.

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 HIA contract you must commence building work:

• by the anticipated start date; or
• within 20 working days of the owner fulfilling a number of obligations (such as evidence of land title and a number of other requirements).

If an owner does not fulfil their obligations by the anticipated start date, clause 2.2 provides that a builder may end the contract or extend the time for the owner to fulfil their requirements.

Commencement has been delayed – what can you do?

You may increase the contract price if commencement has been delayed:

• more than 4 weeks after the anticipated start date due to a delay that the builder is not responsible for; or
• is caused by the owner’s actions.

The price increase may be the reasonable costs incurred because of the delay, or 0.125 percent of the contract price.

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 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.
• Ensure the owner approves the claim in writing.

Once you receive the approved extension of time, a signed copy must be given to the client within 5 working days.

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 disputing an Extension of Time – what should you do?

HIA contracts require a homeowner, if they wish to dispute an extension of time claim, to provide written notice to the contractor within 5 working days of receiving the contractor’s extension of time notice. The homeowner’s written notice must:

• Disputes the extension of time; and
• Details the reason why the extension of time is disputed. 

HIA contracts require the homeowner to not unreasonably refuse to approve an extension of time.

BUT if the homeowner continues to refuse you have a few 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.
• Suspend the building work.
  This is a very serious step and should not be taken without obtaining legal advice.
  In some situations, unlawful suspension of the works may allow a homeowner to terminate the contract.
• From 1 July 2021, the Queensland Government will be offering an Accelerated Builder/Consumer Dispute Framework (ABCD) as a temporary independent mediation service.
  This option is available if you are building a new home or a carrying out a major renovation over $150,000. Applications are free and are subject to certain eligibility requirements. 
  Find more information about the ABCD process. 
  You can also contact the Queensland Building and Construction Commission (QBCC) or on 139 333 for further information.

Information published by the Queensland Government on residential building material and labour shortages may assist when discussing these issues with you clients.

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

To find out more, contact HIA's Workplace Services team

Email us

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