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Dealing with delays in Tasmania
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:
- Before signing the building contract
- After signing the contract but before commencing building work
- 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:
- The availability of subcontractors.
- Predicted delays in the supply of building materials that may impact your local suppliers.
- Time period for having a building permit issued.
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 within 20 working days of the homeowner fulfilling a number of obligations (such as evidence of land title and a number of other requirements).
Commencement has been delayed – what can you do?
If a homeowner does not fulfil their obligations within 20 working days of the date of the contract, clause 10.1 provides that a builder may end the contract or extend the time for the homeowner to fulfil their obligations.
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
- Monitor the progress of the construction work and track it against contracted timeframes.
- Communicate any delays or disruptions to the owner as soon as possible.
- 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
- the builder suspending the works in accordance with the suspension provisions of the contract.
There is a non-exhaustive list of what may constitute an extension of time under the 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 20 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.
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?
A homeowner may dispute an extension of time.
To dispute the claim, a homeowner must, within 5 working days of receiving the extension of time, provide a written notice to the builder disputing the claim and detailing the reasons why the extension of time is disputed.
Where a homeowner disputes a request for an 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. - Refer to the dispute resolution clause.
If you and the homeowner disagree, you should follow the process set out in the dispute resolution clause of the contract.
HIA has extension of time documents available through HIA contracts online.
To find out more, contact HIA's Contracts and Compliance team
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