Dealing with delays in Victoria

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.
  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’s Victorian New Homes and Alterations, Additions and Renovations contract you must commence building works within 21 working days after the receiving:

• the essential information from the owner as identified in the contract;
• all necessary building permits and planning approvals; and
• payment of the deposit

If an owner does not fulfil their obligations by the anticipated start date, you can seek an extension of time to give the owner more time to fulfil them. Alternatively, you may end the contract in accordance with the termination provisions of the contract.

Commencement has been delayed – what can you do?

While you are obliged to commence works within 21 days of receiving all the essential information, this may not always be feasible. You may wish to seek an extension of time to delay commencement:

• If the owner has caused the delay;
• For any other cause that is beyond your direct control.

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 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.

A builder is not entitled to an extension of time where the building works is delayed as a result of the builder causing the delay. 

To claim an extension of time you must give the owner a written notice informing them of the extension of time. The written notice must state the cause and extent of the delay. 

While there is no specified period on when an extension of time may be sought, it is recommended an extension be requested as soon as the builder is aware of the delay.   

If you are unsure of the number of days to be claimed, it is be best to put the owners on notice in writing specifying that an extension of time will be claimed and that the extent of the delay will be determined at a later date. 

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

A homeowner may dispute a request for an extension by giving the builder written notice within 7 days of receiving the extension of time.  The written notice must detail why the owner is disputing the claim.

Where an owner 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.
• Make a complaint to the Domestic Building Disputes Resolution Victoria (DBDRV).

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

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

Email us