Dealing with delays in Western Australia

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 allowed adequate time for the commencement and completion of the building project. This may mean that you need to:

• Ensure your commencement timeframe takes into account the necessary tasks prior to construction.
• 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 that the owner may claim for damages.
  If you do not allow enough time for completion of the works or make a valid extension of time claim,  a court or tribunal may determine that associated damages are payable to the owner.  Such ‘damages’ would represent the additional costs incurred by the owner due to the delays in completion.

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 and Building Bonus grants.

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

• Any limits on your indemnity 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 HBCA Lump Sum Building Contract you must commence building work:

• by the listed start date; or
• as soon as reasonably practicable after the builder and the owner have fulfilled a number of obligations (such as obtaining finance and authorities approvals).

If construction is likely to be delayed, you should provide written notification to the owner of the cause and timeframe for the delay.

Commencement has been delayed - what can you do?

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

• where the building permit and water approval have not been received within 45 working days from the date of contract signing due to a delay that the builder is not solely responsible for (refer to clause 2); or
• where construction has not commenced within 45 working days from the date of contract signing due to a delay caused solely by the owner or a third party (refer to clause 6(b)).

The price increase may be for the reasonable additional costs incurred because of the delay plus the builder’s margin (refer to clause 22).

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 under the HIA HBCA Lump Sum Building Contract 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.

It is good practice to keep a record of when the notice was provided to the owner and that it was within 20 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 unhappy about an extension of time – what should you do?

If the homeowner disagrees with the extension of time, there are 3 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 owner disagree, you should follow the process set out in the dispute resolution clause of the contract. 
• Make a complaint to the Building Commissioner.
  Both you and the owner have the option to lodge a contractual complaint with the Building Commissioner, when the contract is for home building work valued between $7,500 and $500,000.

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

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

Email us