Commencement of building works under HIA Contracts

HIA building contracts include detailed provisions around the commencement of building works. It is vital to ensure that commencement occurs according to the contract to avoid potential disputes around the building period, practical completion, and late completion damages. 
This information provides a guide for builders when using the Queensland HIA contracts.

What is commencement?

Commencement is defined as being when the builder commences physical construction on site of the footing, slab, or drainage system, or when work to change an on-site fixed structure has physically commenced. 

When does the builder have to commence works?

A builder must specify an ‘anticipated start date’ at Schedule 1 of the contract. The anticipated start date is an estimate of when the builder may be able to commence work on site. It is important to note that the time frame specified in the contract should be quantifiable (e.g. 30 June 2023) rather than related to an event (e.g. 20 days from council approval). 

Commencement must take place on or before the anticipated start date, or within 20 working days of the requirements set out in the ‘Commencement’ clause of the General Conditions being satisfied, whichever is the later. The majority of the requirements set out in the Commencement clause relate to essential information that the builder requires prior to carrying the works. The essential requirements of the QC1, QC2, and QC3 contracts are that:

• The owner must provide the builder evidence of their title to the land; 
• The owner must provide the builder evidence of their capacity to pay the contract price;
• If required, the owner must establish a security account;
• The owner must provide the builder possession of the site;
• Where a lending body is named in the contract, the owner must provide the builder a notice from the lending body that construction works may commence; and
• The builder receives all permissions, consents, and approvals required from the relevant authority.

What if the owner does not satisfy all of the essential requirements by the anticipated start date?

Except for building and planning approvals, if the owner does not satisfy the requirements outlined in the Commencement clause, the builder has the option to: 

• End the contract; or
• Provide the owner with additional time to provide the information and, if commencement is delayed for longer than four weeks, increase the contract price in accordance with the ‘Delay Damages’ clause of the contract.  

If the delay to commencement occurs because of building and planning approvals, the owner or the builder has the option to end the contract or extend the time for the approvals to be obtained, however, there is no option for the builder to increase the contract price.

What happens after you commence works?

Once commencement occurs, the building period starts and the builder has 10 working days to give the owner a commencement notice, in writing, that states the actual date of commencement on the site and the date for practical completion. HIA has a Notice of Commencement available through Contracts Online. 

The building period in the contract can be used to work out the date for practical completion. It is important to note that the date for practical completion provided in the commencement notice is subject to change in accordance with the contract, i.e. due to valid extensions of time and/or suspension of works issued throughout the course of the contract. If the builder does not reach practical completion within the nominated building period, they may be liable to pay the owner late completion damages.