Dealing with delays

HIA is aware of the ongoing impacts of trade and materials shortages which can cause delays in building projects in South Australia.

When should I consider delays?

There are 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. If you do not factor in or respond to delays, you may be liable to compensate the owner.

Stage 1. Before signing the building contract

Get the time for doing the work right

Ensure you have adequate time in your contract for the completion of the work. This may mean that you need to:

• Reconsider your usual build times to factor in the current climate.
• Be prepared to explain to the owner 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 any special conditions that may change the way a standard HIA contract functions.

The SA HIA building contracts do not include a liquidated damages clause. However, the owner may still be able to pursue you for damages if you do not finish on time.  

Consider your current workload

While you may not want to ‘miss out’ on work when the opportunity arises, making sure you can deliver on what you commit to should be a priority. 

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 SA Building Contract for New Homes you must commence building work as soon as reasonable after the start date listed on page 1 of the contract.

The work must reach practical completion by the finish date listed on page 1 of the contract.  If the contract does not stipulate a period in which the building work must be completed, the building work must be performed at a reasonable pace.

Commencement has been delayed – what can you do?

If commencement of building work has been delayed you should consider the reasons for the delay and determine whether you are entitled to push back the finish date under clause 11.

The process for pushing back the finish date is the same, regardless of whether the delay occurs before or after commencement. This is described in further detail below.

Stage 3. After building work has commenced

Delays during construction can be frustrating and cause tension. 

They can also lead to disputes.

It is important to be aware of your rights and obligations regarding practical completion and pushing back the finish date.

Three ways to manage delays during the building work

1. Monitor the progress of the construction work and track it against the finish date.
2. Communicate any delays or disruptions to the owner as soon as possible.
3. Seek an “extension of time” to push back the finish date when you become aware that a delay and its impact on construction timeframes.

Putting back the finish date

You are entitled to put back the finish date if you have been delayed in progressing the building work for reasons outside of your control. There is a non-exhaustive list of what may constitute an extension of time under clause 11.3 of the HIA SA Building Contract for New Homes.

The HIA SA Building Contract for New Homes does not prescribe a set process to put back the finish date, however, You should keep the owner updated of delays as they arise. Disputes can be avoided in the outset if the progress of the works is properly monitored during construction and delays are communicated to the owner in a timely manner. One way to do this is:

• Provide the owner with a written notice to put back the finish date detailing:
  • the cause of the delay; and
  • the additional number of days required. 
• Issue the notice when reasonably practicable after you become aware of both the cause and the extent of the delay.
• Have the owner sign the notice and provide you with a copy, if possible.

If you choose to follow this process it will ensure that the owner is informed and can help to reduce the chance of disputes. You should also make sure you retain a records of the cause and extent of the delay.

HIA suggests each delay is dealt with separately, at the time that they arise. Bundling delays into a single claim at the end of the job can be confusing for the owner, create unnecessary tension and is more likely to be disputed.

It is important to note that claim for any additional cost caused by the delay should be claimed separately as a variation.

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

If the homeowner disagrees with you putting back the finish date, there are two options:

• Provide evidence to support your claim.
  In addition to your own record son the delay, economic information or correspondence from suppliers may help convince the owner that the delay was not foreseeable at the time of signing the contract.
• Conciliation under the HIA contract.
  You or the owner may initiate conciliation under the dispute resolution procedures of the contract. Conciliation involves an independent third party, the conciliator, who may help the parties to the dispute identify the issues, develop solutions, options and alternatives to try to reach an agreement.

Where can I get further information?

HIA has extension of time documents available through HIA Contracts Online.

We have also prepared materials to assist you in explaining delays to your clients. 

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

Email us

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