Extensions of time and dealing with delays

Delays are a common source of conflict in residential construction. Many disputes can be avoided with clear communication and sound contract management. Under HIA's Tasmanian major residential building contracts, delays do not automatically extend the building period. To protect your interests, you must submit a formal written request for an extension of time. This resource explains when you're entitled to claim an extension of time, the correct process to follow, and how to manage and document delays to minimise the risk of disputes. 

When should I consider delays?

There are three stages of 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 under delay damages. Watch this video to learn more.

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 the owner why construction may take longer than usual 
• Factor in all foreseeable delays such as annual shutdown periods and known delays in the delivery of building materials 
• Be aware of delay damages

All HIA major residential building contracts include provisions entitling the owner to claim compensation if the builder fails to complete the works within the agreed building period. Under the contract, you and the owner 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.

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 works

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 works?

All HIA major residential building contracts require the builder to commence building works within 20 working days of the owner fulfilling a number of obligations (such as evidence of land title, capacity to pay for the contract price, and a number of other requirements).

Commencement has been delayed – what can you do?

Under all HIA major residential building contracts, if the owner does not fulfil their obligations within 20 working days from the date of the contract, these contracts allows the builder to either terminate the contract or extend the time for the owner to meet their obligations.

Stage 3. After building works have commenced

Delays during construction can be frustrating, cause tension and may lead to disputes.

Being aware of your contractual rights and obligations regarding extensions of time is critical.

Three ways to manage delays during the building work:

1. Monitor the progress of the construction work and track it against the building period. 
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, but not limited to:

• Variations 
• Inclement weather or resulting site conditions 
• Delay in owner-selected materials or items 
• Industrial action affecting trades or suppliers 
• Owner’s actions or inaction 
• Any other cause beyond the builder’s control

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.

Access HIA’s Extension of Time notice and our suite of templates via Contracts Online.

The notice must be provided to the owner 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.

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

The owner may dispute an extension of time.

To dispute the claim, the owner 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 the owner disputes a request for an extension of time, there are two options:

• Provide evidence to support your claim 
  Economic information or correspondence from suppliers may help convince the owner 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.

For further guidance, read our guide to writing notices under HIA Contracts.