Written by Chris Pickering, Client Manager - Commercial Services
Builders around the country are experiencing an exceptional set of circumstances, impacting on their ability to deliver projects within expected timeframes and costs. It has been called a “perfect storm” in recent media coverage, with stock and supply chain difficulties, recruitment challenges, staff absences due to covid, and consenting delays at local authorities all contributing to extensions to contract timelines.
Fair Way provides mediation and adjudication services for builders and homeowners, and we also provide an independent early resolution service exclusively for Master Builder members and their customers. Fair Way is seeing these trends present in recent disputes. Building delays are a common theme. We have seen cases where homeowners have sought the costs of ongoing rental accommodation as their new build has been delayed or loss of rental income from delays in the home being available for possession. We are also seeing cases involving builders who are not able to complete builds at fixed prices. From our experience, two things need be front of mind for builders experiencing or anticipating delays so they can avoid escalating disputes – contracts and communication.
Contract documents are useful in setting out the parties’ respective rights and that is often the first place that people go to when there is a dispute.
Contracts should include an expected date of completion and may list reasons for delay where the builder should not be liable. The reasons may include variations, delay in payment and consenting. They also may include many of the issues currently at play, including unavailability of subcontractors or materials. Difficulties in recruiting staff is not usually one of the permissible reasons for delay, unless this is a catch-all of matters outside the builder’s reasonable control. Considerations of “reasonableness” though require a consideration of wider circumstances including other parties’ interests.
From a contractual standpoint, builders might find themselves in a dispute about delays and whether they should have foreseen them and mitigated them or be responsible for the resulting costs. Conversely, where builders have incurred additional costs for delays beyond their control, should they be able to pass these on to the homeowner? There is a lot here for builders and homeowners to consider within their contracts.
When pricing up new projects, builders should consider whether fixed price contracts are appropriate in the current market, particularly small companies with lots of variables outside of their control.
Your contract is also likely to include a dispute resolution clause, setting out the options for resolving any disagreements. We recommend working together where possible, avoiding Court or other formal processes, as much as you can.
Communication is the key to preventing issues escalating into disputes. Our advice is to always keep communication open as this is the foundation for your working relationship. If circumstances beyond your control arise, these should be discussed between builders and clients straight away, so everyone knows what is going on and the reasons for any deviation from the contract specifics.
Fair Way can help with keeping the communication flowing, especially where the parties are heading for conflict. Understanding the reasons for circumstances goes a long way, it allows for empathising and for both sides to keep their eyes on the ultimate goal. The builder wants to finish the work and move onto the next job, while the homeowner also wants their build completed so they can move in and enjoy the builder’s work. An independent facilitator can contribute as a neutral person outside the contractual relationship to keep communication going and the project moving forward.
Fair Way are as available for builders as for homeowners, so if you see an issue on the horizon, we can talk through options with you so you are better able to face those issues. We can also directly communicate with the other party on your behalf if that is necessary.
What to do if you find yourself in a dispute?
If you would like some independent assistance in communicating with another party, get in touch with Fair Way.
The Registered Master Builders Association have engaged Fair Way to provide an early facilitation service which is free for both Master Builder members and homeowners. We also provide private services for the building and construction sector.
Many builders find our service useful when they are experiencing difficulties communicating with clients or when projects are being held up. We have assisted hundreds of builders and homeowners towards a resolution of their dispute.
You can find more information online or talk to the team on 0800 77 44 02.
About the author
Chris Pickering (firstname.lastname@example.org) is Client Manager for Commercial Services at Fair Way and is based in Auckland. As Client Manager, Chris works closely with our team of Resolution Coordinators and Resolution Practitioners across a portfolio of services which includes Fair Way’s building and construction, commercial and private, financial, education and workplace dispute resolution services. Chris has been admitted as a solicitor in New Zealand and England and is an Associate Member of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ).