Small Builders | Building Software
Wednesday 23 September 2015
Monday 21 September 2015
Keeping it Real – How to Prove Weather Delays
Often small builders and
commercial contractors like yourself encounter project delays due to inclement
weather. And often, you would think
“Hey, they know it rained!”
However, once you submit an
extension of time claim, your principal or head contractor denies it
outright. Why? You didn’t present proof
of the weather delay.
Tips of the Trade
In my years of experience in
building and construction, whether the project uses an Australian Standard or
other form of contract, one thing is common – a small builder or commercial
contractor like you has to send a notice of delay with details of the cause of
delay and an extension of time claim.
So what are the best practice tips
in preparing your notice of delay?
1.
Keep a site diary. – Who was
working on site that day? What work was supposed to be completed? Which trades
were affected by the weather delay?
2.
Take pictures and include them
in your diary. – Yes, you can support your delay notice with data from the
Bureau of Meteorology. But what if the
site you are working at does not have a weather station in that suburb or
city? Taking pictures of the site,
including the effect of the rain on working conditions, is an inexpensive way
to gather proof of the weather delay.
3.
Inspect the project site. –
Take a walk around and gather information regarding the effect of the delay,
including on the work health and safety of the persons who will perform
work. Invite a representative of the
principal or the head contractor and record the results of your inspection.
4.
Do not add to the delay! –
Submit your notice of delay as soon as possible to avoid the contract time
bars. All your supporting evidence will
be useless if your notice of delay or extension of time claim is submitted too
late!
Building Software for your Notice Needs
You have to remember that to claim
for an extension of time is your right as a small builder or commercial
contractor to ask for a reasonable extension to your construction program due
to delays which are beyond your control.
To fail to claim for an extension of time exposes you to liquidated
damages and other delay damages.
Does it all seem too complicated
for a simple notice? You need to take
advantage of technology now available for small builders and commercial
contractors. The Small Builders Building
Software is a perfect example of this technology. The Small Builders Building Software allows
you to:
- prepare a notice of delay wherever you are, as long as you have an internet connection
- attach photos and other documents to your notice of delay
- record minutes of meetings - record results of your site inspection
- send your notice of delay to your principal or head contractor by email
Small Builders Building Software
Small Builders is incorporated in
New South Wales, Australia. Its head office is at the Master Builders
Association NSW Building at 52 Parramatta Road, Forest Lodge, NSW, 2037.
The Small Builders software was
developed by the Company’s Founder and CEO, John Dela Cruz. John is a
specialist building and construction lawyer and a member of the Master BuildersAssociation NSW.
Tuesday 15 September 2015
Inclement Weather Management System
Every builder and contractor needs an
effective and robust inclement weather management system. Whether it is summer,
winter, spring or autumn, the Australian weather can get bad. When quoting a
job, I have not come across any way of predicting how the weather will impact
the construction program, the sequence of work or the increase in costs which
stems from inclement weather delay.
Inclement Weather Defined – Construction Contracts
In building and construction contracts, the
term inclement weather is often defined. Inclement weather is any weather that
may impede or prevent works from being conducted in accordance with the
contract. This definition is broad for many reasons.
In this definition, I use the term impede
loosely to include interruptions to or slowing down of work. Prevent means just
that, to stop. Both apply to a period of time and both apply to works being
conducted in accordance with the contract.
3
Limbs to Define Inclement Weather
For construction contracts, the definition
of inclement weather can be broken down into 3 limbs.
1.
There must be a weather event.
2.
That event must either
interrupt or impede works.
3.
The works being interrupted or
impeded must be the subject of a construction contract.
The
Small Builders Inclement Weather Management System
Small Builders and commercial contractors
should have an effective inclement weather management system in place to help
them run a sustainable business. There are many obvious reasons for having an
inclement weather management system. These reasons include to deliver on your
gross margin estimate (noting overhead costs continue to accrue) and to prevent
exposure to delay damages.
“Small Builders and commercial contractors should have an effective
inclement weather management system in place to help them run a sustainable
business.”
Contracts
You must ensure you draft your head
contracts, subcontracts, and supply contracts to manage the inclement weather
risks. You need to ensure you understand the rights the contract provides you
and the other contracting parties. You need to understand how to comply with
your contractual obligations.
The Small Builders Inclement Weather
Management System can help you manage inclement weather risks.
Construction
Program
Often your contract requires updating the
construction program after an inclement weather event. Even if updating your
construction program is not contractually required, it is good business practice
to communicate effectively with all project stakeholders. Part of good
communication is to update the construction program and any sequence of work
regularly to ensure these documents are up-to-date.
Small Builders software has a construction
program that can help small builders and contractors make and maintain updated
construction programs.
Project
Administration
It is absolutely critical to construction
work that the builder, all contractors, all suppliers and all workers are
communicating. Verbal communication has been the industry norm for very many
years. However, in recent years it has become critical to also formally send
notices to ensure proper documentation.
The Small Builders software can help you
serve compliant notices to manage weather risks.
Variations
Depending on what your contract says, you
may be entitled to a variation to your original contract sum. The basis for the
variation includes:
1.
out of sequence work;
2.
increased costs like industry
change and overhead costs accrued; and
3.
damage to works.
An effective inclement weather management
system can help you manage your risks and costs and claim for variation works.
Out
of Sequence Work
Out of sequence work is important to
consider in carrying out the project after a weather event. Some trades, for
example, may be able to continue with their program but others may not be able
to continue for some days after the weather event passes.
It is important that all interested parties
to the project communicate with each other to ensure they can best manage any
out of sequence work.
Efficiency
It is important that your inclement weather
management system is easy to use and can be carried out quickly. If the system
is either difficult to use or too time consuming, you may have less
stakeholders complying with their obligations. Also, a lack of compliance and a
delayed project has often caused or contributed to disputes.
Work
Health and Safety
You may be required to update the project
safety management plan if the weather event changed the nature or condition of
the project site. Your site work health and safety officer and team should
consult with all stakeholders after a significant inclement weather event to
determine if the WHS plan or WHS control measures need to be updated.
Quotes
A construction contract is important. However, the basis for the parties
contracting often arises from the quote. A good inclement weather system
addresses possible weather risk starting from the quote.
Small
Builders Inclement Weather Management System
Small Builders building software has an
excellent inclement weather management system in the standard package. One
inclement weather event during your project will make having the Small Builders
software an excellent investment.
Small Builders can help if you want to find
out more about inclement weather or inclement weather systems.
Thursday 10 September 2015
The Cost of Project Commencement Delay
The old adage of Time is Money rings out loud when I think of the
Cost of Project Commencement Delay.
In the past 3 months, I’ve worked with many
clients who have experienced delay with their project commencing. I will talk
about 3 of them to highlight where things went wrong and what a builder or
commercial contractor could do to manage this risk.
3 Projects
that suffered from a Delay with Project Commencement
Richie the
Cost Plus Builder – Up to $1M Contract
The builder was approached by a long term client
to refurbish another one of his residences. The client had obtained all the
compliance documents for the refurbishment. The parties agreed that the Builder
should work on a cost-plus contract because of the premises seemed to be in a
flood zone area.
After executing the contract, the builder engaged
an engineer to determine the stability of the ground. Unfortunately, the
engineer’s recommendation was that significant piers would need to installed.
The parties agree it would be more cost effective and result in a better build
if the house was knocked down and rebuilt.
This is where the Cost of Project Commencement
Delay comes into play. The compliance documents approved by Council were now
inconsistent with the new work to be performed. The Builder was expecting to
commence the work in May, it is now September.
On reliance on this important long term client’s
work commencing and the significant work required for this custom project, the
builder cleared out his schedule and refused work from April onward. The
builder accepted a few small odd jobs to keep him going but nothing really
substantial. It took the Builder until August to approach me and describe the
problems he is experiencing from the delay with this project commencing. I have
collated his problems described below.
Trevor the
Lump Sum Builder - $1M+ Contract
The Client consisted of owner-occupiers of a
block of units in Bondi. The Client engaged an architect to prepare all
drawings and specifications and more importantly to project manage the job. The
Client engaged a building and construction lawyer to negotiate the contract
terms and conditions.
The project is in a high profile location - Bondi
Beach. The Client(s) are prominent long term residence of the community. The
project is the first time build for the builder – a knock down re-build of
apartment block. The builder viewed the project as a significant opportunity to
demonstrate his building skills with a view to extending his business into
apartment style building as well as his current portfolio of residential
refurbishments and builds. Most importantly, the value of the contract was in
the millions of dollars so the builder wanted to ensure he devoted his
attention to it.
The Builder, as you would expect, blocked out his
sales and construction pipeline.
Everything seemed to be on track from negotiating
the contract up to the time of contract execution. Then out of left field one
of the unit owners notified everyone that their finance has not yet been approved.
The project has been delayed for more than 4 months now.
John the
Commercial Contractor - $1M+ Contract
This commercial contractor specialises in
high-end commercial windows and doors. The project was in a prominent CBD
location surrounded by Global award winning buildings. The project was to
design and construct curtain wall around the rooftop of a heritage listed
building as-well-as an extrinsic curtain wall for the linkway adjoining the
heritage building and the new building. Put simply, there weren’t many
contractors who could deliver on this project.
Given the significant risks with the project, the
contractor cleared his sales and project pipeline so that he good focus his
specialised design and engineering skills on this project. In close collaboration
with tier-1 engineers, the builders architect and other specialist contractors,
the contractor worked on the design of the works to draft a building to
stand-out from the rest.
You may have guessed that the builder was delayed
with having the contractor commence his work. The reasons for the delay left
people associated with the project wondering whether the project was cursed.
First, the suppliers for the materials were few and far between given the
specialist quality of the material required. The builder, despite many
engineering reports, encountered numerous latent conditions during prior trade
construction particularly when coming out of the ground. Then the Gods got angry and the project
experienced some of the worst rainy weather in many many years.
Unfortunately for the contractor, his work
requires significant capital investment into materials. Being the diligent
contractor that he is, he purchased all the material he required, fabricated
this material, and had everything to go ready, as demanded by his dictating
commercial builder under the construction contract and construction program.
The project was delayed by 5 months.
Summary of
Reasons for Project Commencement Delay
1.
Change in scope of work
2. Incomplete or incorrect scope of work
3. External service provider design and drawings
4. Council approval
5. Lack of or change to financial circumstance of client
6. Weather
7.
Latent condition identified in
prior sequence of work
The Costs
of the Project Delay in Commencing
1.
No revenue generated from the expected
project – the flow on effects of that are obviously significant.
2. Dead sales pipeline – he blocked out the construction period because
it was a cost-plus project and now this construction period is being extended
every day by the delay with the construction commencement.
3. Increased cost with materials. Right now, Sydney is experiencing
significant boom in construction and it feels like suppliers are increasing
their prices by the day.
4. Significant capital being invested and money being locked up
5. Overhead costs being incurred without any work – full-time wages,
insurances, rent etc
6.
Idle time for workers and
company-wide – leading to decreased morale and wasted skill-set
Pondering on these scenarios, I can’t help but
wonder how many projects are delayed and the flow on affects of these delays.
These delays were not expected by either of these builders or the commercial
contractor but I know that the cost of the project commencement delay has left the
small business out of pocket and hurt their successful businesses. I will blog
about at a later date what are some things a commercial contractor can do to
manage the risk of project delay and managing the associated costs with these.
John Dela Cruz
Small Builders – Building Software
Founder and CEO
About the Author
John Dela Cruz is a specialist
building and construction lawyer who works with small builders and commercial
contractors. John is passionate about helping small builders and commercial
contractors build sustainable businesses. As well as being a lawyer, John is
the Founder and CEO of Small Builders, Building Software. John holds numerous
qualifications and memberships including being a member of the Master Builders
Association of NSW.
Subscribe to:
Posts (Atom)