While many contracts specify a definite time period in terms of “x” number of calendar or working days (which exclude weekends and public holidays), some contracts do not and this space is left blank. This does not mean that the builder has an infinite amount of time to complete the project. Courts have ruled on occasion that the length of time to complete a project was unreasonable, despite no time limit being included in the contract.
Where a specific number of days is stated, some contracts start from a particular event at which the construction period begins. For example, some contracts nominate that the starting point is contract signing, others might nominate the date on which building approval is obtained, or even when the slab is laid.
In calculating the construction period you should make sure that you do not include time spent in obtaining building approval, water connection etc. Under the Home Building Contracts Act, a builder has 45 days to obtain the necessary approvals to build. This period does not usually form part of the construction period.
Extensions to the construction period are usually an entitlement of the builder for factors outside the builder’s control and/or which could not reasonably have been foreseen at the time of contract signing. While there may be a dispute over the length of, or justification for, a time extension, a contract period can be extended when certain circumstances arise and particular processes are followed.
In one case, the Building Disputes Tribunal disallowed an extension to a contract due to a builder going on holidays. This was because the construction period agreed to by the parties only excluded weekends and public holidays, not holidays unilaterally decided upon by the builder.
The construction period is an important part of a building contract which means careful consideration by both parties. Many owners rely on the timeline for reasons such as expiry of a rental lease agreement, timely sale of the project and so on. Builders also want to complete projects in an orderly fashion without excessive strain on their capacity.
In summary, some general principles for dealing with overruns are:
- Your builder’s obligation and your entitlements (if any) will depend on the agreement you have signed. You will have to carefully read your building contact to determine the length of the construction period, the builder’s entitlement for time extensions and any liquidated damages clauses. Like any building contract these clauses should be understood before contract signing, not towards the end of the building process.
- In determining the length of the construction period there are often different starting points depending on your contract.
- The completion date can also be problematic. Virtually all contracts entitle the builder to claim time extensions for matters unforeseen at the time of contract signing or which arise and are outside the builder’s control. These claims can extend the scheduled completion date. A builder should be able to accurately verify the amount of time claimed rather than rely on pure assertion.
- Whether liquidated damages are payable because of any delay in completion will need to be further examined. Depending on how your contract is written, damages may be payable based on either “working days” or “calendar days”. Sometimes a specific amount e.g. $30 per calendar day is agreed upon by the parties at contract signing. In other contracts where no specific amount is mentioned, it will be a question of fact and proof as to the damages incurred as a result of the delay. Usually these include loss of rent, additional interest payable etc.