Updated July 2021
The impact of the COVID is profound and may well extend for some time. MBANSW members should note the following in relation to their contracts.
Delays may occur for several reasons in the current circumstances but predominately for lack of materials or people.
Contracts need to be checked for appropriate clauses that may deal with such delays and possibly provide an entitlement to an extension of time. If a contract has an entitlement to an extension of time there may be particular notice requirements.
For example both the Master Builders BC4 Residential Building and Cost Plus Residential contracts have provision for extensions of time due to shortages or delays in trades or materials which affect the builder’s ability to continue with the work. No costs are claimable.
What To Do
- Check your current contracts for extension of time entitlements and notice requirements (be careful of time bars). If there has been delay by the Owner then it may be possible to claim delay damages amounting to the difference in costs during the delay.
- Increased cost and shortages of materials may entitle you to an extension of time but if materials or trades can be sourced but at a greater cost then you may be obliged to use them and cannot pass on the increase to the Owner.
- If you do contract do a Cost Plus contract if possible. If you enter into a fixed price contract you should consider the following;
- Check with suppliers as to current costs and anticipated increases and allow for them.
- Re-cost the contract price immediately before signing to take into account any price rises existing or anticipated.
- Prime Cost and Provisional Sum allowances - You should include any known or anticipated materials or trades the may rise as Prime Cost or Provisional Sum allowances.
- Do not enter into a contract with a start date too far in the future as cost of materials and trades may move dramatically in that time.
- Order materials as soon as you can and have them claimable under the contract upon ordering.
- Consider plenty of extra time for the contract, especially if the contract does not allow for extensions for reasons beyond the Builder’s control, such as COVID-19.
- Discuss any difficulties with your client.
If you have any difficulties or enquiries then please contact MBA Lawyers on (02) 8586 3517.