subject: Understanding Building Contracts [print this page] Generally speaking, only smaller builders can offer this 'personalised service, and clients building with larger corporations should not expect extra service despite the rhetoric from sales people. Clients need to only expect to get what they've contracted the builder to give them.
Clients who are keen to visit the site can be advantageous to the builder because any complications can be dealt with before they become key and expensive dramas. At the same time though, clients need to recognize that they can't interfere, obstruct or direct trades individuals on site. All issues on site will need to be raised with the builder as he or she is the only one who can direct trades people today.
A well-documented contract will minimise the potential for disputes throughout construction. Delays in construction usually result in clients having to extend rental agreements and, at the same time, meet mortgage repayments. Standard building contracts permit an extension of time for the builder where there is a shortage of supplies or labour, or when there is inclement weather. Liquidated damage clauses could be included in a building contract, compelling the builder to pay compensation (normally equivalent to the rental value of the property) if the building work takes longer than agreed. Several builders are reluctant to contain such a clause.
The cyclical nature of the Australian building industry means that in boom times builders are compelled to pay higher rates to attract subcontract labour. If there isn't enough profit in a job they might let it lag and wait for labour rates to drop. Regrettably, in boom times most builders take on more work than their usual contractors can cope with and thus they're forced to boost their pay rates to attract new labour. Since the pool of labour is fixed, they can only 'poach' new labour from other builders. So, due to the reality that building contracts are mostly 'fixed price' and builders' costs escalate, more builders go bankrupt during booms than recessions.
Boom periods within the building industry also result in material shortages and occasional labour unrest. These factors all impact on construction times.
When choosing a builder, speak to other clients and visit the builder's recent projects. Contact the Builders Registration Board and check the builder is registered and that he has not had an unusually high number of building disputes. Most importantly, you should have confidence in the builder being able to competently complete the work he is contracted for and that you are able to produce a good working relationship with either him or his representative.
Contact with your builder will need to only be during working hours and certainly not every day. If you construct with a significant building provider then you are likely to be given a client liaison person as your contact, not the building supervisor. This can be frustrating for clients since messages are not always relayed and supervisors do not always return calls.
You need to keep in mind that supervisors could have thirty or more homes to manage and they only go to a site every second or third day depending on what work is being performed. The level of supervision generally reflects the quality of workmanship on site. Significant building businesses have specialist staff for instance salespeople, contract administrators, client liaison staff, drafts persons, estimators, schedulers, building supervisors, subcontractors, accountants and building managers. It may therefore be hard to obtain quick responses to your concerns.
A client wanting to change something after construction has begun needs to request the variation to the builder in writing. A variation order requiring a change of plan will go to the drafting office to change the plan, the estimating office to price the changes, the scheduling office to order additional material, the supervisor to manage the change on site and finally the subcontractor to make the change. It's no wonder that mistakes are made resulting in despondent clients. Smaller builders, on the other hand, may undertake all of these tasks themselves and decrease the chance of mistakes and misunderstandings.
