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Shortages of Materials and Trades – Builders Be Ready

Posted on July 27, 2021

With the significant amount of construction work being done in South Australia at the moment, (because of the Federal HomeBuilder grant), the construction industry is dealing with shortages of materials, leading to delays in the supply of materials. Also, as tradespersons become busier, it is becoming more difficult to find tradespersons to undertake work when and where required.

These issues are going to continue, and likely become worse, in the short term.

If these things cause delays on jobs, builders should look at whether they can claim an extension of time under their contracts.

Under the standard HIA contract, a builder can claim an extension of time under clause 11. Clause 11.3.16 of the standard HIA contract gives a builder an extension for delays caused by “materials being difficult to get”. This will apply where the materials are difficult to get due to shortages caused by the large amount of work in the industry at the moment. This won’t get a builder an extension if they can’t find trades to do the work however.

Clause 11.3.17 of the standard HIA contract gives a builder an extension for delays caused by “anything else beyond [the builder’s] control”. This is the clause a builder will have to rely on where there is a delay caused by the builder being unable to find a suitable tradesperson. It is important to note however that getting an extension is one thing but increasing the price is another thing altogether.

Although clause 11 does not require notice of a written claim for an extension of time at any particular time, it is a good idea for builders to regularly update an owner about delays and the builder’s entitlement to extensions under clause 11. The more regular these updates and the more detail provided, the less chance of a dispute at the end of the job.

In most cases, a builder will have certain suppliers that they deal with on a regular basis. Where a regular supplier has a shortage, a builder will be expected to identify and engage alternative suppliers that don’t have a shortage, if that is possible. Where the alternative supplier has a slightly (or significantly) different product (including a different brand) than that specified in the contract, alternative products must only be purchased after the owner has approved the substitution.

In most cases a builder will have certain tradespersons that they engage on a regular basis. If these regulars are unavailable, the builder will be expected to engage an alternative (unless the owner agrees otherwise). However, alternative trades should only be engaged if the builder has a reasonable level of confidence that the alternative tradesperson is reasonably able to complete the works in a reasonable manner. Builders should be very careful that they only engage people who they trust and whose work they know is good because the builder will be liable if the tradesperson does a bad job or takes too long.

Where works have not started and a contract hasn’t been signed, thought needs to be had as to what likely shortages of materials and trades there will be during the job and to factor that into the agreed finish date and the price. If shortages should have been reasonably apparent when the contract was entered into, it may be difficult to rely on these shortages during the job as a basis for an extension.

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