Time is money when there is a delay in the commencement of a project. Here are three real examples of when things went wrong.
Richie: the Cost Plus builder – Up to $1M Contract
Ritchie was approached by a long term client to refurbish a residence. The client obtained all the compliance documents and everyone agreed on a cost-plus contract as the premises was in a flood zone area.
After executing the contract, Ritchie engaged an engineer to determine the stability of the ground. Unfortunately, the engineer’s recommendation was to install significant piers. The parties agree it would be more cost effective and a better build if the house was knocked down and rebuilt. This however meant the compliance documents were no longer approved by Council.
As a result, the work didn’t commence in May and it is now September. Ritchie, who had cleared his schedule and refused work from April, went to see in lawyer in August to discuss his issues with the delay.
Trevor: the Lump Sum Builder – $1M+ Contract
Trevor’s client consisted of owner-occupiers of a block of units. The client engaged an architect to prepare all drawings and specifications and to project manage the job. They also 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, a knock down re-build, is the first time build for this builder. For the builder, it’s a great opportunity to demonstrate his skills with a view to extend his business. The contract was in the millions of dollars and the builder intended to devote his attention to it.
Everything seemed on track when unexpectedly one of the unit owners notified everyone their finance had not yet been approved. The project was delayed for more than 4 months.
John: the Commercial Contractor – $1M+ Contract
John specialises in high-end commercial windows and doors. The project was to design and construct curtain wall around the rooftop of a heritage listed building in the CBD as-well-as an extrinsic curtain wall for the linkway adjoining the heritage building and the new building.
John cleared his sales and project pipeline to focus on designing and engineering the project. In collaboration with tier-1 engineers, the builder’s architect and other specialist contractors, John worked on the design to draft a building to stand-out from the rest.
The project was then delayed for a number of reasons starting with the specialist materials being difficult to source, then, despite many engineering reports, the build encountered numerous latent conditions during prior trade construction. Then to top it off, the project experienced the worst wet weather event in years.
Unfortunately for John, his work required significant capital investment in materials and he had everything to go ready to go. The project was delayed by 5 months.
As you can see, unexpected delays can cause significant out of pocket expenses that can hurt a business.
Making sure your contract includes clauses for delay will help you keep your business running and avoid disputes …because excellent paperwork gets you paid.