As featured in the latest edition of Clubs Qld Magazine
In our previous article, we outlined that we have seen Clubs in Queensland undertaking large scale renovations of existing premises or building new facilities. At the same time, we have also seen an increase in construction contract disputes in both Clubs and the general building and construction industry. This article outlines some key issues for Clubs to consider when administering construction contracts in order to avoid disputes and also some tips for Clubs to handle disputes that arise in projects.
Key areas of construction contract disputes
Construction contract disputes can arise in a number of ways between different parties. For example, a dispute can arise between a principal and the builder under a construction contract, between a builder and their subcontractor, or the principal/ builder and a third party.
what is a construction contract dispute?
A construction contract dispute can arise in a number of different circumstances. These can include one or more of the following:
- Defective building work
- Incomplete building work
- Delayed building work or abandonment of the project by the builder
- Breaches of building contracts by one or both parties
- Unclear or ambiguous contract terms
- Variations to work that have not been agreed or recorded in writing
- Disagreements as to amounts to be paid to builders for work completed
- Debt recovery and non-payment of money owed pursuant to contracts
- The builder purporting to charge more than the agreed fixed price or lump sum contract price
how can clubs avoid construction contract disputes?
As Clubs would appreciate, any kind of development project is a big commitment and can incur significant costs.
To assist Clubs in avoiding stressful and time-consuming construction disputes, we always recommend that Clubs seek legal advice before entering into a contract. This is so it can be ensured that the contract is compliant, the terms are clear, and also so that any risks and liabilities can be identified and considered by the Club.
Some additional steps which can be taken by Clubs to avoid construction disputes are as follows:
- Conduct some due diligence on the builder – in particular:
- Do an ASIC search to confirm the company is not in administration or liquidation,
- Do a QBCC licence search to confirm the builder is appropriately licensed,
- Do a Court search to confirm the company has not been involved in any litigation,
- Ask around with other Clubs that have used the builder before.
- Ensure an appropriately qualified person is engaged to administer the contract on behalf of the Club – e.g., a third-party superintendent with experience in administering contracts and project management and engage this person in the process early before a contract is finalised.
- Keep good lines of communication open between the Club, the superintendent and the builder – in particular, make sure there are regular site meetings so that the parties can talk through any issues as they arise.
- Ensure the contract and all variations to the work are in writing – it is common for parties to informally agree to variations on site and this must be followed up in writing to be an enforceable variation.
- Keep a written record of the progress of the work, take notes at any site meetings and take photographs – follow up matters discussed verbally on site with an email to ensure there is a paper trail.
- Ensure the parties have realistic expectations – in particular in relation to costs and timeframes.
- Seek legal advice early before a dispute escalates – this can assist the parties to resolve a dispute informally where possible to avoid project delays and avoid Court proceedings.
In summary, keeping proper written records can help to avoid costly and time-consuming construction contract disputes. This is particularly useful if a future dispute arises and a Club can produce documents which recorded the circumstances of the project at that time.
do you require assistance with a construction contract dispute?
If your Club requires assistance with reviewing construction contracts before they are entered into for advice on any risks and liabilities or if Clubs have a current construction contract dispute or matter which we could assist with for a particular project, please contact me on (07) 3224 0353 to discuss.