Is your building project over/under $30K?

By law you are now required to provide a building contract for projects over $30,000, you are not required to do so for projects under $30,000 but it is recommended.

When choosing and completing a building contract it’s important that you select the correct one for the project you are doing. New Zealand Certified Builders (NZCB) have a full suite of Building Contacts available for all current Business members to complete online or order as a hard copy from the online shop on the members’ only Toolshed. To the right is a quick reference guide to help you work out, which contract to use when your project is over/under $30,000.

Why you shouldn’t use the Small Works contact for a job over $30,000

It’s a common misconception that small and simple is good. Small and simple simply means less protection for the builder and less certainty when a difficult issue arises. The more words, the better. Below is a list of provisions that the full contracts cover, that the small works contract doesn’t cover (or at least doesn’t cover as comprehensively): • Cost fluctuations • Possession of the site • Ownership of the intellectual property in builder-supplied plans • Comprehensive cancellation clauses • Force majeure • Disputed sums to be paid into escrow • An agreement to mortgage allowing the builder to caveat the title • The fast-track super-cheap process for resolving disputes over alleged defects • Protection for the builder against the owner reducing the scope and then giving that work to a substitute builder More information on all NZCB Building Contracts, including samples can be found under the Building Contracts section on the members’ only Toolshed.

Need help with your building contracts?

For guidance on using NZCB Online Contracts, call Georgia at the National Support Office on 0800 237 843 ext 700.

Don’t forget your FREE NZCB Helplines. All current NZCB members have access to 20 minutes free advice with either of the below NZCB Helplines: • For contractual issues, payments, subcontractors and variations:

Peter Degerholm, Calderglen Associates on 021 307 232 • For legal advice on any issue affecting your building business:

Geoff Hardy, Martelli McKegg Lawyers on 09 379 0700 Projects over $30,000

If your project is over $30,000 you should be using one of the following; standard Building Contract, Labour Only or Renovations. Building Contract This contract should only be used when the overall management of the project (including the procurement of the materials, the hiring of the contractors, and the coordination of their activities on-site) is being performed by the builder. Renovations Similar to the standard building contract except for three main differences: 1. First, the Builder only gets possession of that part of the building he is working on. 2. Secondly, the Owner always takes out the contract works insurance. 3. Thirdly, if you are charging on the basis of having reached defined stages of completion of the works, those stages have been left blank so that you can fill them out to fit the requirements of the project. Labour Only This contract should only be used when the overall management of the project (including the procurement of the materials, the hiring of the contractors, and the coordination of their activities on-site) is being performed by the owner or a specialist project manager appointed by the owner such as an architect, engineer or another builder. The contract allows for the supply of incidentals (low value) and variation rates and margins are also agreed upon. Note: all the above contacts can be used on either a Fixed Price+ or Cost and Mark-up basis.

Projects under $30,000

If your project is under $30,000 you should be using the Small Works and Alterations contract.

Small Works and Alterations This Contract is intended for use where the building work is expected to be of such short duration that the builder will only need to invoice the owner once. The builder has the option to select whether the works will be charge up or a fixed quote. Where multiple invoices and payments are contemplated a more comprehensive contract is recommended. Note: this contact can be used on a either a Fixed Price+ or Cost and Mark-up basis.