Message from our Education and Technical Manager

Maintaining consistent procedures is key

Kia ora everyone. I recently attended a workshop with economist Tony Alexander where he confirmed that while our industry has a lot of future work, he predicts this will slow up in the next 12–18 months because increasing interest rates have raised the bar for bank lending.

While there is an abundance of work, the supply challenges continue to impact businesses and our members. It is imperative to maintain our processes and procedures to reduce the risk of an upset client. I know I sound like a broken record, but it’s important to cross the t’s and dot the i’s when it comes to:

• Contract selection

• Contract management • Managing client expectations Mastering these will help ensure a smooth job and a happy client regardless of delays and/or price increases.

While there is an abundance of work, the supply challenges continue to impact businesses and our members. It is imperative to maintain our processes and procedures to reduce the risk of an upset client.

Contract selection

Make sure you select the right contract for the work you are undertaking. The main New Zealand Certified Builders (NZCB) contracts are the Fixed Price+ contract and the Cost and Mark-up, which is for new builds, renovations, alterations, and additions. Some members are still using the NZCB Small Works contract for jobs that aren’t “small work”, meaning they are $60k+ and last three months or more. I know the Small Works contract may be easier to complete but if you want strong protection then I recommend using the NZCB Fixed Price+ or NZCB Cost and Mark-up contracts because they offer full protection measures in their contract conditions.

For more information on the different types of NZCB Building Contracts available, view page 10 of this issue of InHouse or call NZCB National Support Office on 0800 237 843. Contracts require effort and attention to detail because they set out the client expectations of the building project so you and your client are on the same page. Explaining in detail how the contract will perform within the current industry constraints (supply, price increases, labour) and what business processes you have in place to manage these situations, will reduce the number of enquiries from your client. Communication is also key here, especially when it’s bad news, such as “my team will not be on-site for a week because we are waiting for materials to arrive”. Keeping the client in the loop shows them you’re not absent from site or ignoring their job.

Contract management

With price increases, provisional sums, expected start and completion dates, and variations, it’s key to capture any additional costs in a Variation Notice and get client approval to reduce questioning down the track when you present it in a payment claim.

With price increases and bank lending as it is, clients will be going through every invoice or payment claim to ensure they reflect what’s happening on-site or what they have agreed to. If you can comply with ALL nine criteria that make a payment claim valid, use it instead of an invoice. A payment claim is more likely to get paid on time because it acknowledges the Construction Contracts Act 2002. It also has a formal document attached, the Important Notice (Form One), which informs the client of the seriousness of the payment claim and outlines the correct process for challenging it.

The nine things to remember when producing a payment claim can be found under the ‘During the Build’ tab under the ‘Compliance’ section of the NZCB members’ only Toolshed www.nzcb.nz/members/compliance/.