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Builders and suppliers across Queensland are experiencing extreme supply problems with many building materials and trades. This is having an impact on the progress of building works as well as causing a significant increase in costs.
A number of factors have come together to create a “perfect storm”.
- COVID-19 isolation requirements and international shipping delays continue to disrupt building material supply chains.
- A local surge in demand created by the HomeBuilder grant, a spike in interstate migration, and relaxed mortgage lending criteria, in an environment of low interest rates.
- A global surge in demand for construction materials, particularly for timber and steel products.
- Recent east coast floods, further disrupting supply chains and adding to the demand for materials and trades. Insurance work is moving to the ‘front of the queue’ by offering higher prices for trade work.
- Russia’s invasion of Ukraine has directly impacted our industry with a new 35 per cent tariff for engineered wood products (EWP) sourced from Russia and Belarus. Approximately 40 per cent of Australia’s EWP (used in flooring systems and roof trusses) is sourced from Russia or Belarus and alternative sources are limited due to elevated demand worldwide.
Master Builders surveyed members throughout 2021 Master Builders surveyed members on the extent of the problem and found that it only continues to escalate, now reaching critical levels. There is no expectation that things will improve until well into 2022.
Take a look at the results:
How to manage delays and shortages
The QBCC has recognised the severity of the problem and is providing both advice and access to a new Accelerated Builder/Consumers Dispute Framework.
The reality is that cost increases and delays are unavoidable and will need to be factored into build contracts.
Where contracts have already been signed, we urge contractors to work closely with their clients to discuss alternative timeframes and contract variations. Timely and open communication with the client is often the easiest way to avoid a dispute.
To assist we have prepared a general statement about the current situation that may assist members in confirming and explaining the current situation to clients.
Where contracts are yet to be signed, it is important that you can commit to the terms of your contract in light of the trade and material shortages and cost increases.
Do not enter into contracts without a clear understanding of what you are agreeing to do under that contract and without ensuring that you can deliver what you are agreeing to do. Do not assume your usual estimates are still accurate. Check with your sub-contractors and suppliers first.
It is only in certain limited circumstances that you will be entitled to an extension of time to the Date for Practical Completion under the terms of your contract. This is also restricted by legislation in Schedule 1B of the Queensland Building and Construction Commission Act 1991.
If the HomeBuilder grant also applies, the owner may become ineligible for the grant if you do not complete the build within the applicable timeframes.
Some builders have sought to include special conditions, provisional sums or more frequent progress payments in their contracts to deal with the problem; however, some have had those contracts rejected by mortgage lenders. These provisions may also not be legally enforceable because you are required by legislation to ensure that you have certainty in domestic building contracts with very few exceptions.
Our Members Legal team are also on hand to provide advice specific to your contract and situation. We are here for you – contact us for advice if you need to.