Rebuild with confidence

Hiring competent building contractors

Building or repairing is a complex and risky business. It’s important to understand your rights and responsibilities before you start. Time spent researching your project will reduce your risk and help you rebuild with confidence.

As the homeowner you are responsible for ensuring that any work done on your property complies with the law and is of a good standard. This is for your protection, and also to protect anybody else who may buy your propertyin the future.

This guide is designed to assist you in the planning process. It will help you to ask the right questions of your designer and/or builder and rebuild with confidence.

 

Step 1: Get informed

There’s a lot to think about when starting building work, so it’s important to do your research.

The Building Code

All building work must meet New Zealand Building Code requirements. Your designer and building contractor are responsible for making sure their work meets the Code requirements. As the homeowner you have overall responsibility for getting the building consent and code compliance certificate.

If you choose to do the work yourself, you are responsible for ensuring the building work meets the Code, as well as getting the building consent and code compliance certificate.

Recent changes to seismicity and foundation details in Canterbury

Stronger buildings and foundations are now required in the Canterbury earthquake region so that buildings will better withstand future earthquakes. You should ensure your designer and/or builder is aware of changes to the seismic hazard factor and requirements for concrete slab-on-ground floor foundations.

On 19 May 2011 the seismic hazard factor for the Canterbury earthquake region was increased from

0.22 to 0.3 minimum. The seismic hazard factor for Canterbury has been increased to reduce harm to people and property.

A new definition of ‘good ground’ was also introduced and now excludes ground where liquefaction and/or lateral spread could occur and concrete slab-on-ground floors must now be reinforced and tied to perimeter foundations with reinforcement.

These changes took in the three local authority areas in greater Christchurch of Christchurch City, Waimakariri and Selwyn District Councils.

To find out more go to www.dbh.govt.nz/newsindex#seismicity.

 

Building consents

Building consent is permission granted by a building consent authority (usually your local council) to carry out building work. Talk to your local building consent authority about your plans, as some simple, low-risk repair

and rebuild work can be done without a building consent.

Note that all building work must still meet minimum Building Code requirements. There may be other council approvals required before you start work. Getting building consent is your responsibility, but you can delegate this

task to your architect/designer, builder or project manager.

 

Code compliance certificate

A code compliance certificate (CCC) is issued after the final inspection of the finished building project. A CCC confirms that the building consent authority is satisfied the completed project meets the appropriate standards.

 

Insurance 

Does your homeowners insurance cover constructionrelated risks? Call your insurance provider to confirm. Also, check if your building contractor has business liability insurance to protect you from their mistakes.

 

Warranties

All residential building work is covered by the implied warranties set out in the Building Act. These are basic protections for consumers and apply to all contracts for residential building work, whether written or verbal.

In summary, the warranties require all building work to be fit for purpose, meet the requirements of the Building Code and be undertaken with reasonable care and skill.

People carrying out building work have an obligation to ‘put things right’ for up to 10 years, as long as there has not been misuse or negligent damage caused by the owner or occupier.

Some building contractors might offer guarantee products, which can provide additional assurance that any building defects will be put right. If you are thinking of purchasing a guarantee product, shop around and make sure you are aware of what you are getting, including the limitations and exclusions on cover.

 

Step 2: Hire competent building contractors

How to find reliable building contractors

Ask around. Some of the best recommendations for designers and builders come from friends, family and colleagues who have had positive experiences.

Choose a licensed building practitioner. Designers, builders and tradespeople who become licensed building practitioners are independently assessed as competent.

Complaints about a licensed building practitioner’s competence can be made to an independent board.

The Licensed Building Practitioner Register has details of licensed building practitioners in your area; trade associations can also provide information.

People registered to carry out building work under other statutory registration systems – such as architects, engineers, gasfitters and plumbers – are automatically treated as licensed under the corresponding class in the licensed building practitioner scheme.

Note that from 1 March 2012 you must use a licensed building practitioner to do certain critical aspects of the building work on your home. To find out more go to www.dbh.govt.nz/lbp.

 

How to select a designer

Architects and architectural designers generally charge around the same. The respective fees will depend on the scope of the project and services required.

You should expect to pay less for an architectural draughtsperson, as they typically offer a narrower range of services.

The fees you pay to your designer may seem like a lot of money, but in reality they are a small part of the total cost of a building project, and have to be considered in the light of the cost-effectiveness and overall value that the designer will add to your home.

Once you have selected your designer, and depending on how much ground was covered in your initial meeting, the next stage is the thorough briefing.

 

In this briefing:

  • go over your ideas
  • have a budget and be prepared to shuffle items within the budget
  • be flexible
  • be clear about exactly what services your designer will be providing.

Have everything agreed in the contract and reviewed by your lawyer.

 

How to select a building contractor

It’s important to find out as much as you can about the building contractor’s competence and business standards before making any decisions.

Give the building contractor as much information as you can about what you want, your budget and your expectations. This will help you to get off on the right foot and reduce the likelihood of a dispute later.

Always get at least three quotes.

 

A competent contractor will provide you with the following:

  • full contact details, including name, address and phone number
  • whether they are trading as an individual or part of a company and, if it is a company, details about how long the company has been trading and what role the company directors will play in the project
  • information about the skills, qualifications and licensing status of the people who will carry out the work what, if any, financial back-up or insurance is available to cover the costs of fixing any faults
  • information about their track record, including anydisputes they may have had
  • their GST number and proof of any licenses they may hold

This may be part of your written contract.

Remember that you get what you pay for; a low price does not necessarily mean you will be getting a good quality building contractor.

If a potential contractor is asking for a significantly lower price than others, you should enquire further about why. They could have underestimated the cost of materials and time, or be using less-skilled labour. This could lead to cost blow-outs further down the track.

 

Consider how you are going to manage the project 

There are different ways of managing a building project:

  • you manage the project, including contracting the designer, building contractor and sub-contractors
  • you get the design work done, then contract a builder who is responsible for hiring sub-contractors
  • you hire an independent project manager, who manages the project on your behalf.

 

There are pros and cons of these approaches. For example:

  •  managing the project yourself can be more stressful and time-consuming, and you could be liable if there are defects in the work, however, you have more control over the project, including who does the work
  • leaving it to the building contractor might mean you have less control of who does the work, unless you have a comprehensive contract, however, you are less exposed to liability if things go wrong
  • an independent project manager adds more to the cost of the project, however, you will have more certainty that the project will be managed in your best interests by an independent expert.

 

Step 3: Take control. Get it in wr iting!

A written contact protects your interests and sets out your rights and obligations. It also gives your building contractor an incentive to build right first time.

 

A written contract should include the following:

  •  the names and addresses of the parties
  •  the date the contract is agreed
  •  the contract price
  • a full description of the work, including materials and products to be used

 

Note that the Building Act requires that builders use new materials unless otherwise specified, your contract will need to specify whether any recycled materials are to be used.

 

  • a clear payment schedule that lays out when and how much you will be charged (structure your payments so they are aligned to the cost of completing each stage of your project – avoid a large up-front payment)
  • a statement that the building contractor is responsible for making sure that building work meets Building Code requirements
  • the date when the work will start, and be completed
  • warranties detailing what is covered and for how long

 

Note that all residential building work is covered by the warranties set out in the Building Act. Your building contractor may have written these warranties into the contract, or be offering an additional guarantee. Check the contractor’s warranty or guarantee against the Building Act warranties to ensure they at least match. Ask your contractor how their guarantee or warranty works.

  • information about how any disputes will be resolved
  • how any contract variations will be dealt with
  • any reciprocal obligations on the owner.

 

There are a number of different contract options; take time to read and understand the contract – don’t sign it straight away and consider getting legal advice.

Contracts protect you and the other party but they also commit you to obligations and responsibilities.

Try to avoid paying a deposit of more than 10 per cent – if your contractor wants more, ask them to put their reasons in writing to give you additional protection.

Your project and money is at risk if you pay too much, too far in advance.

 

A deposit should be a reasonable proportion of the total value of the work. Be wary of a contractor who wants a significant proportion of the cost up-front.

Many contractors have accounts with building suppliers that they settle when work is complete, so query this with your contractor if they ask you to pay for materials up-front.

A contract is enforceable when both you and the contractor have signed and dated it. Remember to initial every page and keep a copy.

 

Project checklist

Use this checklist to remind yourself of the things you need to do:

  • Ask around about contractors
  • Get three quotes
  • Interview building contractors
  • Ask to see their Licensed Building Practitioner (LBP)card or trade association membership card
  • Follow up references
  • Get the necessary building consents from your council
  • Call your insurance company to check out cover for construction-related risks
  • Check contractor’s business liability insurance (if they have any)
  • Get a written contract
  • Check out the payment schedule – don’t pay too much money up-front
  • Take time to read the contract – make sure it includes a clear warranty and dispute resolution options
  • Ask the builder about the process for varying the contract, including any changes to the final price or timeframe
  • Make sure you get any changes to the works or the contract in writing
  • Sign the contract and make sure you keep a copy in a safe place
  • Keep written receipts of all payments
  • Follow up on any warranty issues without delay

 

Visit www.consumerbuild.org.nz for more practical and reliable information about building, buying, renovating and maintaining your home.

 

Andrew Logan · Hamish Douch · Kent Yeoman · Sue McCormack · Tony Herring· Sarah Manning