This month's podcast features Mark Holland, Partner and construction law specialist at Hazelton Law, who provides a practical hands-on perspective on the ins and outs of charge-up contracts. He discusses frequent concerns that have arisen with the use of charge-up contracts in NZ residential construction due to the disruptions of the COVID pandemic.
Show Notes
This month's podcast features Mark Holland, Partner and construction law specialist at Hazelton Law, who provides a practical hands-on perspective on the ins and outs of charge-up contracts. He discusses frequent concerns that have arisen with the use of charge-up contracts in NZ residential construction due to the disruptions of the COVID pandemic.
In particular, Mark addresses:
• Preparing charge-up contracts, scope, rates and margins
• The role of the estimate, variations in charge-up contracts, the “10% rule”?
• Interim payments; actual and reasonable costs (the reasonable price rule), evidence to be provided
• Ongoing obligations with regard to the final cost.
Typically, there are two types of building contract used in New Zealand – fixed-price contracts and charge-up (also known as cost-plus-margin contracts), though knowing which of these contracts to go with can seem daunting, with usually either being suitable options. As both come with their advantages and disadvantages, it’s important to understand these differences so you can decide which best suits your project, budget and preferences and to avoid any surprises down the track.
Mark discusses the confusion between charge-up and fixed-price contracts (note: Registered Master Builders members can access these contracts online). Mark answers common questions around how builders manage price increases and challenges around supply when using the charge-up contract. In particular, Mark covers the scope, rate and margins; the important role of the estimate, variations and the 10% rule; and implications on final cost if estimates are not outlined properly.
Get help from Hazelton Law
If you have additional questions or need advice, Hazelton Law offers Master Builders members a free 15 minute call and discounted rates to assist with more gnarly issues. Contact the friendly team at Hazelton Law on (04) 472 7570.
Presenter: Mark Holland, Partner, Hazelton Law
Mark is currently working in the areas of construction and insurance law. He has worked on several adjudications concerning claims for variations and extensions of time. Mark also works in both drafting construction contracts and other dispute resolution matters. Mark has a very "hands on" appreciation of the pressures that all parties face on site. Mark's experience makes his legal analysis of contract documents particularly focused on the practicalities of running a site.
Links
What is Master Builders Elevate: Building a Better Business?
Welcome to the Master Builders Elevate podcast, hosted by Ryan Castle, where we discuss topics and talk with experts, advocates and business owners in the New Zealand construction industry. We share knowledge, insights and experiences to help you build a better business and enjoy a better life. The podcast explores ideas and practices that help builders get the best from their businesses, teams and themselves. Every second week a new episode will be released. You can listen online or find and subscribe to the podcast on your favorite podcast platform, such as Spotify or Apple Podcasts.
In addition to a podcast, Registered Master Builders Elevate is the online learning portal exclusively for Master Builders. Here you’ll find courses, microcourses and other learning resources – all free to you as part of your membership. Elevate offers the flexibility to learn what you need when you need it and at your own pace. The learning platform can be accessed anywhere, anytime and on any device and is available to all your staff. When members complete an Elevate course, they also earn LBP points.