What can cause construction delays? Buying a property off the plan is an exciting opportunity that has suited many types of buyers for decades. You can purchase apartments, townhouses and house & land packages to name a few. When buying off the plan you’ll be given guidance around the construction timeframe and estimated completion date.
Many buyers use that time to save additional money to contribute to their deposit or to pay for some stylish new furniture. We haven’t met a developer or builder ever wanting to experience construction delays, however in certain circumstances, an anticipated construction timeframe may not be met.
What can cause construction delays?
In this market insight we summarise some of the reasons a build may fall behind schedule:
Bad weather
Weather can be unpredictable at the best of times. Unfortunately, certain build stages can be held up due to bad winds or rainfall. A build in the commencing stages is often influenced by weather conditions. Digging a hole and pouring concrete for a car basement needs consistent dry weather or it can flood or damage the concrete structure. A house needing to pour concrete for a slab can also cause construction delays. Rain and concrete do work well together!
Starting in winter can be challenging however once a build reaches the lock-up stage, internal works can progress regardless if it’s raining.
Site access
Some residential builds such as an apartment building can sometimes have difficulties accessing the site. The builder may require a permit to enter to the site if it needs to use council property to move or store things during the build.
Neighbours may also complain and make obtaining access to the site difficult. It may also be on restricted hours per day.
These issues aren’t always predictable, so it may cause some construction delays.
Government regulations
In normal economical and political circumstances, build know what is required to meet government regulations. However situations such as the global pandemic (covid-19) can cause construction delays. During the peak of the pandemic, Melbourne builders were restricted to a certain amount of builders. Larger development was asked to reduce their staff on site by 25%.
These changes will impact construction, but unfortunately, a builder or developer can’t account for something like this.
Disputes between the builder and developer
Disagreements between builders and developers can happen. In most cases, both parties are aware of their build deadlines and prioritise in meeting their initial targets. A developer will not be happy if a builder takes 6 months longer than scheduled. This not only upsets buyers, but the developer will need to pay an additional 6 months of interest. The extra interest can comfortably surpass $250,000 due to construction delays.
If a dispute is personal or a big problem, this can cause a hold-ups. A builder may cease site works until the problems resolved.
In this case, it’s a kind reminder than when buying off the plan you should seek professional advice. At Crest Property Investments we complete our due diligence on both the builder and developer. If they have a past history of success and experience, we would be satisfied. If they had less experience to complete a multi development or the builder and developer have encountered issues before, it would raise alarm bells for us. We wouldn’t recommend our clients to proceed.
Delays in shipments of materials
Builders and developers are aware before construction what materials are needed to complete it. However, sometimes the shipment of goods can be delayed. We recall one example where an apartment building ordered a lift to be installed to find the one that arrived was not what was ordered. The lift came from Germany, so they had to wait another 6 weeks for the correct lift. A mistake not made by the builder, but this may cause construction delays.
Council approvals and site inspection
This situation occurs more towards the end of the construction. Once the property reaches practical completion, the council will inspect the property and confirm that the build was done within the engineering plans and initial council approval.
In certain circumstances, the council can be inundated with work, most commonly at the end of the calendar year. If the council can’t attend the property the builder remains in a holding pattern waiting for their availability. This can sometimes take weeks.
If the property requires a tree removal from council land, the builder will not be able to reach practical completion until the tree is removed. The removal must be done by council. This may also cause further delays in waiting for it to be chopped and removed.
Metropolitan Fire Brigade (MFB) audit
If the developer was putting together a new apartment building, the MFB will be required to attend at the end of construction. The MFB will investigate and review the fire safety of the property before the developer can lodge for titles and settlement.
The MFB provides a significantly wide range of services which can reduce their availability. This is another situation where the builder has no control to escalate the process. This can sometimes take several weeks, depending on the MFB. The property will technically be finished but it can’t proceed to lodge titles until the MFB audit is complete.
Most of these construction delays are not caused by the builder, however, they are responsible from start to finish. It’s normal practice for the developer and builder to lease with each other and account for these delays. This will then allow them to estimate more accurately how long the build will take. When consulting a buyers advocate or property adviser they will also have the experience to validate future dates.
When buying off the plan, the majority of investors remain content with delayed settlements as they acknowledge they’ve only paid a deposit and the property may increase during the time you signed a contract and when it settles. Owner occupiers on the other hand are more sensitive to construction falling behind. This is often caused by the fact they are renting or living with their parents.
If you are wanting to buy or learn about purchasing a property off the plan, please feel free to contact us. We source brand new and off the plan properties for buyers.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
January 2021
