Post Contract Quality and Statutory Warranties

With the contract retention securities returned, there are different risks that we face in the post contract period.
• Contracts have a 6 year statute of limitation for action – so there is the potential for action to be brought against Hutchies’
• Deeds have a 12 year statute of limitation for action which is twice as long but the same as above for risk of action against Hutchies
• Owners are protected by statutory warranties (legislated rights that cannot be contracted out of by Hutchies) which can lead to action through regulators (such as the QBCC in QLD, Fair Trading in NSW), Court actions or the tribunals (QCAT, NCAT, VCAT etc) – these have action limitations of 10-15 years
The regulators are there to recover money or create legal decisions against us that force us to complete the work
It may even extend to paying legal costs and expert reports engaged against us and goes on the public record against our name
• Regulators can issue restrictions/demerit points against our building license which goes on public record against our name and may affect our ability to trade.

Post contract quality and statutory warranties are areas where Hutchies differs from other builders.

We always go back for genuine issues. We stand by our works. Hutchies’ position is that a direction from a regulatory body or legal action against us should not be required to assist with genuine concerns. We have a good reputation and public record because we take responsibility for these types of issues.

Being decent and fair doesn’t mean we should be taken advantage of, so if in doubt, please ask the Quality Team to review and advise.

We need to investigate the cause to determine who the responsibility sits with. If we don’t investigate, the issue doesn’t go away – it just escalates. We don’t just ignore risks like this because the job is ‘finished’.

The only thing that’s finished is the contract payments and retention risks. The job remains live as a potential liability to Hutchies and focus on other jobs can’t be used as an excuse. The delay in dealing with issues because we are too busy only increases the risk as it typically escalates the issue to external parties.

We need to deal with everything promptly to manage the risks of action against Hutchies for over many years after practical completion with people that have not been a part of the building process and have limited building knowledge usually.

The way we address issues in this phase will determine the approach taken by many people.

It’s a sensitive period that is only successful when we are genuine and take care of issues.

Hutchies expects our people to consider the outcome of all actions (including doing works or pushing back) against a few very simple questions;
• were we contracted to do it? (don’t give away our reasonable position)
• is it something we are responsible for or should have done better all things considered?
• is it the fair and right thing to do?
• have the people involved had a trend of genuine issues?
• What happens if I don’t address it?

You need to work out were this issue ends up at the start and jump to that position Day 1. Don’t go through the dispute and create the unnecessary conflict and frustration only to end up in the same place. Wrap it up early and avoid the dispute completely. If you aren’t sure - ask for help!

If you can put our hand on our heart after the above, and there is still an issue, call in support to review/assist. The earlier the better. These situations DO NOT improve with time as if they will somehow go away. They escalate and create a worse position for Hutchies.

This leads very quickly to regulator action that may threaten our reputation and/or building license. Failure to address statutory defects poses a risk of directions or orders being put against our name on the public record, and demerit points against our building license (which is a threat against our entire business).

Where action is taken by others, the Hutchies resources required to deal with an issue to ensure actions and responses are completed properly and in a timely manner is significant. This reduces our capability to deal with other live projects and moving forward.

It may delay the release of retention Bank Guarantees/Securities. And if there is any possibility of Hutchies securities being converted/cashed our record in State and Federal works are jeopardized because the record of a project getting to the extreme case of requiring such drastic action is a red flag (be aware that this situation is NEVER allowed this to happen regardless of the size of the security – refer to Project Finance if there is ever any potential for this action of occur)

If action is taken against Hutchies it essentially says we needed to be told what to do by the regulators or lawyers for Body Corporates who have engaged experts to argue the case.

It says we’ve probably failed to communicate or find sensible common ground. Try and explain this to new clients considering awarding us future work / having you on the next job. Will they really want someone that difficult?

It’s important to manage the works in this phase well to manage our congoing contract, financial, regulatory action and reputational exposure.

Remember these works are a risk to Hutchies.

The only opportunities we have is to hold the subbies accountable, maintain a good reputation and learn more about building performance (what works and what doesn’t) so we continually improve.

Always consider both the risk and opportunity of all decisions.