The New Zealand Institute of Quantity Surveyors (NZIQS) has welcomed the long-awaited Construction Contracts Amendment Act, which was passed recently in Parliament.

The Act, which was introduced in April 2003, has transformed payment behaviours in the New Zealand building industry, and will affect every new construction contract from 1 December 2015.

NZIQS president, Jeremy Shearer, says significant changes around managing claims and payments will impact every building owner, homeowner, contractor and subcontractor. 

The Act is central to the work of quantity surveyors, who are responsible for managing the payments and money aspects of contracts, and these changes were necessary to ensure that it works properly.

Mr Shearer says the ‘adjudication’ process for resolving disputes is also vastly improved.

“It has been extended to cover a wider range of disputes, and it will be easier to enforce an adjudicator's determination,” he says.

From 1 September 2016 the Act will cover architects, engineers and quantity surveyors, which means disputes about their professional services and fees can be referred to adjudication, and they can rely on the Act to recover unpaid fees. 

Mr Shearer says the Act also introduces an entirely new retention regime for commercial contracts, although this will not come into effect until 31 March 2017.

“This is the Government's response to industry-wide calls for legislation following the failure of Mainzeal Construction Ltd in 2013,” he says.

“The regime requires the money withheld from builders and subcontractors as security for their performance to be held on trust, and introduces penalties where retention money is not properly managed or paid out.”

The regime applies from 31 March 2017, allowing time for the industry to make the significant adjustments that will be necessary. 

“This is a pragmatic solution to a complex problem that has plagued the industry ever since the repeal of the Wages Protection and Contractors Liens Act 1939 in 1987,” says Mr Shearer.

“The industry has plenty of work to do in the coming months, particularly in working through the practical implications of the retentions regime, and the impact on professionals.”

As the amendments come into force in December, NZIQS will be delivering information seminars nationally to inform the industry about the changes. 

For more information contact Jeremy Shearer 027 473 0869