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I can't get any gib! What to do if you risk penalties for late completion

By Kiren Narayanan - 11 Apr 2022

Supply issues in the construction industry at the moment are well known. If you're in the industry and running the risk of incurring penalties, there are things which can be done.

Almost all workers in the construction industry in New Zealand at some point over the past two years have suffered supply issues. The restrictions over the past two years have had a significant impact on anyone involved in the construction industry. Getting the required materials has been a struggle for all - and because supply is simply not able to meet demand, you just have to wait until you're next in line and can get what you need: Sometimes, even if you're prepared to pay ridiculous prices, you still can't get your hands on materials. The supply issue has had a significant impact on those who have made commitments to get work done by a certain time. And sometimes customers can be less than understanding of the plight faced by those facing the supply issues. So what can you do to make sure you're not stung by any penalties for completing late?

Check your contract - extensions of time

If you have committed to carrying out work for a customer and it is quickly becoming apparent that you're not going to be able to complete the job on time, your first port of call is to check the relevant provisions on the completion of the project.

Check your completion date. Do you think you'll make it? If not, you'll need to look at how your contract deals with extensions of time for the completion date.

Each contract deals with delays differently. The first thing to look for is what delays are covered by your contract. Some are very wide ranging and include anything that's beyond your control. Some are slightly more narrow and set out a list of things. Check to see whether the supply issue could be covered by the relevant clause.

If the cause of the delay is covered by your contract, the next thing to look out for is the process you need to ensure that the completion date is extended by the necessary time. Some contracts allow for an automatic extension of time where the listed delay events have occurred. Others may require you to submit a notice. If a notice is required, ensure you submit your claim for an extension of time within any time limits set out in the contract.

Some forms of contract require those extensions of time to be approved by an independent party. If this is the case, then ensure those requests for an extension of time are submitted to that independent party within any contractual time limits.


Extensions of time are the envisaged way to deal with delays to a project. If however, there is nothing in your contract which deals with them, you may wish to turn to variations.

Have a look at the variations clause in your contract to see whether it caters for variations of the contract in circumstances where something occurs that is beyond your control that may affect the performance of the contract, or a variation for the period for completion. While this is not the correct way to deal with extensions of time, some less commonly used contracts rely on variations clauses for all changes to the contract.

Similarly, if the clause does allow you to vary the completion date, check to see whether you are required to submit any notices for this and if so, whether there are any time limits for doing so and whether there is any particular process for doing this.

Potential consequences

It is important to follow the steps above to avoid any negative consequences in not meeting the completion date. If a completion date is not met, this is a breach of contract and the customer can seek to recover any losses resulting from the delay.

In some contracts, there is a provision for what is called "liquidated damages", which is an agreed, usually daily sum of money which is an estimate of the loss that would be incurred by a delay. If the contract provides for these, liquidated damages will accrue until the date the project is completed.

Alternatively, if there is no provision discussing delays, the damage will be calculated in terms of any actual financial damage suffered.

For delays which are not of your making, this is clearly not ideal. For that reason, it is important to follow any contractual processes to extend the completion date.

Contact Kiren Narayan or Geoff Hardy if you have any concerns about completion dates in your contracts or applications for extensions of time.


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