In October 2015, amendments were passed in Parliament to the Construction Contracts Act 2002 with some changes taking effect in three phases from
1 December 2015.
Changes to the Act
These changes will affect new construction contracts from 1 December 2015 and will affect managing claims and payments in the construction industry. These changes will impact every building owner, homeowner, contractor and subcontractor.
The adjudication process for resolving disputes has been improved under the new changes and have been extended to cover a wider range of disputes as well as it becoming easier to enforce an adjudicators decision.
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 or to resolve fee disputes.
From 31 March 2017, the amendments will introduce a new retention regime for commercial contracts. This new regime requires the money withheld from builders and subcontractors as security for their performance should be held on trust, and introduces penalties where retention money is not properly managed or paid out.
The amendments have widened the scope of the original Act to remove the distinction between residential and commercial contracts. Most importantly, on all contracts from 1 December 2015 every payment claim must include a prescribed 'notice to payer' which until December 2015 was only required for contractors with homeowners.
The staggered time frame allows time for the industry to make the significant adjustments that will be necessary.
Ministry of Business Innovation and Employment Article on the amendments to the CCA.
Construction Contracts Amendment Act 2015 (complete legislation).
NZIQS Response to Changes in the Act
These changes were well signalled to the industry and enabled NZIQS to be proactive in its response.
In late 2015, NZIQS in conjunction with Peter Degerholm of Calderglen Associates Ltd and Ministry of Business, Innovation and Employment, launched a series of Construction Contracts Amendment Act 2015 seminars which travelled to 10 New Zealand centres presenting the changes to more than 800 construction professionals. Proving to be popular with members and non-members alike, NZIQS is looking to organise further seminars in 2016.
Peter Degerholm is working on a CCA Handbook and attendees at the above seminars in 2015 will receive a copy by end of March 2016.
If you did not attend the 2015 seminars and would like to receive a copy of the Handbook, please click here to go to the Calderglen Associates website to reserve your copy (charges apply).
Media Release 21 October 2015 - Quantity surveyors welcome new building industry Act