Conduct On-Site

Supervision of the
Building &
Construction Project
BCGBC4008A / CPCCBC4008A

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Contents
Section 1
Introduction ....................................................................................................................................................... 6
Contracts ........................................................................................................................................................... 8
Tender forms and letters ................................................................................................................................... 9
Variations......................................................................................................................................................... 12
Back Charges.................................................................................................................................................... 14
Insurance claims .............................................................................................................................................. 15
Payment of delivery Invoices........................................................................................................................... 16
Progress claims and payments ........................................................................................................................ 17
Final accounts .................................................................................................................................................. 21
Cost Items .................................................................................................................................................... 21
Contract Sum ............................................................................................................................................... 21
Variations..................................................................................................................................................... 21
Deposit......................................................................................................................................................... 21
Prime cost items reconciliation ................................................................................................................... 21
Provisional sum adjustment ........................................................................................................................ 22
Progress claims received ............................................................................................................................. 22
Retention ..................................................................................................................................................... 22
Claim for extended site establishment........................................................................................................ 22
Balance payable ........................................................................................................................................... 22
Summary.......................................................................................................................................................... 23

Section 2
Introduction ..................................................................................................................................................... 26
What Site Records Should Be Kept? ................................................................................................................ 27
Types of Records.............................................................................................................................................. 28
Using the diary, calendar and planner ........................................................................................................ 28
Site instructions ........................................................................................................................................... 29
Site Reports ................................................................................................................................................. 31
Variation Requests ...................................................................................................................................... 31
Extensions of time ....................................................................................................................................... 31
Unsatisfactory Work Notices ....................................................................................................................... 33
Documentation to control material, plant and equipment............................................................................. 34
Good construction site communication .......................................................................................................... 35
Simplified communication ........................................................................................................................... 35
Communicating through the design Phase ..................................................................................................... 37
Drawing provision and distribution ............................................................................................................. 37
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Communicating through the Construction Phase ........................................................................................... 38

Pre-start meeting......................................................................................................................................... 38
Technical literature and advice ................................................................................................................... 38
Communicating across the whole construction project ................................................................................. 41
Take care and time with communication .................................................................................................... 41
New communication technology................................................................................................................. 41

Section 3
The Operation of a Quality System in a Construction Company ..................................................................... 44
The Quality Manual ......................................................................................................................................... 45
Operating a Quality System for a Construction Project .................................................................................. 46
Controlling Quality on a Construction Site ...................................................................................................... 48
Preparatory phase ....................................................................................................................................... 48
Start-up phase ............................................................................................................................................. 48
Production phase......................................................................................................................................... 48
Description of records ................................................................................................................................. 48
Personnel qualifications .............................................................................................................................. 48
Subcontractors ............................................................................................................................................ 49

Section 4
Completion of Project Administration Processes ......................................................................................... 52
Completion Checklist for Builder ................................................................................................................. 53
Planning and Development controls ............................................................................................................... 54
Categories of Development ......................................................................................................................... 54
Development Application and Approval process ........................................................................................ 55
Documents required for Development Consent ......................................................................................... 55
Construction Certificate Drawings............................................................................................................... 57
Providing Certificates................................................................................................................................... 57
Inspections................................................................................................................................................... 58
Inspecting for Defects...................................................................................................................................... 60
Typical Defect Report .................................................................................................................................. 60
Project Close Out ............................................................................................................................................. 62
Final Application for Payment ......................................................................................................................... 63
Presenting the final account............................................................................................................................ 64
Retention and defects liability period ............................................................................................................. 66

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Conduct On-Site
Supervision of the
Building &
Construction Project
BCGBC4008A / CPCCBC4008A

Section 1

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Introduction
As a building contractor you will need to master contract administration. Not only do
you need a good understanding of contracts and the conditions that control the
operation of the project, you need to have or develop good interpersonal skills when
interacting with clients, architects, subcontractors, suppliers etc.
In this unit we will discuss how to fulfil your contractual obligations by way of
procedures and standard forms. This is contract administration.
The contract between the client and building contractor is used as the book of rules
in administering the work and working towards completing the contract by
performance. By performance we mean fulfilling your obligations under the contract
conditions and meeting or exceeding the expectations of the client or architect in
respect of time, cost, quality and customer service.
Communication is a fundamental element of good administration. Too often this
aspect is ignored and can lead to costly disputes that can take years to resolve and
may even cost you your business. The preparation of forms can simplify the process.
Examples of the more common forms used in residential construction are included in
this unit. These forms include:

tender letter
variations
extensions of time
site instructions
progress payments
final account

Disputes with clients are often due to a need for better administration of the overall
contract as well as onsite activities. Small matters have a tendency to escalate in
importance if left unresolved. Good communication and interpersonal skills will
develop the trust shown by the client in awarding you construction of the project in
the first place.
The job is made easier if you have good organisational skills and procedures in place
to properly document the project. Your project file should accurately record the
history of the job and should make your task of finalising the project much easier.
Contract administration is not about one thing. Its about:

communication
organisation
procedures
supervision
quality
customer service
documentation

It is about establishing and maintaining your organisations image and reputation as a

professional building company. By establishing effective procedures in your
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organisation, you project a professional image and promote efficiency in terms of

your internal operations and the smooth running of your projects.
The following flowchart illustrates the main steps in the process of being invited to
tender on a project, up until the completion of the defects liability period.

Figure 1- Administration Flowchart

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Contracts
There are many types of pro forma contracts available for residential construction.
In New South Wales, the current contract prepared by the Office of Fair Trading for
work greater than $25,000 in value incorporates the current legislation requiring a
cooling off period, a checklist of questions which a client will be required to read and
the requirement for a brochure to be given to the client by a builder outlining dispute
resolution.
This contract is readily available through retail outlets such as Australia Post shops
and can be downloaded from the Office of Fair Trading website. Remember, it is
important that you use current forms of contracts to ensure you meet the
requirements of the Home Building Act (NSW) 1989 and any amendments.
There are comparable contracts prepared by industry associations such as the HIA
and MBA. The Australian Standards also have contracts which you should make
yourself aware of. You should make yourself aware of the differences between the
contracts and, when it is in your power to do so, adopt the most favourable one.
Remember, you need to be an expert on the contents of the contract you are using
and you must know the contract form and conditions to be used before tendering on
the project. If the contract form is unavailable at the time of tender, it is vital that you
condition your tender to advise the client of the contract it is based on.
Once you have signed a contract you are bound by the terms of agreement and
ignorance is not a defence should you find the conditions onerous or if your price
does not adequately cover the contract conditions. For example, if the contract
conditions which you tendered on do not allow for extensions of time, allowance for
this must be made in your tender, usually as a cost implication to cover any risk that
may present itself in the absence of extensions of time.
If you are not sure of the intent of a clause in a contract you should consult a legal
expert for clarification and advice.
Remember, if you do not understand a contract, do not sign it.

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Tender forms and letters

Often clients/architects require that tenders be submitted on a standard form
provided in the tender documents, usually known as the Tender form. This form
provides for the basis details of your offer but does not allow for supplementary
conditions that you may wish to include. These conditions may arise when:

the tender documentation lacks detail

there are issues not provided for in the documentation (For example, excavation
in rock)
there are items or work (known as provisional sums) for which you cannot
provide a definite price
prime cost (PC) items for items or work that need to be chosen or confirmed after
the signing of the contract, are involved
you do not accept some terms of the contract

In addition to submitting the standard tender form provided, many builders also
prepare a tender letter that outlines these conditions. A sample, with some common
conditions included, is provided in this unit. The conditions can be quite varied and
while some are considered standard, others will be relevant to a particular project.
Examples of conditions are:

no allowance for excavation in rock

no allowance for work on any unknown underground service
all fees by proprietor
all approvals by proprietor
PC items
Provisional sums
Advice on margins where not stated in the contract form

It is not uncommon for builders to use both of these documents when submitting a
tender. It is usually a condition of tendering that a completed tender form be
submitted. By not completing and submitting a tender form, a builder could
jeopardise the chances of his tender being accepted. So it is important that the
builder submits both a tender form and tender letter. The tender letter allows for the
inclusion of the necessary conditions the builder has allowed for in the price. If a
tender form is not required as a part of the tender conditions, a tender letter should
still be submitted with your offer.
If successful, the builder should insist that the tender letter be attached to the
contract and become part of the contract documents.

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TENDER FORM

JWA Architects P/L

51 Wentworth Road
STRATHFIELD NSW 2135

PROJECT:

Brick veneer cottage

20 Jersey Road
Burwood

Builders Name:

________________________________________________________

Address:

________________________________________________________
________________________________________________________

We hereby submit the following tender to construct the proposed brick veneer cottage at
20 Jersey Road Burwood, as per the plans and specification prepared by JWA Architects
P/L.

CONTRACT SUM:

__________________________________________________

(amount in words)

__________________________________________________

CONSTRUCTION TIME: ___________ Weeks

Signed:

______________________

Capacity:

______________________

Date:

______________________

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Figure 2 Tender form

NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

Date

JWA Architects P/L

51 Wentworth Road
STRATHFIELD NSW 2135

We do hereby tender to execute and complete the construction of a brick veneer dwelling
at 20 Jersey Road, Burwood, according to plans (numbered A1 to 3) and accompanying
specifications (page 1 78).
FOR THE SUM OF:

$122,634.00 (one hundred and twenty two thousand six

hundred and thirty four dollars)

CONSTRUCTION TIME: 18 Weeks

Included in the above tender are:

no allowance for excavation in rock,

no work to any unknown underground services,
all council and statutory fees by proprietor,
a PC sum of $35.00 per square metre for the supply and delivery for ceramic tiles,
a provisional sum of $2,000.00 for landscaping the site and
a 20% margin for all plus variations to the contract

This tender is valid for a period of 28 days after which we reserve the right to review our
price and is subject to Council approval and satisfactory negotiation.
Yours faithfully

.....................................
Construction Manager

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Figure 3 Tender letter

Variations
Projects are commonly subject to variations during the course of the project. Whether
initiated by the client/architect, or by you, (the building contractor), all variations need
to be recorded.
Variations are often referred to as extras but this is a misnomer and comes about
because most variations are for extra work that adds a cost to the contract sum.
Variations can be an addition, deduction or a no cost variation to the contract. For
example, a product as specified is unavailable at the time of procurement and
replaced by a product of comparable quality and at the same price.
A variation needs to be recorded and approved before ordering the product since the
specification has been altered even though there is no variation in the contract sum.
If this change is not recorded and approved, a client may use it as an issue should a
dispute arise further into the contract.
Most building contracts give the client the right to vary the contract at any time. Some
builders use variations as an opportunity to increase their profit margin by pricing the
variation work higher than it is worth. Doing this could lead to a dispute between
client and builder. As long as you cost all variations accurately (and this can be easily
substantiated) you can justify their value to the client/architect if the need arises. It
may also pay to consider the implication of the variation in terms of extra time
needed and whether you need to communicate this to have an extension of time
approved. All variations need to be approved in writing before any work associated
with that variation can begin.
Some variations may bring in safety issues for which written approval cannot be
sought and received before the work is undertaken. In these circumstances the
builder may have to proceed with the work and be prepared to argue the case with
the client at a later date. Safety is the responsibility of the builder and compliance
with the OH&S Act 2000 and OH&S Regulations 2001 is expected by Workcover
NSW. Compliance with the Act is expected under any contract.
On the following page is a pro forma for variations to a contract. The form allows the
builder to clearly describe the extent of the variation, communicate the cost and,
where necessary, change the contract sum.
The variation form and the variations should be numbered for future reference,
particularly when finalising the contract.

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NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 406 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

CONTRACT VARIATION

No.

DATE:

PROJECT:

CONTRACT PRICE

PREVIOUS VARIATIONS APPROVED

TOTAL CONTRACT PRICE TO DATE

NET VARIATION THIS CLAIM (from below)

NEW CONTRACT PRICE TO DATE

DESCRIPTION

THIS VARIATION

ADDITIONS

DEDUCTIONS

$
NET VARIATION

SIGN:
DATE:

Figure 4 Contract variation

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Back Charges
When undertaking construction works there are often instances as a head contractor
when something on a clients site might get damaged and needs to be repaired by
the owner of the property. In this situation and other similar situations it is clear there
is a loss to the owner.
There are ways in which the above scenarios can be resolved efficiently and quickly
so that it does not leave a bad taste in the mouth of the owner. Remember it is
important to keep up the reputation of the company even if it costs the company a
little bit at that point in time. The quick resolution of these issues can mean that the
companys reputation is maintained.
So how do you resolve the situation;
1. The rectification can be paid for directly
2. The client can issue a negative variation and not pay this amount if this is agreed
between the parties is often the simplest resolution
Quite often it is a little bit more complex than withholding some money and more
complex scenarios arise the later into a construction project you get. For example if
there is a trade that shows up late and the cleaners have been through and they start
making a mess after the cleaners have finished... WHO PAYS? Is it right that the
builder should pay again? Is it right that the client should pay again? However the
cleaner needs to be paid and the only person to blame is the contractor that did not
show up on time. How is this resolved?
Firstly when dealing with Back charges, you must ensure that you have given every
opportunity for the contractor to fix the problem before getting it fixed. (in the above
example it would be necessary to ask the contractor to clean up the mess to the
standard that the cleaner left it so that the client can take over the property.)
Secondly IN WRITING advise the contractor that they will be charged the cost of
cleaning up the mess. THIS IS IMPORTANT.
Thirdly instruct the cleaner to do the works issuing a positive variation to the cleaner.
Fourthly issue a negative variation to the contract sum to the contractor that made
the mess that the cleaners cleaned up.

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Insurance claims
Accidents occur on building sites and occasionally they damage materials or the
fabric of a building. Sometimes they are caused by malpractice or negligence and
sometimes by mistakes during construction. The main question when damage to
property, building fabric or product occurs on a building site is who pays.
The above is the reasons why we have insurance policies that cover every step of
the building process.
The biggest question is how do you make an insurance claim. This is quite often
undertaken by the insurance company. It should be noted however that there are a
number of things that you can do to help make an insurance claim.
As soon as the damage theft accident or whatever the scenario occurs it is important
to document the situation clearly and logically so that the insurance company can
see proof. This proof can be shown through photos or evidence of delivery and the
subsequent value of the product. Details in site diaries are very important.
Calling the insurance company and stating that you would like to make a claim
quoting the policy number and you can start the process rolling to recover the loss
that has occurred.
In some cases this will be money and in other cases it will be product or material.
Whatever the situation it is important to start the process as quickly as possible so
that the information can be passed onto the insurance company before it becomes
vague.
If the damage was caused by vandals or there is theft it is essential that the police
are called and a police case report number is issued by the police and that this is
given to the insurance company.

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Payment of delivery Invoices

Materials and supplies being delivered to the site need to be paid for as soon as
possible often the materials are delivered by companies that have accounts with the
Builder.
Money can easily be lost if deliveries are overpaid or time can be lost if accounts are
not paid on time.
The question that we are going to examine is how do you account for deliveries and
track payments whilst ensuring companies are not overpaid.
There are a number of pieces of paper that are involved with any delivery of
materials or supplies to a building site. Each of these papers is interrelated. These
are:
1. Order form or Purchase order docket this is produced by the builder prior to
delivery to site.
2. Delivery docket this arrives with the delivery and is signed for by the site
manager or similar. This should be cross checked against the purchase order or
Order form.
3. Invoice for payment this arrives at the company office as opposed to the building
site and relates directly to the delivery docket. This should be cross checked with
the delivery docket ensuring that everything charged for has been signed off as
delivered and the order form ensuring that what was delivered was ordered.
Quite often issues arise if some of the above steps are missed or not carried out
correctly resulting in arguments over payment and what was or was not delivered to
site.

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Progress claims and payments

With the progress claim the builder aims to claim progressively, for the increasing
value of work completed to date. The client then makes a progress payment against
the claim (invoice). Progress payments are made to the builder during the course of
the project either at predetermined stages (such as lock-up), or at periodic intervals
generally monthly or 30 days. In the Home Building Contract (work over $25,000)
published by the Office of Fair Trading, progress payments are made at the
completion of certain stages.
Progress claims are prepared on the basis of work completed less and previous
claims or retention. The progress claim should equate to the value of work done. A
claim is usually broken down on a trade basis that relates to a total cost breakdown
submitted at the start of the contract.
Progress payments including GST are made to financially support the builder
who could not be expected to complete the project using his or her own money.
Progress payments also prove to the builder the clients ability to finance the project
and their commitment to pay.
Progress claims are prepared as an invoice to the client, not the architect, even
though the architect may be acting as the clients agent. Sometimes the client asks
that a statutory declaration be attached stating that all monies owed to your
employees have been paid, you have a current workers compensation policy which
covers all your employees and all superannuation contributions are up to date. The
architect, or on larger projects, a quantity surveyor may certify the claim before the
client makes payment.
Under the NSW Building and Construction Industry Security of Payment Act, (1999)
any party that contracts to carry out construction work or supply related goods or
services on construction projects in NSW, has a statutory right to payment. Under
this Act, contractors and subcontractors are entitled to receive all payments due,
including final payments and retention monies. Apart from those contracts with home
owners who live in, or intend to live in, the dwelling where the work is being carried
out, the Act applies to all construction contracts at all levels in the chain. It also
applies to contracts between subcontractors, consultants and suppliers to contractors
carrying out works to homeowners. The Act allows the claimant to secure payment
on account inexpensively and speedily without the use of lawyers, court hearings or
witnesses. Note that the progress claim form (invoice) carries a statement at the
bottom of the page stating that This claim is issued pursuant to the Building
Construction Industry Security of Payment Act 1999. To ensure that your claims are
covered by the Act, this or a statement of similar wording should be included on all
invoices.
Subcontractors will also submit progress claims to you for payment based on their
claims. If you pay subcontractors before you receive payment for the work from the
client, you may be out of pocket if a dispute arises from claim and you may have to
use your own working capital to support the project until these funds are available to
you.
In NSW, current legislation (Workers Compensation Act 1987, Payroll Tax 1971 and
Industrial Relations Act 1996) requires that each progress claim be attached to a
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declaration signed by the subcontractors declaring that they have, and maintain a
valid workers compensation policy, have paid all pay-roll tax due and have paid all
monies payable to employees for work done under the contract.
The timing of progress claims and payments are important for your cash flow.
Ensuring that your subcontractors make claim for work before you submit your own to
the client but that their terms of payment are longer allows you to receive
payment from the client before paying subcontractors.
On the following page an example of a progress claim (invoice) and cost break up
(progress report) is included.

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TAX INVOICE

NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

ABN
18 105 199 407

DATE
21/6/08

INVOICE NO
23

INVOICE TO

PROJECT

Mr Wilt
13 Mystic Drive
Forestville

Alterations and additions 13 Mystic

Drive. Forestville

TERMS
7 days

DUE DATE
28/6/08

PROJECT
15 13 mystic

DESCRIPTION

AMOUNT

Labour and materials for work completed at 13 Mystic

Drive, Forestville as per attached payment schedule
dated 21/6/08

$20,800.00 (excluding GST)

Less Retention (10%)

(2,600.00)

TAX SUMMARY

SUB TOTAL $20,800.00

GST $2,600

TAX TOTAL $2,600.00

TOTAL

$23,400.00

This claim is issued Pursuant to the building Construction Industry Security of Payment Act 1999

Figure 5 Progress claim

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NETO BUILDING & CONSTRUCTION PTY LTD

PROGRESS REPORT CLAIM # 1

Contract #: 15
Date: 21/6/08

WORK BREAK UP

Project: 13 Mystic Drive, Forestville Alts and Adds

For work up to & including: 20/6/04

COMMITTED
VALUE

% COMPLETED
TO DATE

VALUE COMPLETED
TO DATE

CONTRACT WORKS
Preliminaries

10,000

50%

5,000

Demolition

5,000

100%

5,000

Excavator

8,000

75%

6,000

Concreter

20,000

25%

5,000

Carpenter

30,000

0%

SUBTOTAL CONTRACT

73,000

21,000

VARIATIONS
V01 Disposal of Asbestos

5,000

TOTAL VARIATIONS

5,000

100%

REVISED TOTAL

5,000

5,000
$26,000

LESS PREVIOUSLY CERTIFIED

$0

VALUE THIS CLAIM

$26,000

LESS RETENTION

$2,600

BALANCE PAYABLE

$23,400

Figure 6 Progress report

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Final accounts
The final account is the last bill that the building contractor submits for works as
contracted. It is prepared and submitted at the stage of practical completion.
Commencing with the original contract sum and ending with the balance payable on
the contract (excluding and retention held over the defects liability period), it outlines
the financial history of the project.
So when do we reach practical completion? Practical completion is when the builder
has completed all the work in accordance with the contract documents and any
variations. Any apparent defects should have been rectified and all rubbish and
surplus material removed from the site. It is also dependant on the client accepting
the work as complete.
Preparation for the final account must be done progressively throughout the project.
Preparation cannot be delayed until the last week of onsite activity. Except for the
payment of retention at the end of the defects liability period, this is the last
opportunity to make a claim on the client. Therefore, as a builder, you need to make
sure you include all claims due to you as well as any credits due to the client. The
onus is on the builder to provide an accurate final account, free of any errors or
omissions.

Cost Items
The final account will detail all the monetary aspects or cost items of the contract and
would normally include, but not be limited to the following:

Contract Sum
This is the original contract figure that would have appeared on the signed contract
conditions of agreement.

Variations
The total cost of the variations would be included in this final account. No details of
the variations would be included here. This should have been submitted and
approved prior to the work on the variations commencing.

Deposit
Deposit paid by the client should appear on the final account.

Prime cost items reconciliation

The prime cost items for the building work would be adjusted to show the differences
between the prime-cost allowances and actual expenditures. An adjustment is made
between the allowance and the actual expenditure and the difference is stated as a
claim or credit.
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Provisional sum adjustment

The specifications and contract documents may have provisional sum allowances of
a stated dollar value for some sections or items of work that at the time of tender had
an unknown value. On completion, the money has been spent and the cost of that
work is known. An adjustment is made between the allowance and the actual
expenditure and the difference is stated as a claim or credit.

Progress claims received

A total of the progress claims received should be totalled and included in the final
account.

Retention
All retention monies should be shown. Retention percentages change at the time of
practical completion. Usually, a maximum of 5 per cent of the total contract is held up
until the time of practical completion; then it reverts to 2.5 per cent for the duration of
the defects liability period. The Final Account needs to show the adjustment to 2.5%
and the outstanding retention owing.

Claim for extended site establishment

Where variations to the contract are predominately extras and the total represents a
large proportion of the building contractors final account, the builder can claim for
payment. Site establishment costs include shed hire and foremans wages. These
combined costs are worth claiming if a building project went over the original
scheduled time (with extensions of time claims being approved).

Balance payable
This is the amount of money the client is required to pay the builder (excluding the
2.5 per cent retention), within the agreed time period. This time period should also be
stated on the final account.

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Summary
The success of contract administration depends on effective communication
between all parties involved. The contractual parties must ensure that the lines of
communication are established and kept open throughout the contract period. The
fundamental aspect to create and maintain a workable relationship between the
client and builder is central to the completion of the contract to the satisfaction of all
parties.
Satisfied clients create opportunities for future work by recommending you, the
builder, to new clients.
While much of what we do as builders in contract administration is tried and tested,
there is still an element of human nature involved and you cannot rule out a clash of
personalities that can make your work environment very difficult. It is important that
the impact of your administration will impact the relationship with your client.
However, the clients experiences throughout the project are what they will convey
to others. There may be personality clashes throughout the project, however all that
can be expected is openness and honesty throughout the administration.

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Conduct On-Site
Supervision of the
Building &
Construction
Project
BCGBC4008A / CPCCBC4008A

Section 2
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Introduction
The communication process is probably the single most important factor in the day to
day activities of a building supervisor.
All building organisations require essential communication links between the different
levels of the hierarchy. Communication has a direct association with performance i.e.
the better the communication process, the greater the performance. Because
performance is inextricably linked to profit, it is desirable for management to adopt
sound communication strategies from the outset; this becomes a major platform in
on-site culture.
Effective communications will stop confusion occurring between the sender and
receiver of a message whether it is written or verbal. Communication is a two way
process that involves listening to the feedback supplied when instruction is given.
Feedback should be encouraged so that the supervisor can determine if the
information which is given out in digestible amounts is clearly understood.
How well you perform your activities and how they are seen by workers will be
determined importantly by your communication skills.People do not communicate all
their thoughts and feelings. People commonly use poor communication techniques
which can lead to confusion.
Confusion can be caused during communication by:

Hearing what we expect to hear

Using the wrong methods e.g. telling as against providing written information
Ignoring information that conflicts with what we know
Evaluating the source of information
Having different perceptions
Using words that have different meanings for different people
Use of jargon and technical terms
Inconsistent non verbal signals
The effects of emotions
noise and other interruptions

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What Site Records Should Be Kept?

So what primary records should a contractor maintain? This may differ from case-tocase and will depend on the nature of the works or the requirements of the contract.
My view is that as a minimum requirement contractors should maintain the following
records:
1. Labour and plant allocation sheets showing the labour and plant allocated to
specific tasks on a daily basis (including labour allocated to additional or
disrupted works).
2. Daily diary to include details of site progress, unusual site conditions, delay
events and additional resources. It should also include weather in the morning
and afternoon as well as the number of subcontractors on site each day.
3. Requests for Information (RFI) these should be made using a pre-agreed
format and not merely by way of correspondence.
4. Confirmation of verbal instructions (CVI) whenever an instruction is issued by
an employer (or his agent) verbally, it should be confirmed by the contractor in
writing and a separate file for CVI maintained.
5. Drawing register an up-to-date register for all drawings (and subsequent
revisions) is essential.
6. Minutes of meeting minutes should be kept for all internal/external meetings
and should in particular note progress of the woks, any obstacles to progress and
agreed action plans.
7. Approvals and inspections including for materials, work methods, and designs
and the inspection of works and materials.
8. Photographs in almost all delay and disruption cases photographs provide an
invaluable record of progress. Photographs should be dated and labelled. It is
also useful to have photographs taken from the same place(s) during the course
of the works to allow for comparison.
Armed with this information the prospect for the timely resolution of claims or
disputes is greatly enhanced.

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Types of Records
The types of records that should be kept on the computer, ready to be printed off or
as hard copy are:

Diary and planner

Instructions and File notes
Site Reports
Variation requests
Extension time requests
Unsatisfactory work notices

Using the diary, calendar and planner

Proper documentation of scheduling, work progress, resource use etc are all key
factors in a projects success.
Calendars and planners (as with the master programme for a project) help us keep in
mind the big picture of the project. It is possible when dealing constantly with day to
day issues on-site to lose track of longer term scheduling and planning issues. This
reduces the ability to forward plan which is very important in effective supervision of
contractors/workers.
The site diary is an extension of the planner in that it provides the day to day
planning tool for supervision. As important as its planning role, is the recording of
activities occuring on a daily basis. It is important not to leave to memory factors
affecting the construction process. These need to be included in the site diary.
A well kept diary will include information on:

Activities to be completed
Information on workforce numbers and activities
Meeting schedules and meeting notes
Information on materials usage
Information on plant and equipment usage
Union matters
Suppliers/deliveries
Many other aspects of recording work related information
Twice daily weather conditions
Changes to inclement weather

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Site instructions
When the builder queries a design detail, the client often instructs he or she to do
something that is not clear in the documentation. If this is the case and the client
does not provide written confirmation, you as the builder should confirm the
instruction in writing by use of a site instruction. If the instruction impacts on your
subcontractors, you should also provide them with a site instruction.
A site instruction is merely written confirmation of an instruction given to you by the
client that is not clear in, or contradicts, the contract documents. For example,
although the colour of fencing specified on the drawings and in the specifications is
black, the client has changed their mind and wants the fence to be green.. They have
advised you verbally but as it is considered a small change that has no monetary
impact (not a variation) the documents have not been changed. In this case, you
need to confirm the request in writing and ask the client to sign it. Keep a copy and
distribute one to the client and to any subcontractors impacted upon by the
instruction.
When you receive an instruction from the client of the clients representative that is
not considered a variation, and not confirmed in writing, you leave yourself open to
dispute. It is vital that any instructions given to you by a client is confirmed in writing
and signed by them.

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NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

No:................
CLIENT: .................................... PROJECT: ..........................................
DAY LABOUR

SITE INSTRUCTION

TRANSMITTAL

JOB NO: ............

REQUEST FOR INFORMATION

ISSUED TO:

....................................................................

ATTENTION:

....................................................................

ISSUED BY:
SIGNATURE:

.......................................
.......................................

RECEIVED BY:
SIGNATURE:

DATE:

MEMO

............................

.......................................
.......................................

Figure 1 Site instruction

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Site Reports
There is a fundamental need for the supervisor to have a good understanding of
basic report writing techniques and their application. They will be frequently
involved in activities such as performance appraisals, job instructions, job
specifications, recruitment, site diaries, progress reports and many other relevant
areas.
The communication between senior management and the supervisor requires a
daily flow of correspondence which must be quickly and effectively addressed by
the supervisor.
Performance appraisal is one task frequently assigned to the supervisor and as
such they must closely follow company policies affecting the performance of
subordinates; this appraisal is considered one of the most important on-site reports.
Any written formal or informal communication is important. Many of these are in
short report form and should be recorded electronically or copies filed accordingly.
Example Site Evaluation Report
The Site Evaluation Report consists of a general site investigation and research
involving local code officials and public/private utility organisations to identify
requirements associated with the proposed site utilisation, expansion, or redevelopment that could impact the budget or timing.

Variation Requests
Variation requests should be recorded and filed. Generally, a variation request is
priced by the sub-contractor then presented to the client, approved and signed.
After approval the sub-contractor should be told to proceed with an instruction and
the signed copy filed. An example of this kind of communication has been included
in Section 1 of these competency notes.

Extensions of time
The time taken to complete a project is all too often the cause of a dispute. This can
be the result of many factors including:

The original underestimated time

Unexpected delays
Bad weather
Lack of diligence by the builder
Poor performance by sub-contractors
Variations

In order not to be penalised at the completion of the job should it take longer than
the original estimate, the builder has to claim an extension of time. The contract
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generally outlines the circumstances that allow for such a claim. The contract
conditions and rules should be followed closely.
Some builders will claim at every opportunity. Be aware that ridiculous claims can
be challenged and you may be required to justify it. If you cannot justify a claim, you
may damage the integrity of your organisation. A claim should be backed up by
evidence and documentation (such as site diary entries).

NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

EXTENSION OF CLAIM ADVICE

Extension of Time Claim Number

Description:

(Project Name)
(Type of delay)

Reason for Delay:

Date of Occurrence:
Date Advised:
Estimated Extension of Time for Completion Claimed:

Signed:

Site Manager/Foreman

Date

Figure 2 Extension of time claim

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Unsatisfactory Work Notices

Part of the construction business involves maintaining a good quality checking
system or systems over the finished product. It is important that all problems with
unsatisfactory work are communicated directly to the contractors involved in writing
and that these are filed appropriately in hard copy or electronic form.
Your notice should include details of the contract date, when the work was
completed, the amount in question, the faults in the work and what you consider
would be reasonable action to remedy the problem. Ask, in writing, for a reply to
your letter within 10 days time by either telephoning or writing.
There are multiple avenues for ensuring quality workmanship on site. One of those
used commonly in the building industry is called an Inspection Test Plan (ITP). An
ITP identifies all the steps involved in ensuring that a quality product is delivered.
For example and ITP for concrete could include the following steps:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Ensure levels are set out to plan.

Ensure formwork is installed as per surveyors details and according to plan.
Check correct plastic is installed according to Australian Standards.
Check steel reinforcement delivered is as per order.
Check reo is installed as per engineers drawings.
Get sign off from engineer prior to pouring.
Check concrete delivery is as per order.
Check slump is correct when concrete arrives on site.
Check quality of finish is as per specification.

This is a very simplified ITP but gives you the example as to how to write an ITP.

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Documentation to control material, plant and equipment

Together with the role of managing the project workforce is the equally important role
of keeping track of incoming materials and the movement of necessary plant and
equipment. A supervisors effectiveness is influenced by the control exercised by
higher level management. This control could take the form of documentation
associated with, deliveries, maintenance records and other site works using
appropriate housekeeping procedures such as a diary.
Other ways to document materials is through keeping delivery dockets and checking
them against what was ordered.

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Good construction site communication

Improvements in communication should result in an increase in the quality of the build and
a reduction in the level of defect occurrence.

Simplified communication
Figure 3 illustrates a simplified methodology for communication during the different
phases of a construction project.
At the outset and/or contract stage, the ways in which project communication will be
designed to work should be agreed. Issues to be agreed include the following.
Method issues

Meeting types and frequencies.

Method(s) of drawing transfer.
Use and control of amended, or unconfirmed drawings.
Grading, reporting and tracking of defects.

People Issues

Who should accept and check deliveries of materials to the site?

Employment of a Clerk of Works, supervisor or gate person; setting their
communication responsibilities and methods, including setting the authority of the
Clerk of Works to instruct operatives.
Communication with and supervision of sub-contractors.

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Figure 3 Examples of communication issues during a typical construction project

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Communicating through the design Phase

Drawing provision and distribution
The role of drawings in producing good quality work is crucial. Therefore, careful
attention must be paid as to how drawings are going to be produced, checked and
distributed. The following points must be considered:

Provide drawings as early and as complete as possible at all relevant stages

Ensure drawings are adequately detailed and checked before site work starts
The different means by which drawings could be produced to help building work
progress smoothly (e.g. colour coded, by trade or element, laminated, small or
large sized)
How much information is needed on any drawing for it to be successfully built
from?
Where are the drawings to be used/kept, e.g. site office, supervisor, operatives?
How to prepare and return amended drawings back to site as quickly as possible?
Is there a role for the manufacturers to help prepare drawings?

The provision of complete and correct drawings should be regarded equally as

importantly as ensuring that materials and operatives are available.
Single points of contact
Consideration should be given to appointing defined, single points of contact at
suppliers, design offices and contractors. This should help to avoid delays, confusion
and duplication of effort.
Trade supervisors
Assuming that the size of the project merits it, a supervisor on site for each trade is
likely to bring benefits to the project communication and the quality of build. However,
ensure that the role of the supervisor links with the project requirements. For
example, is the supervisor required only to schedule work for the operatives of to be
directly involved with setting out, examination of drawings and quality of build.
To be effective, the trade supervisor must be sufficiently authoritative which may be a
problem as the position can be viewed as being neither operative nor
management.

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Communicating through the Construction Phase

Pre-start meeting
The project manager should ensure that a pre-start or kick-off meeting is held as
there are several benefits to site communication which may arise from such a
meeting, including the following:

It allows people to get to know each other; this is likely to lead to better
communication and less confrontational attitudes as work progresses
It provides the opportunity to decide on how communications will operate
It provides the opportunity to define points of contact at each organisation
It can be used to ensure that all people have the contact details for others working
on the project.

Ensure that all relevant people attend the kick-off meeting, this may include
supervisors and major suppliers.

Technical literature and advice

Large numbers of best practice information documents on design, material selection
and construction are available from a variety of sources including the following:

Manufacturers
Australian Standards Institution
Building regulatory authorities
Trade associations (e.g. Master Plumbers Association)
Insurance companies (e.g. HIA, MBA)
Consultants and research organisations

The documents available vary widely in their scope, size, and format dependent on
issues such as the intended audience and place of use for the document. Always
bear in mind that technical information is also available in formats other than paper
documents.

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Communication method

Description/use

Telephone help-desks

Manufacturers provide free advice on the selection,

properties and use of their products. Much used by site
managers. Often followed up by a fax.

Internet based advice

Product selection, technical and best practice advice

accessible from a personal computer. Mainly the same
information as technical literature.

CD ROMs

Manufacturers provide product selection, technical and

best practice advice. Personal computer required to
access.

Videos

Not a common method. Perhaps best used to actively

demonstrate a new product being used/built.

Hand held guides

Readily able to provide best practice guidance at the

point of construction. Most effective when laminated.
Not a common method.

Posters

A traditional way to communicate best practice

messages. Tend to concentrate on Do and Do Not
points of site practice. Commonly displayed in site
canteens.

Instructions printed on
packaging

Manufacturers provide information on their products.

The information is generally limited (e.g. telephone
number, main points of good practice).
Table 1: Non-paper based communication methods

Provision of technical advice

Arrangements should be made to provide technical advice to site based staff. This
may be most important in situations where there is particularly difficult detailing to be
built, operatives are inexperienced or new materials/products are in use. Providing
the best practice information could be done in several ways, including the following:

Introducing technical issues into the standard induction procedures.

Sample panels and mock-ups.
Best practice posters on display (e.g. in the site canteen).
Manufacturers visit the site to demonstrate best practice or new products.
Supply operatives with relevant parts of good practice guidance.

Upwards feedback
Establish means by which information can be effectively fed back up through the
formal management structure. Two key areas where this can be particularly important
are as follows:

Operatives to site office (e.g. reporting on an incorrect drawing).

Site office to head office (e.g. where an incorrect detail is discovered, this should
be reported back to the design office and the drawings corrected).

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Project Meetings
While it is almost universally accepted that no one likes going to meetings, there are
likely to be communication and build quality improvements from an appropriate
number of well structured meetings being held. The benefits from such meetings
should make the time spent worthwhile. The importance of kick-off meetings has
already been covered. Trade co-ordination meetings have also often proven to be
particularly worthwhile, especially at helping site work to progress smoothly and
informal agreements between trades to be established.
The success of formal meetings (e.g. the monthly progress meeting) is helped by
being structured, including the following:

Chairperson
Agenda
Set start and finish times
Minutes recorded

Minutes should always be circulated after the meeting and include action points with
the responsible person(s) identified and dates to be completed by. Consider inviting
all the relevant people to any meetings, but bear in mind that some people may only
need to usefully attend specific parts of a meeting.

Keep people in the loop

Where instructions, drawings or documents are passed outside the correct formal
channels ensure that all relevant parties are kept informed. For example, where the
architect faxes an amended drawing straight to a sub-contractor, the main contractor
must be informed and given a copy of the amendment. Where the Clerk of Works
instructs an operative, the trade supervisor must be informed of the instruction.

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Communicating across the whole construction project

Take care and time with communication
Remember that paying attention to and spending time on communication is likely to
lead to benefits to the project. The following are some typical examples:

Communications must be supported (i.e. ensure that someone given an

instruction has the back up, resources and knowledge to complete the task
properly).
Make sure the method of communication used is the most appropriate.
Whatever method is used, make sure the message is clear and all people who
need to know are informed.
If at all possible, provide instructions as early as possible.
Do not assume that actions identified in a memo, fax or email will always have
been carried out. Some sort of follow up or checking may still be necessary.
Learn from previous projects that you have been involved with where the
communication was either particularly good or bad. This will mean lessons will be
learnt from mistakes made previously to ensure the same issues do not arise
again.

New communication technology

The use of new technology to help communication should be considered. While the
benefits of items such as mobile phones and two way radios are well known, digital
cameras and on-site internet and email access may also be beneficial
communication tools. For example, drawings can be emailed between the site office
and the architect, as can digital photographs of defects and progress. The internet
can be used to access information such as Building Standards and good practice
guidance documentation.
On large scale construction projects the use of project intranet systems has been
shown to be valuable. These systems are based on project wide access via a
network of personal computers to electronic (virtual) project documents such as
drawings, specifications and correspondence.

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Conduct On-Site
Supervision of the
Building &
Construction Project
BCGBC4008A / CPCCBC4008A

Section 3

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The Operation of a Quality System in a Construction Company

Effective operation requires a firm commitment and leadership at a senior
management level. It also is important that personnel and contractors understand the
principles of quality management and are proficient in their operation of the
companys quality system. Workers therefore need to be trained in the system.

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The Quality Manual

Large companies should have a Quality manual which lays down procedures to be
followed and determines the standards which must be adhered to.
For a one person operation, e.g. a sole trader who is a builder, it may be extremely
useful for you to formulate a series of documents which outline the standards that
you expect from contractors that you hire and the ways in which you are going to
check on the quality of the materials and work performed.
Refer to Inspection Test Plans (ITPs) from the previous section.
The companys Quality Manual:

States the companys Quality Policy;

Describes the companys Quality System.

The Quality Manual explains how you operate and drive the system, in the same way
that other types of manuals tell you how to operate your video recorder or service
and maintain your car.
The Quality System contains documented procedures. These are explanations of
how the company carries out its basic processes and activities. These are written in
plain English and preferably were written by the staff who normally carry out those
procedures.
A company needs to update its manual and procedures from time to time. This will be
necessary to improve its efficiency, overcome deficiencies, to take account of new
technology and materials and/or when it introduces new processes as it undertakes
different types of work.
Regular updating of Quality Management systems rectify any issues that are not
working satisfactorily such as items or processes that can be simplified.
Quality Management is not some kind of quick fix or magic. Quality Management is
developing and using a system on a day to day basis to run the companys business
and projects. Used in this way it provides assurance to customers that projects and
services will meet their requirements.

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Operating a Quality System for a Construction Project

The Quality System requires that the project or work be properly planned before work
commences on it. This planning is known as Quality Planning and is done using a
Project Plan (also called a Quality Plan, Project Quality Plan or a Project
Management Plan).
One of the documented procedures in the companys Quality Manual will describe
the contents of and how to prepare the Project Plan. The size and complexity of the
plan will vary depending on the project. For small routine jobs it could be a single
page.
People in the building and construction industry tend to be action-oriented and
achievers. As a result they frequently want to start work on site as soon as the
contract is awarded to their company and before proper planning has been done.
(Sometimes they have no choice because of the demands of some of their
customers.)
In todays competitive client, designers, contractors, sub-contractors must increase
efficiency, cut wasted time and effort and look for smarter ways to do things.
Preparing a Project Plan at the beginning of the job helps to achieve these
objectives. The capability to influence the final outcome is greatest at the start of a
job. That capability quickly reduces as more and more decisions are made as the job
progresses.
Figure 1, below illustrates diagrammatically the relationship between the Quality
System operating at Company level and at the Project or Site level.

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This Manual tells

staff how to
operate the
Companys
System

Quality
Manual

Documented
Procedures

Other
Sections

ITPs

This Plan tells staff

how to manage the
project in accordance
with the Companys
Quality System

Project
Quality
Plan

At project (or site) level

At company level

Quality
Policy

Documented
Procedures

ITPs

The minimum elements

required for a small or
frontline project

Figure 1 Operation of the Company Quality System at company level project level

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Controlling Quality on a Construction Site

The construction process may be broken up into three distinct phases. Each phase
has its own requirements as far as inspections and following procedures is
concerned.
Address each of the following subjects in each phase of construction:

Preparatory phase

Review all contract requirements

Ensure compliance of component material to the contract requirements
Coordinate all submittals including certifications
Ensure capability of equipment and personnel to comply with the contract
requirements
Ensure preliminary testing is accomplished
Coordinate surveying and staking of the work

Start-up phase

Review the contact requirements with personnel who will perform the work
Inspect start-up of work
Establish standards of workmanship
Provide training as necessary
Establish detailed testing schedule based on the production schedule

Production phase

Conduct intermittent or continuous inspection during construction to identify and

correct deficiencies
Inspect completed phases before scheduled Government acceptance
Provide feedback and system changes to prevent repeated deficiencies

Description of records

List the records to be maintained

Personnel qualifications

Document the name, authority, relevant experience, and qualifications of person

with overall responsibility for the inspection system.
Document the names, authority, and relevant experience of all personnel directly
responsible for inspection and testing.

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Subcontractors
Include the work of all subcontractors. If a subcontractor is to perform work under this
Section, detail how that subcontractor will interface with the Contractors and/or other
sub-contractors organisations?
The quality of work carried out by contractors/workers on the site is usually measured
against a required standard. On large commercial sites Inspection Test Plans set
out in detail when, where and how each critical activity is to be checked for
conformance. Contractors must sign off each activity to show that the activity is
completed and checked for quality against the specifications. This signing off also
helps the proper sequencing of construction activities. On smaller sites such as
house construction the same principles apply however how these principles are
applied may vary dramatically.

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Conduct On-Site
Supervision of the
Building &
Construction Project
BCGBC4008A / CPCCBC4008A

Section 4

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Completion of Project Administration Processes

The date of substantial completion is defined in contract terms as the date which the
owner/client/client and/or architect will certify that the work, or designated portion of
the work, may be beneficially occupied or utilised by the owner/client for its intended
purpose. The actual date of substantial completion is usually noted on the certificate
of substantial completion or Practical Completion.
When the contractor considers that the work, or designated portion of the work as
previously agreed to by the owner/client, is substantially complete, he will prepare
and submit a list of items which remain to be completed or correct. The failure of the
contractor to include any items on the list, will in no way alter his responsibility to
complete or correct these items per the contract documents.
The builder and owner/client should review the list and the completed work to
determine that the list is both accurate and complete. Items which require correction
and/or completion, that are not included in the list, should be added. The owner/client
should be advised that the items on the list should be corrected and/or completed
within the time limit set forth in the certificate of substantial completion.
If the owner/client is occupying the house, the correction and/or completion of all list
items should be conducted in a manner not to adversely effect the owner/clients
occupancy of the facility. The mechanical systems, life safety systems, telecommunications systems and any other systems which are required to properly
utilise the house should be complete and in good working order.
The owner/client should be consulted to confirm that there are no other construction
deficiencies that he may be aware of which are not on the list.
The Certificate of Substantial Completion should be prepared by the builder and
certified by the Owner/client and/or Architect, prior to being submitted to the
Owner/client for their written acceptance of the responsibilities assigned them in the
Certificate.
The Certificate of Substantial Completion will also establish the dates and
responsibilities of the transitional arrangements which will be required between the
Owner/client and the builder. These should include:

The time limit for completing the remainder of the work per the list
Establish the responsibilities of the owner/client and builder for security,
maintenance, utilities, damage to the work and insurance.
Establish date for the commencement of all warranties.

Upon successful execution of the Certificate for Substantial Completion the

owner/client may make payments which reflect adjustments in the amount retained to
cover items to be finished or fixed up, as provided in the contract documents.
In cases where the work is unacceptable, the builder upon consultation with the
owner/client and/or architect, should establish the value of the remaining work and
suggest an amount that reflects the value of that work.

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Generally the minimum amount retained for each unacceptable item should be
estimated at a cost incurred to have another contractor brought in to complete or
correct the item. This includes any costs for mobilisation and/or equipment required
to correct or complete any outstanding construction deficiencies.

Completion Checklist for Builder

About three to four weeks before the project completion, both the builder and the
clients should together identify that which must be arranged before completion,
including such matters as:
1. Insurances to change from builder to clients
2. Services to be connected in the name of the clients post office notified of date of
occupancy, deposits may be needed for electricity, phone, cable TV and the like.
3. Clients and builder to agree precisely what completion means grounds will be
graded and cleaned up, windows cleaned, final finishes and the like.
4. Final inspections
5. Final payments
6. Protection against theft new appliances are prized by thieves. The house should
not be left unattended if at all possible. The hot water system should be located
and filled to deter theft.
7. Locations (with reasons for positions explained to the clients) of items, including:

Water valves (an extra valve at the entry of the house is handy).
Electricity metres must be accessible to electricity authority but circuit breakers
and earth leakage safety device should be inside the house for both security
and convenience
Hot water system located preferably external to house in case of leakage
Post box
Cable entry points future faults can often be fixed quickly if these are known
Survey pegs which are required for fencing. Dividing Fences Legislation
establishes two principles:
a. Fences must suit the area, and
b. A prior written notice is required to obtain contributions from neighbours.

8. Clients are provided with a maintenance program and copies of certificates,

guarantees, government information and suchlike.

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Planning and Development controls

All development proposals in NSW must be assessed to ensure they comply with
relevant planning controls and, according to nature and scale, that they are
environmentally and socially sustainable. State, regional and local plans and policies
indicate what level of assessment is required, and who is responsible for
assessment: council, an accredited private professional or the Minister for Planning
(the Department of Planning assesses proposals for the Minister of Planning).
Planning and building approvals in the City of Sydney are governed by The
Environmental Planning and Assessment Act 1979.

Categories of Development
Approval is required to carry out development in the City of Sydney, except where
expressly exempted. The Environmental Planning and Assessment Act 1979 defines
development as:

The use of land

The subdivision of land
The erection of a building
The carrying out of work
Demolition
Any other matter controlled by an environmental planning instrument

Other categories of development are:

Exempt Development: minor development that does not need any approval but
must comply with specific standard provisions.
Complying Development: a subset of local development that has a low
environmental impact and that can be certified as complying with predetermined
standards. Separate complying development procedures provide a fast system for
assessing development. A Complying Development Certificate may be issued by
either the City of Sydney or an accredited certifier.
State Significant Development: is a development identified by the State
Government as being of State or regional significance. The Minister of Planning is
the consent authority.
Integrated Development: is a development where separate approvals are
required under other Acts, such as The Heritage Act 1977 or The Roads Act
1993. Here the City of Sydney refers the application to the relevant authority to
seek the terms of approval. If approval is granted, such terms of approval will be
included in the development consent. Separate approvals will still be needed
under the relevant acts, but the confirmation of an approval will be obtained early
on in the process. The approval of the relevant authority does not fetter the
discretion of Council in determination the application.

So what does all the above mean to you as a builder? In some circumstances you
will be required to obtain a Development approval and all other statutory
documentation for and on behalf of a client. So how is this undertaken, below is
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outlined the various steps and stages required to obtain all the statutory approvals
this does change from one council area to another so it is important to confirm with
the particular council exactly what is required.

Development Application and Approval process

Development Applications and any subsequent applications for related building or
construction work, such as a Construction Certificate, are assessed under Section
79C(1) of The Act.
In nearly all residential projects the proposed works are assessed by the local council
using documents produced by the owner or the builder or architect for and on behalf
of the owner.

Documents required for Development Consent

DA documentation involves recording the proposed building including enough detail
for assessment by the Local Council for compliance with local town planning
requirements. DA documents include drawings and supporting information
documents which together provide all the required information about the proposed
building.
Each council has specific requirements for DA submission. An example of DA
requirements can be found on Ku-ring-gai Councils website.
http://www.kmc.nsw.gov.au/go/planning/development/developmentapplications
Below is a list of common drawings and documents that are required by councils.
DA drawings generally required are:

Site Analysis Plan

Survey Plan
Site Plan
Floor Plans
Elevations and Sections

Additional DA drawings may be required for specific building types or in specific

areas, including:

Shadow Diagrams
Landscape Plan where significant landscaping works are involved. Generally
prepared by a Landscape Architect or Designer.
Stormwater Management Plan for many city and suburban developments
Environmental Site Management Plan for environmentally sensitive sites

Some of the other DA documents would include:

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Environmental site management plan

Some Local Councils require an Environmental Site Management Plan as part of the
DA to demonstrate how the site will be maintained throughout the construction
process to ensure optimum environmental outcome.

Statement of Environmental Effects

A Statement of Environmental Effects (SEE) states the likely impacts of the proposal
and the measures that will mitigate these impacts. It includes written information
about the proposal that cannot be readily shown on plans.

BASIX certificate
The Building Sustainability Index is a web-based planning tool put in place by the
State Government to assess the potential performance of residential developments
against a range of sustainable indices. You must provide a BASIX assessment
certificate for all new detached single dwellings and dual occupancies, multi-unit
developments and additions and alterations to house. Refer to
www.basix.nsw.gov.au for more information and use this webpage to complete your
certificate

Heritage impact statement (HIS)

An application for a property identified as a heritage item, within a heritage
conservation area or within the vicinity of a heritage item or heritage conservation
area requires a heritage impact statement.

Waste management plan

This identifies whether the waste building materials and demolition waste are to be
re-used, recycled or where disposed of.

Geotechnical report
This may be required when it is proposed to excavate to a depth of two meters or
more below the existing ground level and also in other instances depending on the
nature of the development and site circumstances.

Sample board
A sample board shows the proposed finishes of the development and may be
required for new residential developments, including single dwellings, dual
occupancies, flat buildings of three or more stories, all developments where four or
more dwellings are proposed and for all retail, commercial or mixed-use
development.
The sample board provides an example of each material to be used on the exterior of
the development and the outdoors areas of any new structures.

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Construction Certificate Drawings

After a development application is approved, a Construction Certificate is needed
before building actually begins. A Construction Certificate is an approval that:

Makes sure that the detailed construction plans and specifications comply with
the Building Code of Australia (BCA) and any other relevant Australian standard
Certifies that the detailed construction plans and specifications are consistent
with the Development Consent
Certifies that the relevant Conditions of Development Consent have been
complied with.

The above requirements are often covered in the construction drawings, see table
below outlining the different types of drawing involved.
Construction or Working Drawings
CC Drawings

Working drawings showing the information required to

obtain a Construction Certificate (approval to construct).

Construction
details

A part of working drawings showing detailed information

about the construction of building elements.

Shop (workshop) Working drawings showing the detailed information

drawings
required to fabricate items e.g. furniture, joinery, fixtures.
Tender drawings

Working drawings showing the information required to

obtain quotes (tenders) for construction work

Providing Certificates
If a Development Consent (commonly referred to as a DA) has been approved for the
works then a Construction Certificate (CC) will be required for the works (as noted
above). This will be either issued by the building surveying department of the council
that issued the Development Consent or the CC can be issued by a Private Certifying
Authority (PCA).
As part of the development consent there are conditions that must be complied with
these are outlined in the consent. The Private Certifying Authority ensures that not
only are all the conditions complied with but that the building or development is
completed according to the plans and specifications that have been approved as part
of the consent and CC.
In order to obtain a Construction Certificate (CC) from your PCA, you will have to
provide some certificates to show that your works will comply with the consent and
also that the works will comply to the BCA and Australian standards.

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Upon completion of the works the PCA or council will require the following certificates
as part of the approval process, verifying compliance with the BCA and relevant
Australian Standards:

Any engineer certificates that were required e.g. for footing design or roof design
Waterproofing for wet areas
Glass in windows and doors (provided by supplier)
Timber treatment where necessary
Termite management system where necessary
Roof trusses from manufacturer
Hydraulic certificates
Smoke detector certificate of installation
Cadastral survey report where required or requested
BASIX Certificate for residential projects

The above certificates enable an Occupation Certificate (OC) to be issued by the

PCA or Building Surveying department from council. An OC enables the building or
development to be occupied or used for its designed purpose.

Inspections
During the building process there are a number of statutory inspections that are
required to be undertaken it is critical that the inspections are undertaken at the times
that they are supposed to. The Environmental and Planning and Assessment Act
1979 specifically outlines the mandatory or Critical stage inspections that are
required during the building process. So what are the inspections that need to be
undertaken during the building process? Below is a list of requirements for work to a
residential development:

Pre-Commencement inspection prior to works starting this ensures that all site
establishment requirements have been completed prior to starting works.
Footing and piers inspections.
Stormwater drainage inspection after pipes have been laid and prior to backfilling
trenches.
Structural engineers inspections prior to pouring concrete including termite
protection and vapour barrier.
Framework
Waterproofing
Completion inspection upon completion of the works prior to occupation of the
premises including landscaping.

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There may also be other inspections that are required under the development
consent depending on the type of premises that are being constructed or built. Some
of these could be on the following list:

When it comes to a food shop quite often a health inspector is required to inspect
the premises prior to occupation.
When it comes to premises that store or use dangerous goods there are
requirements for inspections by the Environmental Protection Agency or specific
agencies depending on the type of materials or the legislation that may govern
the storage of said materials.
Councils often require an inspection to be carried out by them if new kerb and
guttering are to be installed in front of a property.
A new driveway to a property will often require council to inspect prior to pouring
concrete to view steel reinforcement and stormwater.

With the completion of the above the Private certify can issue an occupation
certificate following there completion inspection. As part of issuing an occupation
certificate, the certificates that are listed above will also be accompanied with
certificates that state that the inspections were carried out.

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Inspecting for Defects

On substantial completion, the builder should inspect the building thoroughly for
defects. He/she may do this with the client, or the client may even engage a
specialist to do this and produce a report.
Below is a list of items that builders may use as a check list for final inspections.
External aspects of the building and surrounds including: roof line, flashing, eaves,
gutters, downpipes, walls, windows, glazing, doors, stairs, porches, balconies, safety
barriers, paint finish, boundary fences, car accommodation, clothes lines, council
crossings and footpaths for damage during construction, driveways, landscaping,
paths/paving, retaining walls, steps, stormwater run off, drainage and taps.
Internal aspects of the building including: ceilings, cornice, walls, architraves, skirting
boards, floor structure and covering, cupboards, drawers, shelving, wardrobes, vanity
units, fly screens, ventilation, paint finish, doors, windows, glazing, stairs, fittings and
appliances.
If accessible, roof space and sub-floor space.
Builders should then sit down with clients and discuss what rectification and
maintenance works need to be carried out to either rectify the stated defects or
properly maintain the property.

Typical Defect Report

A typical defect report would cover the following:
Foundations and Footings
External and internal walls are visually checked for cracking or signs of movement.
Brickwork
The physical appearance of bricks used and the correctness of the laying of the
brickwork is thoroughly checked.
Mortar
Mortar is checked for any signs of visible imperfections, weakness or crumbling etc.
A simple test is conducted to assess the strength of mortar. A further check by an
accredited testing laboratory may be recommended.
Damp Proof Course (DPC)
A check is conducted to determine the presence of a DPC. If the omission of a DPC
appears to have caused dampness, we advise you of this, and provide solutions on
how this problem can be treated.

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Plumbing
Plumbing works, fixtures or fittings are checked to see if they are in order. Any leaks,
drainage problems or other defects (e.g. lack of water pressure, slow drainage etc)
are noted.
Site Drainage
Poor site run off or lack of connection of downpipes to stormwater drainage that
results in obvious boggy areas is noted.
Electrical Wiring
The condition of the meter and switchboard, power point testing in at least 5
locations, and visual examination of the wiring in the roof space (where accessible)
and elsewhere, is checked to assess the state of electrical wiring. A further check by
a licensed electrical contractor may be recommended.
Roof Condition
The roof covering and its associated plumbing (i.e. flashing, gutters and downpipes)
are visually inspected to detect any defects (e.g. broken tiles, leaks, blocked
downpipes, etc).
Roof and Sub-floor Structure
Visual inspections from access points are undertaken to determine the condition of
the structural components. Any apparent signs of sagging, lack of support, moisture,
rot or faulty services are noted.
Insulation
The presence and adequacy of roof space insulation is reported on, where
accessible.
Paint finish
Imperfections/inconsistencies in paint finish are noted.
Floors, skirting, architraves, walls, cornice, ceilings, doors, cupboards,
appliances, etc
All visible defects are noted.

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Project Close Out

Following Substantial Completion, the builder should arrange for the following items
and materials which should be collectively referred to as the Close-Out Documents:

Application for payment showing all work as completed and requested amount to
be retained
List showing all items identified by the builder, certified as being completed
All copies of necessary certificates, as required by the Building Surveyor
Final release for the total amount of contract sum
Final drawings and specifications as per the contract documents
Warranty and maintenance information as required by the Contract Documents
Extra stock materials and special tools as provided in the Contract Documents
Final accounting of all requested variations for the project.

In addition to the items listed above, the Close-Out Documents shall include proof
that all equipment and maintenance demonstrations required by the contract
documents, have been successfully completed by the builder for the owner/client.
Equipment demonstrations shall be scheduled by the builder with the owner/client
given adequate notice to ensure that proper personnel may attend.
Should all prerequisites for project close-out be satisfied, the Owner/client and/or
Architect will then recommend to the builder in writing that the owner/client make final
payment to the builder.

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Final Application for Payment

The builder should advise the owner/client and/or architect when all Close-Out
Documents have been properly transmitted to the owner/client, all required list work
is completed and all requirements of the contract have been satisfied per the
Contract Documents. The owner/client and/or architect will, upon consultation with
the builder, recommend that the Owner/client make Final Payment to the Contractor.
The final payment request from the contractor will be for the remainder of the amount
retained.

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Presenting the final account

You or another nominated person should personally present the final account to the
client. For you to be paid quickly and in full, it is your responsibility as the builder to
present a final account that is simple in form and sequence and easy to read and
understand. Long paragraphs of descriptive prose should not be included in final
accounts. Each item should be listed. The presentation of the final account needs to
be made without contention and without opportunity for the client to delay payment
by argument. No item of claim should be in dispute at final account time.
This is also the time to ensure that all handover items such as warranties as-builts,
tagged keys, and maintenance and operation manuals are completed and passed on
to the client.
On the following page, an example of a final account is shown.

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NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142
TAX INVOICE
Invoice # 759
Ms. Wels
51 Wentworth Road
STRATHFIELD NSW 2135
21 June 2004
Dear Ms Wels,
RE: ALTERATIONS AND ADDITIONS AT 51 WENTWORTH RD, STRATHFIELD
We are pleased to submit our final account for the works at the above address, as works
were completed 20 June 2004.
FINAL ACOUNT
$
Contract Sum

$
120,000.00

Variations nos 1-9 (net)

17,500.00

Adjustment to PC items
Allowed 6,000.00
Cost 7,200.00
Adjustment to provisional sums

1,200.00

Allowed 20,000.00
Cost 18,000.00

2,000.00
138,700.00
2,000.00

Final Contract Sum

136,700.00

Deposit Paid

6,000.00

Progress claims received

120,000.00

Retention 2.5% for defects liability period

3,417.50
129,417.50

136,700.00
129,417.50

Balance Payable
TERMS: 7 DAYS

7,282.50
Figure 1 Final account

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Retention and defects liability period

The defects liability period is the time after practical completion (generally 13 weeks
in residential construction) when the builder is responsible to rectify any defects that
become apparent. For that period of time, the client holds the retention. Retention is
a sum of money which is deducted from payments to the builder during the course of
construction to ensure the:

Builder proceeds with the job diligently

Builder rectifies any defects during the course of construction
Client has some compensation should the builder default on the contract

As describe previously, the most common arrangement for retention is that retention
is deducted from progress payments at the rate of 10 per cent until the fund reaches
a maximum of 5 per cent of the contract sum. At practical completion, 2.5 per cent is
refunded to the builder, with 2.5 per cent remaining in the fund until the end of the
defects liability period. The remaining 2.5 per cent is taken as 2.5 per cent of the
adjusted contract sum (that is the original contract sum plus or minus any variations).
For example, for a contract sum of $100,000, the following would apply.
Progress
payment
1
2
3
4
5

Amount claimed
$20,000
$20,000
$20,000
$20,000
$20,000

Retention
$2,000
$2,000
$1,000
NIL
NIL

Payment received
$18,000
$18,000
$19,000
$20,000
$20,000 + $2,500
Retention released on
practical completion

As 5 per cent of the contract sum is $5,000 and 2.5 per cent is released on practical
completion, $2500 is held until the defects liability period has expired.
Note that the current Residential Building Contract published by the Office of Fair
Trading does not contain a retention clause. This is because the Home Building Act
1989 requires the builder to provide home warranty insurance.
Generally, a contract requires the client to open a joint bank account in the names of
the client and builder. All retention monies are deposited into this account and the
interest accrued is usually shared equally between the client and the builder upon
satisfactory completion of the contract and the expiration of the defects liability
period. Builders are generally not signatories to the retention bank account.
Once the defects liability period has expired and provided any defects of the
outstanding defects have been satisfactorily rectified, a written request in the form of
a letter or invoice should be submitted to the client to secure the release of the
outstanding retention. On the following page is an example of a letter that could be
used to request balance of retention.
As a builder, you are also required to hold retention on your subcontractors. An
identical retention clause used in the head contract should be included in your
subcontractor agreements.
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NETO BUILDING & CONSTRUCTION PTY LTD

ABN 18 105 199 407 - ACN 105 199 406
15 WENTWORTH STREET, MELVILLE 2142

TAX INVOICE
Invoice # 770
Ms Wels
51 Wentworth Road
STRATHFIELD NSW 2135
20 September 2004
Dear Ms Wels,
RE: ALTERATIONS AND ADDITIONS AT 51 WENTWORTH RD, STRATHFIELD
The defects liability period on the above project expired on 10 September 2004. As no
defects have become apparent, please release the balance of our retention as required by
the contract documents.
Balance of retention:

$3,417

Thanking you for your co-operation.

Yours faithfully

.........................................
Construction Manager

Figure 10 Retention release letter

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Summary
The success of contract administration depends on effective communication between
all parties involved. The contractual parties must ensure that the lines of
communication are established and kept open throughout the contract period. The
fundamental aspect to create and maintain a workable relationship between the client
and builder is central to the completion of the contract to the satisfaction of all parties.
Satisfied clients create opportunities for future work by recommending you, the
builder, to new clients.
While much of what we do as builders in contract administration is tried and tested,
there is still an element of human nature involved and you cannot rule out a clash of
personalities that can make your work environment very difficult. It is important that
you remember this, as hindsight is quite useless in ensuring the success and
continuation of your organisation.

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Activity 1
To answer the following questions, you will need a form of standard contract (such as
the Home Building Contract for work greater than $25,000 published by the Office of
Fair Trading)
1. Who must get a copy of the signed contract and its associated documents? How
long is allowed for this to be done?

2. The owner of the property must sign the contract to confirm they have received a
special document. What is the document and what does it contain?

3. Under the Home Building Act 1989, what does the statutory warranties clause
require the contractor to provide?

4. Who should pay security deposits to authorities?

5. When can a contractor cease or suspend works onsite?

6. Give examples of items considered prime cost items.

7. What must be included on progress claims to ensure they are paid as per the
terms of the contract?

8. What must the client be given on receipt of their final payment?

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Answers to Activity 1

1. The contractor and the builder should keep their own signed copy of the
contract with all the attachments. You have 5 business days after the contract
is entered into to do this.
2. The document is a consumer building guide that explains the operation of the
Home Building Act 1989 and the procedures for the resolution of contract and
insurance disputes.
3. The statutory warranties require the contractor to provide the agreed product,
in an appropriate state and fit for its intended purpose, complying with all the
relevant laws and delivered within the agreed time.
4. The client or owner of the property pays security deposits to authorities.
However, the builder is responsible for damage to public and council property.
5. A contractor can cease or suspend works onsite when the owner
Fails to provide evidence of title
Does not have the capacity to pay the contract price
Fails to pay progress payment within the time allowed and after the
contractor has provided another written notice to pay
Fails to advise the contractor promptly of any requirement from a statutory
or lending authority if it affects the work
Fails to perform any work or supply materials as specified in the contract
which prevents the contractor from continuing work under the contract
Denies the contractor or sub contractors access to the site
Becomes bankrupt
6. Some examples include the stove, special kitchen appliances or bathroom
products, flooring, and finishes such as tiles.
7. The period of time the client has to pay within, for example, Terms: 7 Days.
8. The contractor is required to hand over to the client all guarantees and
instruction manuals, and keys relating to the work, together with any
certificates or approvals relating to the work which may have been provided by
public authorities.

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