The Thomson Reuters 2019 Building and Construction Law Conference will discuss contract risk, insolvency, disputes and a range of other regulatory issues
Building and Construction Law Conference returns in 2019
Increasingly thin margins on construction projects, coupled with contract provisions which don’t always fairly allocate risk along the supply chain, have caused significant calamity for the New Zealand construction sector in recent years. And smaller subcontractors at the end of supply chains are often exposed to the greatest contract risk.
The Mainzeal insolvency of 2013, where about $18 million of retention money was lost for many small subcontractors, drove changes to the Construction Contracts Act’s provision on retentions. This was intended to bring certainty and protect the more vulnerable members of the construction supply chain, but McConnell Group president Geoff Hunt argues that those changes may have unintended consequences.
“The perversity of the retentions legislation is that if directors of construction companies, with inadequate balance sheets, comply with the legislation by declining new projects, they risk becoming insolvent and unable to pay subcontractor retentions,” Mr Hunt says.
Karen Overend of Overend & Associates agrees that contract forms can inherently disadvantage subcontractors. “The New Zealand construction industry is built on subcontract relationships. Our reliance on subcontractors for construction projects has even been described as a ‘house of cards’. And yet the attention that goes into negotiating the head contract is often not spent on the subcontract,” she says.
“Once the project’s been won by the head contractor, the subcontracts can only be left as an after-thought, filling in a standard form that doesn’t reflect the head contract, or the proportionate risk to be taken on by the parties. Much of the project depends on the subcontractor relationship, and yet it is so often overlooked.”
The collapse of Ebert Construction in July 2018 shows that the sector is still under strain and continuing margin pressure. Contract and commercial professionals from across the construction supply chain, along with the lawyers that advise them, need to carefully consider the allocation of contract risk.
The Thomson Reuters 2019 Building and Construction Law Conference, taking place on 27 February at the Crowne Plaza in Auckland, will discuss contract risk, insolvency, disputes and a range of other regulatory issues.
Speakers include representatives from McConnell Group, Fulton Hogan, Tonkin+Taylor, Simpson Grierson, PwC, Bell Gully, Hesketh Henry, Kensington Swan, Russell McVeagh, NZ Strong, RANZ and FC International.
The conference also features two optional workshops: Negotiating Subcontracts, and Dispute Resolution.
For the full programme and registration information, visit the Thomson Reuters website. Early-bird registrations available until 18 January 2019.