As featured in the June edition of QHA Review
The construction industry across Australia, particularly in Queensland, is presently facing some daunting issues. Therefore, it is quite understandable that any publican seeking to undertake renovations to his or her venue may approach the process with some trepidation. Upfront due diligence coupled with careful planning will minimise risk and likely angst at the other end.
First and foremost, it is worth investing a significant amount of time to select the right builder. This should be verified with not only a QBCC licence check as to that builder’s current licensing status and licensing / disciplinary history but equally importantly perhaps, word-of-mouth recommendation from a trusted colleague based on firsthand experience.
When considering the design, consider the materials to be involved and the chain of supply; for example, there would be nothing more frustrating than to order unique materials from overseas only to find that the chain of supply is interrupted for months on end and works cannot progress because of a particular and unique item not being available.
Careful consideration should be given to utilising an architect, not only to create the design in conjunction with you as the publican but also to engage that architect (ideally someone with specific experience in the hospitality industry) to project-manage the build.
The construction contract should be in writing but a draft should also be reviewed before being finalised and entered into. No contract is perfect in that it cannot predict and cover every scenario but a review by a competent legal advisor before finalising and entering into the contract can save much heartache down the track. Consideration should be given to what warranties are to be included and, in particular, what security should be sought from the contractor, whether in terms of retention monies, bank guarantees and/or personal guarantees. Similarly, careful consideration needs to be given to a liquidated damages provision; in particular, the periodic amount to be applied for any delay. That can become crucial to the commercial outcome of any build.
In terms of the cost base for the contract, a cost-plus contract should be avoided, if possible. Such contracts have been on the rise since the supply and cost difficulties experienced by builders in the last few years such that builders endeavour to pass on that risk. However, a cost-plus contract gives no certainty to you as the end user. A fixed price contract that has been properly scoped by both parties such that there will be minimal variations is more likely to provide the comfort needed when investing in such a significant project.
Finally, the termination provisions within any contract are equally as important and should be considered by a legal advisor. The ability to terminate the contract or to at least take the work out of the hands of a builder who has not performed can be crucial to a successful outcome for the build.
Should you have any queries or require any further information about this topic, please contact me on (07) 3224 0241.
