Critical examination of building contracts in New Zealand: an investigation into the types of building contracts employed; their formation and administration ; and into the incidence, nature and resolution of disputes resulting from
Creators: name: Gatley, David
Publisher: name: RMIT University
Year: 2024

description: oward the end of 1999 and during the early part of 2000, the commercial construction sector in the Auckland area of New Zealand was affected as a result of liquidations of a number of major commercial construction companies.<br><br>The aim of the research is to investigate the employment of building contracts, their administration, and into the incidence, nature and resolution of disputes executed during the calendar years of 1999 and 2000. This research was undertaken by surveying 100 commercial and 60 residential projects undertaken in the Auckland region of New Zealand to determine if the problems being experienced by the commercial contractors who were liquidated was incidental and limited to the commercial sector. Projects surveyed ranged in value between NZ$10,000 and NZ$700,000 for residential projects and between NZ$150,000 and NZ$99,000,000 for commercial projects. The literature review identifies, analyses and discusses:<br><br>(i) To what extent are 'standard' forms of building contracts used by the construction industry including who was responsible for the drafting of those contracts? (ii) What provision was made in these building contracts for the resolution of disputes? (iii) Who was responsible for the independent administration of those building contracts? (iv) What was the incidence of disputes that resulted as a consequence of the usage of these building contracts and what was the nature of the disputes and how were they resolved? and (v) Would the construction industry in New Zealand benefit from legislation that would require that an independent third party be engaged for the administration of the building contract?<br><br>Gaps in the literature of all areas of the research were identified.<br><br>The following hypothesis was promoted: The incidence of disputes is reduced in building contracts that are administered by an independent third party for both commercial and residential sectors of the construction industry in New Zealand.<br><br>A statistical analysis of the data collected was used to test the hypothesis as well as to determine whether the appointment of a third party to administer a contract between the client and contractor was of direct benefit and assisted in the avoidance or resolution of disputes. The results provided support for the hypothesis in both the commercial and residential sectors of the construction industry. Additionally, there was also qualitative endorsement for the propositions. The surveys provided evidence about the attitude adopted by those involved in the particular sectors to the independent administration of building contracts. 79% of the building contracts surveyed in the commercial projects were independently administered compared to 42% in the residential sector.<br><br>The data was also used to provide positive test results for a proposition known as the 'principle of remotivity' which states that: 'the further the architect (or designer) is from the independent administration of a building contract during its execution, the more likely it is that disputes will arise'.<br><br>The research confirmed that the culture of the construction industry in New Zealand; the legislation used to control the industry; and the decisions of local judiciaries in construction related matters are different to those adopted in Australia and the United Kingdom. These variations are not recognised by persons connected to and detached from the construction industry. The dissertation concludes by making 19 (nineteen) suggestions and recommendations.<br><br>The research was limited to projects undertaken in Auckland, New Zealand and replication of the study would provide a broader understanding of this area of inquiry and further data to qualify the 'principle of remotivity'.<br>