hbcf building contract review program

Our building contract review program (bcrp) is designed to help builders take on new or larger, more complex projects.

If you’re a residential builder, you may be required to participate in the bcrp as a condition of obtaining eligibility with the icare hbcf.

If you’ve already been assessed as eligible but you would like to change your eligibility profile, the bcrp may help you develop the skills and experience required to take on larger and more complex residential building projects.

The bcrp assists new entrants to the building industry, as well as existing small to medium builders without demonstrated experience for proposed projects.

How the bcrp works

The bcrp is intended to be a transition phase. You can apply to have the requirement removed from your eligibility conditions, once you have demonstrated satisfactory competency for that project type.

As a participant in the program, you’ll have the opportunity to obtain mentored project management experience.

The bcrp is overseen and managed by us, and delivered by five authorised service providers.

A bcrp service provider is responsible for reviewing your ability to quote and deliver a particular type of project. It’s not their role to ensure you’re compliant with building standards.

As part of the bcrp program, they will:

  • review contract documents for a project to ensure that you provide a detailed budget that includes a gross margin that is reasonable for the project type, size, value and other project requirements
  • determine a schedule of performance reviews, including site inspections, to ensure your supervision and contract administration is appropriate
  • make sure the project is running to budget and contracted completion date
  • undertake reviews and report on the progress or development of your competence relating to specific areas that have been reviewed. A written report is provided to both Corporate Scorecard, the Eligibility Risk Manager, and yourself.

Who needs to participate 
You may be required to take part in the bcrp if all other relevant financial and non-financial requirements are met for hbcf eligibility, and you:

  • have never contracted and completed construction of a new single dwelling or alteration project for a homeowner
  • are proposing to contract a larger or more complex project than your experience supports, or
  • have never before contracted with a developer and completed a construction of a multi-unit project while working as the key manager within a building business.

The bcrp is also appropriate where the gross margins of the builder are an issue of concern. The program can assist a builder to adequately price contracts and test actual costs against budget. 

Eligibility conditions

If bcrp participation is required, it’s a condition of your eligibility for each individual project above a certain contract price, usually $50,000 (GST inclusive) or a higher amount.

It’s not a condition for contracts under $50,000 or the alternative amount prescribed by the Eligibility Risk Manager.

Builders don’t need to engage a bcrp service provider until a certificate of insurance is required for a project.

The builder should factor the likely cost of bcrp participation into preparation of a quote or tender with the homeowner.

A certificate of insurance for projects subject to bcrp participation is not issued until the bcrp service provider has signed off on the first three components of the program, as outlined below.

Service providers and fees

Costs will vary from project to project and provider to provider.

Each service provider will be able to give an estimation of the likely costs for a particular project.

A building contractor who participates in the program can choose a service provider that suits their needs from a panel of authorised providers listed below. The list of providers are not in anyway ranked in the order they appear.

    The components of the bcrp

  • Contract document review

    Service providers will review your contract documentation for the project to ensure that:

    1. the correct parties to the residential building contract, site address, etc. are identified
    2. the correct name and licence number of the builder's trading entity is shown on all documentation
    3. the licence held by the builder's trading entity covers all the work being contracted
    4. the building contract terms do not create a commercial risk for the completion of the project because of unfair terms, provisions etc. (including contracts with developers and architect administered contracts)
    5. the project application for insurance is consistent with the service provider's understanding of the project
    6. the project's construction schedule is appropriate for the type and complexity of the project.

     

     

  • Reasonableness of budget and progress payments
    Service providers will ensure that you provide a detailed budget, providing for a gross margin that is reasonable for the project requirements, type, size and value.

    They will test your detailed budget completeness and realistic costs including an allowance for contingencies including cost erosion and wage assumptions.

    They will review and confirm the scheduled payments under the building contract directly relate to the progress of work carried out at each stage that a payment is scheduled.
  • Builder performance review schedule

    Determine the number of reviews (site visits and remote site assessments) that are required to be completed.

    Service providers must take into account the nature of the project to ensure that the builder's supervision of the project construction works is of an acceptable industry standard and the project is progressing to contractual completion date and budget.

    Site visits require attendance at the project site by the service provider.

    Remote site assessments do not require site assessment. The service provider must review sufficient information and make any necessary enquiries. The completion of a remote site assessment can include, for example, a review of project photographs or relevant documentation and phone enquiries with the builder.

  • Builder performance review

    Obtain a copy of the certificate of insurance for the project from the builder and check that all details correspond with the contract and the licence of the builder's trading entity.

    At the time of each site visit or remote site assessment:

    1. review all scheduled progress payments invoiced to determine that progress claims were appropriate
    2. review all third party certificates (including engineers' inspections, mandatory PCA inspections, trade compliance certificates etc.) issued since the previous bcrp review
    3. review contract variations ensuring they are in writing and properly costed
    4. review progress in accordance with the project construction schedule and terms of contract and investigate reasons for any significant delays
    5. review the builder's competence in site supervision for all works carried out since the previous report and any areas previously identified as a concern.

    For each assessment prepare a report and include dated photographs, any concerns, and notes covering an observation of the following:

    • general site presentation
    •  work flow of trades and materials
    • competence of the trades and appropriateness of the materials being used
    • report to the scheme agent any concerns over the builder's competency to complete the project including concerns as to time delays, standard of work performed, any evidence of cash flow issues, and where payments have been made or sought other than as scheduled under the building contract.

    Provide timely copies of all completed builder performance review reports to the builder and to the scheme agent.

  • Final report on completion of project

    On completion of the project the service provider will prepare a final report including:

    • confirmation that all scheduled reviews have been completed
    • details as to whether there are any unresolved issues of concern
    • comment on the progression or development of the builder's competency relating to specific areas that have been reviewed as part of the bcrp.