Builders look to cut corners with squeeze on construction supplies face risks

Builders caught up in desperate times are in some cases resorting to desperate measures.

Backed into a corner by the squeeze on construction supplies, increasing numbers of them are looking to substitute one product for another, to get around unprecedented supply shortages.

However, they are being warned that can come with big problems.

Tripled

At the busiest little council in the country, Selwyn District, requests to amend residential consents have tripled to about 40 a month.

Council group manager of environmental and regulatory services Tim Harris said "They can't just get the materials that they had been approved for their building consent".

"It's quite widespread - anything from plasterboards, linings, trusses and frames down to things like ... door [handles]."

Harris's newly expanded team of 30 building officers already faced a flood: Consents pouring in at almost 2000 a month, a fifth above last year.

Selwyn [https://www.stats.govt.nz/information-releases/building-consents-issued-july-2021#download-data

ranked third behind Auckland and Christchurch for new house consents in total], and far outpaced all others per capita.

Hot on the heels of those consents was the rising demand to change the consents.

Substitutions can be made for many materials, and minor variations using comparable materials can sometimes be made on site, though others require an amendment and council signoff, which takes longer.

'Shortcuts ... backfire'

Some builders were not waiting around but taking it upon themselves to sub out products without checking with councils, which was what really worried Harris.

"We're all in this together," he said.

"But the builders under the pump, they've got customers yelling at them, and they, in some cases, are looking for shortcuts that sometimes backfire on them ... they might struggle to get the certificate of compliance."

At scores of jobs - maybe a 10th of the 1800 inspections they did a month - his inspectors were running into problems like that.

"What we want to avoid is our inspectors going on site and finding the builder has been using materials that aren't part of the approved set of plans."

That was happening "quite a bit".

Delays and priorities

Selwyn aimed to process amendments to consents in 10 working days - half the time for a full consent - but was struggling.

"The more work-arounds, the more variations, the more amendments we get, that actually is extra work for us on top of the volume of new applications coming through the door," Harris said.

He echoed the most common advice swirling in the industry: Check things out early, whether with the council, the designer or merchant such as Placemakers or Mitre 10.

"Come to us as early as you can, to work out solutions," Harris said.

Builders who left it late risked longer delays and higher stakes.

Some merchants were now refusing to accept major orders unless the builder could wait until next year.

Manufacturers and distributors of bespoke frames and roof trusses were now supplying first to jobs that already had their consents in place, Fletcher Building said.

"We are looking for sensible and equitable ways to prioritise which work to do first," said its chief executive of distribution, Bruce McEwen.

"Jobs that already have the necessary consent in place will generally be completed first."

Can you get an extension?

Minor variations could often be worked out if a comparable product had been swapped in, but amendments were another story.

Lawyer Tanya Wood, a partner at Duncan Cotterill, warned councils' hands were tied.

"The builder would take the risk that the council didn't consider it a minor variation, and then council couldn't retrospectively issue an amendment to the building consent," she said.

A builder looking to sub a product must also check with the client and the designer.

"It needs to be done before you do the work," Wood said.

Even if they got all the approvals, builders had to be more hardheaded about the risks amid what she called a "perfect storm" of supply, labour and consenting pressures, and wafer-thin margins.

"If you're going to have to substitute materials, you need to understand what the consequences might be in your contracts, your ability to be able to get that substitution made with the clients and/or council and if there's delays ... understanding whether you're entitled to what's called an extension of time," Wood said.

Selwyn was innovating by fast-tracking consents for designers, builders and developers who met certain criteria.

Hamilton City Council said it too has seen an increase in the number of queries regarding product substitution and how to apply for an amendment over the last six to 12 months.

"While we haven't seen a significant increase, it's a common conversation and challenge across the industry," building control manager Cory Lang said.

The council was working to make the process "as simple as possible".

The problems were not across the board. For instance, Queenstown Lakes District Council said it was not "encountering any issues from local builders".