Security of final account payments: the case of New Zealand

Choi, Daniel and Abeysekera, Vasantha and Ramachandra, Thanuja (2010) Security of final account payments: the case of New Zealand. In: CIB World Congress 2010: Building a Better World, 10-13 May 2010, Salford Quays, United Kingdom.


Little is known about final account disputes. In this exposure study, 20 cases out of a total of 57 have been studied in order to seek a first time understanding of the nature of final account payments, causes that hinder settlement, and to unearth possible improvement strategies. It is found that the number of court cases on final accounts have increased significantly since the introduction of the Construction Contracts Act (CCA) in 2003. These cases have been mainly with private clients with most judgements in favour of contractors and subcontractors. Whilst the monetary values of most disputes are not exceedingly high, the time delays are, suggesting the need to examine alternative dispute resolution methods currently not available through standard form contracts such as conciliation. Workmanship issues and cross claims feature more frequently as the main reasons for disputes. Issues connected with a lack of understanding of CCA also featured prominently. In an attempt to understand the root causes, initial investigations revealed the presence of generic causes such as ‘contractual incompetence’ and ‘opportunistic behaviour’ which seems to substantially hinder the resolution of these disputes not least ‘technical incompetence’ and ‘managerial incompetence’. It is expected that understanding the relevance of such generic categories coupled with broad trends on court decisions including reasons hindering early settlement would help ease problems connected with final accounts. Industry initiatives through client and contractors’ federations may be useful too. Further studies are necessary to gain a greater understanding of the issues impacting on final accounts in order to minimise the incidence of final account problems in courts.

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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: Copyright held by publisher: 'All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system without permission in writing from the publishers. CIB Publication 341. W055 Special Track Papers (excluding Postgraduate Papers) reviewed by: Gerard Devalence and Prof. Jorge Lopes.
Faculty/School / Institute/Centre: Historic - Faculty of Engineering and Surveying - Department of Agricultural, Civil and Environmental Engineering (Up to 30 Jun 2013)
Faculty/School / Institute/Centre: Historic - Faculty of Engineering and Surveying - Department of Agricultural, Civil and Environmental Engineering (Up to 30 Jun 2013)
Date Deposited: 30 May 2011 01:14
Last Modified: 03 Jul 2013 00:31
Uncontrolled Keywords: commercial settlement; final accounts; payment disputes; security of payment
Fields of Research (2008): 18 Law and Legal Studies > 1801 Law > 180123 Litigation, Adjudication and Dispute Resolution
15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
12 Built Environment and Design > 1202 Building > 120201 Building Construction Management and Project Planning
Fields of Research (2020): 48 LAW AND LEGAL STUDIES > 4805 Legal systems > 480506 Litigation, adjudication and dispute resolution
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350208 Investment and risk management
33 BUILT ENVIRONMENT AND DESIGN > 3302 Building > 330202 Building construction management and project planning
Socio-Economic Objectives (2008): B Economic Development > 87 Construction > 8799 Other Construction > 879999 Construction not elsewhere classified

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