Redefining our values to power our future

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From White Associates’ very beginning in 2005, our business has been built on a values-based platform. In fact, we established our firm partly to chart a new course from doing things ‘the old way’, which our founders Konrad and Graham saw as ineffective. They were determined to do what they thought was right, more than what was just the norm.

This has been the litmus test for everything that has followed over the next nearly 19 years, as White Associates has grown in sustainable and structured ways while staying true to what matters.

Turning 18 was a big moment for us all at White Associates. As part of our 18th birthday celebrations towards the end of last year, it made sense for us to take time to revisit our values to ensure that they continue to drive us forwards; helping us to operate and deliver systematically in ways that our clients value – and that matter to us.

Amid long discussions, we kept circling back to three core values that are at the heart of what we do, how we do it, and what motivates us. These authentic values, which are already being lived by our team, comprise:

COLLABORATION

To us, collaboration is all about sharing knowledge with each other and our clients to achieve project success together. “Collaboration involves working together to ensure better outcomes through reflection and continuous improvement,” says Justin Maritz, “as well as two-way leadership and 360′ feedback. By seeking perspectives from different departments, roles, companies, and projects, we involve and apply specialist skills collaborating to achieve the best results.”

Justin adds that collaboration is already alive and well within our business. “Not only is it in our departmental and team meetings across the disciplines we practice, but also in our team-wide workshops and how we share information across departments. Mentoring partnerships and cadet Q&A sessions also share knowledge, as do the thought leadership articles, we find, create, and share on social media and internally.”

CONNECTION

This intensely human value is something that really emerged during the Covid years, when we realised how important – and powerful – connection is to each of us as people and in our work to be an effective team. Since then, says Darin Bayer, “understanding the power of connections has enabled our people to embrace flexibility and build strength in our diverse workplace.

“Our culture of autonomy entrusts all team members to enjoy responsibility and take ownership of their work, knowing development and support is available.

“Making this value of connection prominent helps us to support our people in building diverse and long-lasting relationships, as well as empowering strong and trusting work-related connections – in the office and in our industry.”

This value is brought to life within White Associates through opportunities to work across different departments, by being exposed to a variety of projects and clients, as well as at client networking events, which are open to all. We also encourage people to feel accepted, connected and included at work through our Coffee Club, creating lunchtime dining together, and by holding in-house yoga sessions, Friday drinks, and office competitions.

COMMITMENT

“To us commitment is about always putting people first: our team, our clients and our partners,” says Brett Zeiler. “It is about having and showing confidence in our people – their specialist training, team collaboration and support, positivity, communication, and dedication.

“This has the positive flow-on effect of maintaining integrity and following professional, moral ethical standards, and in giving our clients assurance in the quality of our service.

“Our diligent processes and continuous improvement enable us to uphold our good reputation through meeting expectations – of ourselves, our clients, and our project partnerships. It is through our belief and commitment that we continue growing from strength to strength.”

Brett adds that examples of commitment in action start for our people by being available, punctual, and professional. “It is then also about doing what is best for each project, tailoring solutions rather than what is easiest, and always being flexible and responsive to client needs. Then, by investing in relationships and connections we can go beyond expectations, providing solutions outside of scope to help clients navigate their way and succeed.”

Collaboration, connection, commitment. Redefined values that are the best ways of working to keep doing what is right – for our people and our clients, so we all build stronger futures together.

White Associates hits the ground running with 3 new people

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2024 has got off to a fast start at White Associates. It is exciting for us to announce the appointment of three new people into the business, all of whom are active and underway in their roles, underlining that our business continues to go from strength to strength as we track into 2024.

Doreen Chua, Senior Quantity Surveyor

A Senior Quantity Surveyor working in our Post-Contract team, Doreen joined White Associates in January to develop her successful track record in estimation and completing projects on time and with quality.

Applying a powerful combination of contractor-side experience and outstanding organisation and planning skills that she has gained in her 17-year QS career in New Zealand and Malaysia, Doreen’s experience across a wide range of sectors includes cost estimating, tendering, contract procurement and post-contract cost management across consultant and main contractor firms.

Multi-lingual across English, Malay and Mandarin, Doreen applies skills across the quantity surveying spectrum on projects as varied as those for government departments, the development of major multi-unit apartment blocks, school campus developments, local authority land upgrades, medical centres and retirement villages.

“I’m enjoying collaborating closely with project managers, architects, engineers, and subcontractors to ensure efficient communication and seamless project delivery,” says Doreen.

Liam Crane, Project Finance Analyst and Finance Consultant

Liam has long been known to White Associates through his previous role as a Contract Manager at the Department of Corrections, where he played a leading role in delivering the Modular Build Programme.

Joining our Bank Funding team at the outset, Liam is involved in examining precondition reports and drawdowns across numerous projects, also undertaking peer review quality assurance. Applying his attention to detail and analytical skills alongside his considerable abilities across contract management, financial modelling and negotiation, Liam also undertakes discovery for litigation.

In doing so, he also applies expertise he has gained over many years in contract analysis and management across major infrastructure projects, which have required working at pace and with the agility to refocus and reprioritise workloads as deliverables and timeframes change.

Moving out into White Associates from his Corrections role is a good step, he says. “I am keen to try the private sector, and the opportunity to grow my construction skills at White Associates was too good to pass up. I’m now working in bank funding, looking at precondition reports and drawdowns, helping out with projects, also doing some peer review QA. The intention is for me to branch out further into our Advisory business, using my skills in contract management and litigation / negotiation: great opportunities for me to explore new areas and gain knowledge.”

Sarah Turner, Business Manager

A highly organised business manager whose successful career to date has been based on attention to detail and communication, Sarah manages a range of core business activities across White Associates.

Coming to White Associates from managing the nationwide BNI business network, Sarah brings a community feel to the firm, driving our performance through building our team, helping our specialists to build their leadership skills alongside their technical skills and developing our workplace as a place where people want to come.

In doing so, Sarah actively contributes to the strategic planning of the organisation, aligning efforts with overarching goals and objectives.

Sarah says she found the role on LinkedIn. “The variety of the role drew me, as well as the experience in a more traditional business structure after working in franchise networks. In this very people and operations role there are many different parts to it, and all are ticking boxes for me. What I want to bring to White Associates is that we work ever-more strongly as a team – a business family at work, going from strength to strength – helping our skillful specialists to build softer skills alongside their technical expertise.”

Konrad Trankels, Managing Director of White Associates, says that White Associates has come a long way since we opened our doors on 1 April 2005. “Today, we continue to go from strength to strength, and these three new appointments demonstrate the quality of people we are now able to attract as we strengthen our team in a period of managed growth backed by systems and structure. We are active throughout New Zealand, delivering great outcomes for our clients and doing so when relying on our values, which have always been about delivering in the right way for people.”

Weng Tan White Associates

Older and Wiser: Weng Tan Reflects on Ten Years at White Associates

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Weng’s love of collaboration means he is always learning something new.

“How many decades do you have in your life? Use it wisely.” 

 

That’s the advice that Weng Tan would give to himself back in December 2013, when he first landed in New Zealand for his new job at White Associates. He has used this decade well, developing from a Quantity Surveyor in 2013 to a Senior Quantity Surveyor and last year to Associate level in our Post Contract team. 

 

Weng has seen the Construction market change significantly over the last ten years. “The market has changed from a very manageable workload to a very high demand workload, and I have loved seeing organisations like MATES in Construction created to look after those in these high-pressure environments. Everyone wants a very quick turnaround. Pricing is getting more competitive; you can see this in the shortage of materials during and post-Covid. Materials aren’t an issue anymore, but the next challenge ahead is how to service high levels of construction activity with a small pool of local talent.” 

 

The demographics of Construction workers have also changed. “There are now a diverse mix of nationalities in the New Zealand Construction industry,” says Weng. “This affects the way that people work and run Construction businesses, as there will be different expectations. For example, different countries move at different speeds and foreign clients may expect shorter timeframes.” 

 

“I’m also glad to see the number of women in construction increasing. Construction is no longer such a male dominated industry. I have noticed that NAWIC [National Association of Women in Construction] are growing quickly, they now have more activities and are quite active on social media. When I joined White Associates, we only had two or three ladies in our team, and now half our staff are women. That is very impressive.” 

 

As part of our Post Contract team, Weng has been exposed to many different industries. “Each project has different challenges, uses different construction methodologies, has different project teams and project expectations,” Weng says. 

 

“There are a few projects I’m especially proud of: The Douglas Pharmaceuticals Innovation Centre, Woolworths’ Palmerston North Distribution Centre, a project in Mount Eden, Ryburn Road Townhouses, and Nugent Street Apartments. The common thread in these projects is that they were collaborative. I’ve learnt that the recipe to project success is a combination of teamwork, effort and knowledge.” 

 

Director Brett Zeiler works closely with Weng on Post Contract projects and has seen his impact firsthand. “My first job at White Associates was the Mount Eden project. I saw how effortlessly Weng slotted into the project team and how efficiently he ran the project. He has made a great reputation for himself within the industry; our repeat clients often ask for him to be assigned to their projects,” Brett says. 

 

What Weng enjoys most about working at White Associates is the people. “I love the collaboration and teamwork, everyone helps each other,” says Weng. “I share my workload with the other Post Contract Associates, and the Directors are always available to assist. There’s been times where I’ve lost my direction in a project, and [Directors] Justin and Brett gave me the advice and support I needed to reset and carry on. 

 

“Most of the time we think that people that are older are wiser. That’s true, but we learn a lot from young people too. The world is continuously evolving, and technology is always improving. When I first arrived at White Associates I brought my own scaler, it’s now sitting at the back of my drawer. Our Juniors are skilled in CostX, they can look for files quicker and navigate our online systems easier. Do not stop learning and treat every day as a new day.”  

 

The next ten years will bring new adventures for Weng. “I would like to enhance my skills and broaden my horizons,” he says. “In order to step out of my comfort zone and explore different things, I have made the hard decision to leave White Associates in the new year. However, that doesn’t mean my relationship with the company will end. I look forward to improving myself in new ways within the Construction industry.” 

 

White Associates congratulates Weng on his decade of service. “On behalf of all the directors and the whole team, we want to say a massive thank you to Weng for all his hard work,” says Brett. “It’s been a privilege to have worked alongside and learned from him over the last ten years.” 

 

This article was contributed by Gemma Christall, Weng Tan and Brett Zeiler. 

Douglas Innovation Centre

Under the Microscope: An Advanced Future for Douglas Pharmaceuticals

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The new Douglas Innovation Centre adds significant research and development capacity to Douglas Pharmaceuticals.

If you’re looking for evidence of New Zealand as a hub for advanced technology, you need to look no further than the $50 million Douglas Innovation Centre in West Auckland, a state-of-the-art pharmaceutical research and development (R&D) facility created by Douglas Pharmaceuticals. The facility is the largest of its kind in New Zealand, and sits castle-like at the top of a hill in Henderson. 

 

Opened in September 2022 after an 18-month construction period, the Douglas Innovation Centre uses world-class research to find solutions for a range of serious illnesses. The three-storey, 4,500m2 facility includes multiple laboratories, purpose-built rooms for commercial manufacturing, pilot scale product development suites, open office space, cafeteria, meeting facilities and a GMP warehouse. In recognition of its innovative design, which includes a skybridge connection to Douglas Pharmaceuticals’ existing head office, the Douglas Innovation Centre was recently awarded an Excellence Industrial Property Award at the 2023 PCNZ Property Industry Awards. 

 

White Associates was involved in the creation of the new facility, utilising a senior team comprising of Directors Justin Maritz and Brett Zeiler, and Associates Weng Tan, Elliot Smith and Richard Moore-Savage. The White Associates team provided a full range of Quantity Surveying services from Pre Contract feasibility estimates through to Procurement/Tender cost analysis and Post Contract cost management.  

 

Weng Tan says that what really stands out about the project is its complex and evolving nature. “The Douglas Innovation Centre was a significant extension of Douglas Pharmaceuticals’ existing warehouse, laboratory and office facilities, and laboratory facilities are technically sophisticated and mechanically intensive structures. Hermetic doors and windows were required for its multiple clean spaces, and the pressurisation of rooms required careful attention to detail to ensure no surfaces presented a hygiene risk.  It also required various types of reticulated gases, compressed air and vacuums throughout. The surrounding buildings remained fully occupied and operational throughout construction, which created logistical challenges included limited access to the laboratory building.”

 

The goals for the end-user experience evolved throughout the project, and the design had to adapt quickly so the Contractor could complete upgrades while they were still on site. “From a cost consultancy perspective, in addition to the routine construction cost control and monitoring we worked closely with the client’s accounting team. We ensured the payments were facilitated correctly and accordingly from the designated accounts,” says Weng. 

 

“Reliable, consistent communication was crucial in this project. Our job was to be clear and transparent about cost throughout the process. We added value by working closely with Douglas Pharmaceuticals, the Contractor, Project Management and consulting teams to provide quick, sound advice on costs. This in turn enabled Douglas to make informed decisions to ensure continuity of works for the contractor whilst working toward project budgets. We also kept close to the Mechanical and Electrical (M&E) Engineer and Contractor throughout the project to understand all changes as they arose, making forecasts and notifying the design team and client.”

 

Despite additional scope being added to the project, it achieved completion on time. “We were able to progress swiftly and close the final account with no dispute,” Weng says. “The client is extremely happy with the overall outcome and the level of quality achieved.” 

 

This article was contributed by Weng Tan and Gemma Christall.

CCA Retentions Regime: Complying Instruments – What are they and what are my options?

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In this article, we explain the function of a Complying Instrument and compare the various options available.

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The recent amendments to the Construction Contracts Act (CCA) have cast a spotlight on the retention regime.  The traditional approach of holding retention monies is just one of many ways in which parties can secure performance and ensure there is some level of security in place to assist with the remediation of defects.

 

What are Complying Instruments?

“Complying Instruments” are a lesser-known mechanism under the CCA and provide an alternative to holding retention money.  Whilst not a new concept [1], complying instruments have, until now, rarely been utilised in the New Zealand construction industry.  However, there is a significant increase in administration and management of retentions for retention holders (Parties A) under the amended CCA. This, along with changing market and economic conditions, means Complying Instruments are becoming an attractive alternative.

Bonds, guarantees or specific insurance are all examples of Complying Instruments that may be procured by Party A from a registered bank or licensed insurer to secure retention money. These instruments require the issuer to pay money to Party B should Party A default in paying retention monies that have become due under the relevant contract.

 

What are the options, and how do they work?

This is White Associates’ third instalment on the subject of retentions, in which we briefly summarise the various Complying Instruments, the perceived advantages and disadvantages of each to Party A, and some key points regarding compliance.

 

Am I Party A or Party B?

If you are a:

  • Principal
  • Developer
  • Head Contractor (holding retentions for a Subcontractor)

You are Party A.

 

If you are a:

  • Head Contractor (having retentions held from you by a Principal or Developer)
  • Subcontractor

You are Party B.

Requirements of Complying Instruments

Compliance with the CCA

It is important to note that all Complying Instruments must meet the requirements set out in the CCA.

The CCA defines “Complying Instruments” in section 18FB:

 

(2) The issuer of the instrument must be:

  1. A licensed insurer; or
  2. A registered bank; or
  3. Any other person, who is not an associate of party A, prescribed or within a class prescribed in regulations.

 

(3) The instrument must:

  1. Be issued in favour of party B or endorsed with party B’s interest; and
  2. Require the issuer to pay the retention money to party B if party A fails to pay that money on the date on which it is payable under the construction contract; and
  3. Enable party B to enforce that promise against the issuer; and
  4. Comply with any requirements that are prescribed in regulations and that apply in respect of the instrument.

 

(4) The premium or other money that is payable, or that may become payable, to the issuer for the instrument must have been fully paid by party A and all terms and conditions must have been satisfied so that the instrument is, and remains, in effect.

 

An instrument may be in different formats (such as insurances, bonds, or guarantees) as long as it fulfils the requirements described in sections 18FB (2–4).

 

Party A is furthermore required to maintain and disclose records of all Complying Instruments held in respect of any Party B. The reports provided by Party A to Party B must include the following details in respect of each Complying Instrument:

  • The name of the entity that issued the Complying Instrument; and
  • The policy number (or similar); and
  • The amount secured under the particular Complying Instrument.

 

Costs incurred in procuring and maintaining a Compliant Instrument cannot be recovered from Party B.

Retention Account

What is it?

Party A maintains a bank account for the specific purpose of holding contract retentions. 

How does it work?

A retention account must be opened, and the money kept, within New Zealand with a registered New Zealand bank.  Retention money is automatically held “on trust” by Party A.  

 

A retention amount (specified under the relevant construction contract, commonly 5–10% of the contract value) is deducted from each of Party B’s progress payment claims.  The trust arises as soon as the amount becomes retention money and continues until certain contractual obligations have been fulfilled, defects have been fixed, and the money is paid to Party B. i.e., Practical or Final Completion is achieved.   

 

Alternatively, the trust will come to an end when: 

  • Party A uses the money to remedy defects (to the extent permitted under the construction contract); or
  • It otherwise ceases to be payable to Party B; or  
  • Party B relinquishes its rights in respect of the retention monies.

Pros

  • Retention monies from multiple parties and multiple projects can be held within the same retention account.   
  • They can be utilised by all Parties A, regardless of their financial situation. 
  • Retention accounts are a relatively simple self-managed solution ensuring compliance with the Construction Contracts Act (Retention Money) regime.  
  • Party A has entitlement to any interest accrued on retention monies.

Cons

  • Requires ongoing management and administration to ensure compliance with the CCA. 
  • Requires monthly reporting to all Parties B. 
  • May require adjustment to your progress payment schedule template to include a retention summary (as required under clause 18FD of the CCA (Retention Money) Amendment Act 2023). 
  • The cost of managing and administering the trust account rests with Party A, and Party A cannot charge or deduct any monies from Party B for doing so. 

Retention Bond or Guarantee

Also known as a...

  • Complying Instrument.
  • Performance bond.
  • Bank bond / Bank guarantee.
  • Surety bond / Surety guarantee.

* Not to be confused with a Bond in lieu of Retentions (Clause 12.3.3, NZS3910:2013).

What is it?

A retention bond is a guarantee from a third party, typically a financial institution. If a company fails to deliver on its contractual obligations and does not return to fix defects, the bond provider will pay instead.

How does it work?

There are three parties to a bond:

  1. The Principal / Client / Head-Contractor (Party A) – known as the Bond Principal.
  2. The Contractor / Subcontractor (Party B) – also referred to as the Beneficiary.
  3. The Bond Provider – a bank or other institution, known as the Guarantor or Surety.

A bond operates much like a mortgage – i.e., it is a loan facility, which if drawn down, must be repaid in full plus any fees and/or interest. A retention bond is a type of performance bond which requires conditions to be satisfied before it can be either called upon or released (if not, then it is an on – demand bond). A bond normally applies to a single project only.

Pros

  • As good as cash.
  • Replaces traditional retentions but fulfils the same role / purpose.
  • Demonstrates Party A’s financial stability.
  • Once in place, requires no ongoing management or administration.
  • Provides security for performance of Party A’s contractual obligations.
  • Improves Party A’s cash flow.
  • Eliminates trust obligations and related liability under the CCA for the Party A and its directors.
  • Reduces likelihood of CCA breach(s).
  • Can be drafted to suit individual parties’ requirements and/or projects

Cons

  • May not be suitable for low value and/or small projects, i.e., Small alteration projects.
  • Will not be an option for smaller companies and/or companies with fewer assets and borrowing capacity.
  • Must be repaid in full if it is called upon by the Party B.
  • May be difficult to obtain for Parties A where they are working on multiple concurrent projects, all requiring bonds.
  • Specific contract drafting will be required to ensure the conditions of the Retention Instrument and Construction Contract are aligned (NZS contracts 3910, 3915 and 3916).

Retention Insurance Instrument

Also known as an...

  • Insurance policy.

What is it?

An Insurance Retention Instrument is a financial guarantee from a third party, in the form of an insurance policy, that protects retentions (in respect of one or more Parties B) up to a designated maximum value.

How does it work?

This retention instrument operates like an insurance policy.

Party A deducts and holds retentions from Parties B. However, it is not necessary to hold retention money on trust as the Retention Instrument protects the full value of the retentions. This means Party A can use these funds as working capital.

The policy responds when Party A is unable to pay a relevant retention amount to Party B.

Pros

  • Reduces retention management and administration.
  • Reduces risk of CCA breach(s).
  • Enhances cashflow for Party A up to the insured value.
  • Is renewable annually.
  • Can be dollar specific (i.e., a group of projects) or project specific. Can be used across multiple different projects, of any size and value, involving multiple Parties B.
  • Avoids the scenario whereby third party retention information is intermingled with retention account information of Party B.
  • Can be updated and revalued as retentions values change.
  • Does not necessarily have to be repaid by Party A, if called upon.

Cons

  • Subject to terms and conditions set by the insurer.
  • Subject to verification of Party A’s financial status. This may not be an option for smaller companies and/or companies with fewer assets or turnover.
  • Party A may need to operate a compliant trust account as a backup to manage retentions that exceed the policy’s maximum limit i.e., where there is a shortfall between the value of the Retention Instrument and actual retentions.
  • Party A will still have some administration / management obligations. For example:
    • Servicing premium payments.
    • Provide the policy provider with a monthly retentions report (this report becomes the policy schedule).
    • Provide each Party B with a monthly retentions report.
  • Specific contract drafting will be required to ensure the conditions of the Retention Instrument and Construction Contract are aligned (NZS contracts 3910, 3915 and 3916).

Third Party Retention Account Holder

Also known as a...

  • Retention account.
  • Trust account.

What is it?

Party A can engage a third party to manage and administer a retention account on their behalf.

How does it work?

A third party takes responsibility for operating and maintaining the retention trust account on behalf of Party A. Those approved to take on this role are authorised by statute under clause 18E(3) of the Construction Contracts (Retention Money) Amendment Act 2023.

The account can be held by:

  • An incorporated law firm.
  • The Public Trust.
  • A trustee company.
  • A Chartered Accountant.
  • A person holding a licence under the Auditor Regulation Act 2011, or other person authorised under that legislation.

Pros

  • Management and compliance with the CCA retentions regime is outsourced, and Party A can focus on core business.
  • Party A cannot misuse (or be tempted to misuse) retention monies.
  • Retention monies from multiple parties and multiple projects can be held within the same retention account.
  • Specialist management of retentions reduces risk of CCA breach(s).
  • Can be utilised by all Parties A, regardless of their financial situation.

Cons

  • Retentions are deducted from progress payment claims, and require ongoing administration, reporting and management.
  • Party A pays a third party for management and administration of retentions.
  • May not be suitable for shorter or low-value projects as the cost of administration may outweigh the benefits.

Further Guidance

If you require further guidance, please feel free to contact our Advisory division leads.

Justin Headshot

Justin Maritz

Director

Justin has over 24 years' international experience and a proven record in achieving successful outcomes on challenging projects.

Jesse Conradie

Associate Director

Jesse has a powerful combination of Advisory expertise including contract law, engineer to contract, and dispute avoidance and resolution.

Further Resources

 

For the relevant legislation:

 

[1] Section 18FB – Complying Instruments – was inserted on 31 March 2017 by section 152 of the Regulatory Systems (Commercial Matters) Amendment Act 2017.

 

Disclaimer: the content of this article is general in nature and is not intended as a substitute for specific professional or legal advice on any matter and should not be relied upon for that purpose.  It is current as at the date of publication only. 

 

This article was contributed by Rebecca Ward, Jesse Conradie and Gemma Christall.

White Associates Directors

Graham White to retire as White Associates goes from strength to strength

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Graham will retire at the end of November, leaving behind a strong management team and a company that continues to grow.

No one would ever describe Graham White as a shy and retiring sort of person. However, it is nonetheless true that after a long and highly successful career he is retiring from White Associates, the company he co-founded with Konrad Trankels back in April 2005.

 

Planned over the past three years, Graham’s retirement at the end of November comes at a time when White Associates celebrates its 18th birthday and looks ahead with confidence, in a time of growth. The business is led by Konrad with exceptional directors in place – Justin Maritz, Darin Bayer and Brett Zeiler – plus a new Associate Director and a strong roster of Associates in the team for a year now. There is longevity within the leadership team, with Director Justin Maritz and Associate Weng Tan celebrating their 10-year work anniversaries this year. 

 

Structured and strong, White Associates has expanded successfully into the South Island from its Auckland base, establishing a flourishing office in Queenstown led by Elliott Smith which is now in its fourth year. White Associates’ service offerings now span four thriving departments: Pre Contract, Post Contract, Funding Representation and Advisory Services. 

 

The track towards this level of success was laid in the very first days of the firm, when the immediate priority was to win work in the right way, says Graham. “Konrad and I always said from Day 1 ‘we’re not going to do it the old way’. We determined to do what we thought was right, and this has always been the litmus test for everything that has followed. 

 

“We have grown over the years thanks to meeting great people along the way: brilliant clients and people who have worked in our team. The relationships and teams we have forged along the way, as well as the projects we have been fortunate enough to work on, have been the defining feature of my working life, and I will never forget them.” 

 

Graham adds that over the years he has realised that White Associates is great at doing its job, and that it doesn’t need to go beyond that. “We have learned to focus on what we are great at, so we have spent considerable time and resource in creating processes and people in place to be truly effective as a QS firm. White Associates has improved hugely over recent years, growing in a sustainable and structured way while reclaiming its core value of ‘doing it right’. Truly we’re going from strength to strength.” 

 

Appointed an NZIQS Life Member in December 2019, Graham says that as White Associates reaches its 18th birthday now is the right time to go. “This is my baby; it is a big thing for me to leave, but it is the right time, something we have planned for the last three years. I’m ready to move on to the next chapter of my life, and it is good for the directors to grow as a team. It is good for the company as well: a refresh, time to grow with our leaders in place. 

 

“I am leaving White Associates in brilliant shape. Konrad has been running the company for years, and I am truly in awe of our team. The structure is in place for White Associates to succeed into the future, with our technical teams focusing on getting the job done in the best way for our clients and our staff, and Konrad at the helm ensuring all facets are aligned to the White Associates’ vision.” 

 

That said, he also says that he plans to keep in touch for years to come. “I will continue to meet regularly with Konrad to be a sounding board, to help him and hear what’s going on. I want to hear great things about White Associates when I bump into people. I know I will.” 

 

We know that Graham has formed many great relationships and made many friends along the way. If you have any messages you’d like to send him, please click HERE:  

Retentions Money Regime White Associates

A Practical Guide to the new CCA Retentions Regime – how will it affect me?

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In this article we highlight the implications for Financiers, Principals, Developers, Contractors and Subcontractors.

The Construction Contracts (Retentions Money) Amendment Act 2023 (“CCA”) comes into force next week on 5 October 2023, and with it, a myriad of changes affecting the way in which retentions should be held and managed on commercial construction contracts [1].  It will apply to contracts entered into after this date, and contracts entered into before this date and renewed thereafter.

This is the second article in our series in which we shed light on the new regulations and how they impact you.  Whether you are a Principal, Contractor, Subcontractor, Developer or Financier; whether you hold retentions, or retentions are withheld from you; this guide aims to highlight the most important changes to the Act, and practical steps you can take to help you meet your obligations and avoid the pitfalls of the revised CCA regime.

 

Parties A and Parties B – which one am I?

The rule of thumb is that Party A holds retentions and Party B has retentions withheld from them.

Therefore, if you are a main contractor, you will be both Party B – in respect of the head construction contact, and Party A in respect of any sub-contract retentions.

 

If you are a:

  • Principal
  • Developer
  • Head Contractor (holding retentions for a Subcontractor)

You are Party A.

What are my rights?

  • To withhold a portion of money from Party B in each progress payment claim (assuming this is permitted by the specific contract) [2].

 

  • To utilise retention monies to rectify defects and/or non-performance by Party B – if necessary and once the necessary preconditions have been met.

 

  • To keep any interest earned on retention monies.

 

[2] However, the retention regime will apply even where money is withheld as security for the performance of contractual obligations, even where the contract does not allow retention money to be withheld.  A Principal’s deduction, or funds held by a 3rd party in escrow, are both considered retention monies.

What are my obligations?

You must:

  • Keep retention monies separate.
    • They are held on trust and cannot be mixed with any other funds. However, you can hold retentions from multiple different projects and parties in the same account [3].

 

  • Report on retention monies regularly.
    • A retention report must be provided to Party B after every retention money transaction, every 3 months minimum thereafter, and upon reasonable request [4].
    • The report must include:
      • The bank name, branch, account name and number.
      • The total amount of retentions held on behalf of that Party B.
      • The contract(s) to which the retentions relate.
      • Date(s) and time(s) of any transactions.
      • A statement that Party B may inspect the retention accounts and records.

 

  • Release retention monies – this should occur once Party B has completed its contractual obligations. The due date for the payment of retentions cannot be later than date of completion of contract obligations.

 

  • Use retention monies – to remedy defects as long as:
    • Use of the retentions for that purpose is permitted under the contract.
    • The relevant contractual provisions are complied with.
    • At least 10 working days’ notice is given to Party B of its non-performance and Party A’s intention to use retentions, prior to using the retentions.

 

[3] A trust is automatically formed as soon as monies are withheld.  The retentions are trust property.  Party A is the trustee, and Party B is the beneficiary.

[4] Full and complete accounts / records must be kept, the cost of which is not recoverable by Party A.

How can I best comply?

  • Educate directors and staff – to ensure everyone understands the roles and responsibilities, from directors to administrators.

 

  • Ensure that effective internal accounting policies and procedures are in place – directors have a legal duty to ensure their companies are abiding by the retention money regime.

 

  • Open a dedicated “Retentions” bank account – for the sole purpose of holding retentions.

 

  • Develop a naming protocol – A simple coding system will ensure you can quickly and easily identify each project, retention type value and entity, and report on it to the relevant Party B.

 

  • Update your monthly payment schedule / certificate template – This will simplify the reporting process by including retention money reporting in a standardised format.

 

  • Contractual – Ensure that contractual provisions including relevant notice requirements are adhered to. Terms making payment of retentions, or due date for payment, conditional on anything but Party B’s performance of its contract obligations are ‘prohibited provisions’.

Key Takeaways for Party A

  • Retention monies are held on trust – It is not your money, and you must not mix it with money in your own accounts and/or use it in any way.

 

  • Retentions monies must not be used as working capital.

 

  • In the event of receivership or liquidation – the receiver or liquidator will step into your shoes, automatically becoming Party A and the new trustee of the retention monies.

 

  • Non-compliance is expensive – The new Act outlines significant penalties including fines between $50,000 – $200,000 which can be enforced against both your company and individual directors.

 

  • Demonstrating compliance may become a condition of funding (banks and financiers)

 

  • Ensure that the contract entered into contains adequate procedures and criteria for dealing with retentions. Also note – a contract must not contain provisions which attempt to avoid the retention money regime.

If you are a:

  • Head Contractor (having retentions held from you by a Principal or Developer)
  • Subcontractor

You are Party B.

What are my rights?

As Party B you are entitled to:

  • Receive regular reporting – in respect of all retention monies held by Party A on trust for you. Reporting must be in the correct format and contain all the information specified under the Act – at least once every three months and until Party A’s obligations as trustee of the retention money trust have ended. [as per Party A description above]

 

  • Make reasonable requests to inspect – Party A is obliged to show you the account(s) and records pertaining to your retention monies. [note reluctance due to commercial factors, however, this is your right]

 

  • At least 10 working days’ written notice – before Party A uses retention monies to rectify any non-performance or defect.

 

  • Be paid out retention monies – once all your contractual obligations have been completed and any other pre-conditions for release have been met. Interest is payable on late release of retentions.

 

  • Report non-compliance – The Act is administered by the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE). You can raise any concerns about Party A’s compliance (or lack thereof) by emailing CCRMComplaints@mbie.govt.nz .

What are my obligations?

  • To promptly rectify any defects and non-performance in the contract works.

 

  • Monitor retention holder’s compliance with the CCA and report any breaches thereof.

Key Takeaways for Party B

  • Retentions owed but unpaid retain the status of “retention monies”. Your retentions are now protected in the event of Party A’s receivership or liquidation.  Bear in mind, this form of security associated with retentions, applies even under circumstances where amounts have been certified as debt due but not yet paid.

 

  • Ensure that the contract entered into contains adequate procedures and criteria for dealing with retentions [5].

 

[5] Section 18I – CCA (Retention Money) Act states that provisions in a contract which purport to change the conditions on which retentions are released, and/or avoid the application of this section shall be void.

If you are a Financier:

What should I consider implementing?

  • Make CCA compliance a condition of funding – statutory compliance, in all respects.

 

  • Ensure borrowers’ construction contracts contain appropriate retention provisions.

 

  • Make regular reasonable requests for documentation demonstrating compliance – ideally on a monthly basis, and in any event prior to any draw down of funds. Financiers should verify compliance in relation to the retentions borrowers hold for contractors as well as the retentions contractors are holding for their subcontractors.

 

  • Ensure that retention funds are not considered assets or equity and/or used as security for funding.

What are my obligations?

  • Not to include retention funds in my assessment of my client’s financial position.

 

  • Report non-compliance of retention holders.

Key Takeaways for Financiers

  • Compliance with the CCA can be a condition of funding; however, financiers need to take care not to be construed as a “constructive trustee” and consequently become responsible for management or compliance with the retention monies regime. In order to avoid this situation, borrowers should draw down retention amounts progressively and not leave it to be drawn down as a lump sum when retentions are due to be paid to the contractor.

Next month we will discuss the alternative mechanisms – known as Complying Instruments – available to manage risk and performance under commercial construction contracts.

 

Further Guidance

If you require further guidance, please feel free to contact our Advisory division leads.

 

Further Resources

 

For the relevant legislation:

 

[1] This guidance does not apply to a construction contract with a residential occupier.

 

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.  It is current as at the date of publication only. 

 

This article was contributed by Rebecca Ward and Jesse Conradie.

Rebecca Ward Senior Advisory Consultant White Associates

Introducing Rebecca Ward, our new Senior Advisory Consultant

Posted by white associates on

Rebecca brings a practical, big-picture approach to the White Associates team.

We are delighted to welcome Senior Consultant Rebecca Ward to our Advisory Division. 

 

Rebecca’s varied background in related industry roles means she has a deep understanding of how different construction stakeholders interact with each other, and what their needs are. After being admitted to the bar as a qualified lawyer, Rebecca soon began applying her legal knowledge in practical property environments including a developer, a building surveying company, and a multi-disciplinary company where she interacted with a full suite of property consultants. “Over time, I began to specialise in contract administration, supporting the project lifecycle and all the associated specialty consultants,” she says.

 

Rebecca’s ability to consider the big picture comes in handy when working on complex projects. “I like to step back from a project and take the time to understand it in its entirety, not just the portion that I’m involved in. I find this gives me a big advantage when it comes to advising on bespoke solutions and considering the best project outcomes for all. I ask a lot of questions and have learnt not to assume anything!”

 

Director Justin Maritz, who leads our Advisory Division alongside Associate Director Jesse Conradie, says Rebecca has already made a noticeable impact on projects.

“With her wealth of construction and legal expertise, Rebecca has instantly added value. Rebecca’s specialist skill set enables her to bring a different perspective to our Advisory team. As a collective, we can examine projects from a variety of angles and advise outcomes that are beneficial to all parties.”

 

In Rebecca’s view, the key to achieving these beneficial outcomes is communication. “If all stakeholders can ‘buy in’ to the project and have realistic expectations, particularly in areas such as risk allocation, then disputes can be avoided,” she says. “I enjoy helping people understand that a shared risk matrix is much more powerful than an unbalanced one. When things go wrong, everyone pays the price to a small degree but there is a shared desire to work together to find a solution – which is not always the case on projects with unbalanced risk allocation. It’s important to remember that all stakeholders have the same end goal: to deliver a successful project.”

 

If you require advice for your project, get in touch with our Advisory Division today.

 

This article was contributed by Rebecca Ward and Gemma Christall.

White Associates Director - Justin Maritz

The Next Decade of Procurement

Posted by white associates on

Director Justin Maritz calls for efficient procurement strategies on his 10-year anniversary.

This month we celebrate Director Justin Maritz, our fifth employee to reach a decade of service.

 

Having initially joined White Associates as a Senior Cost Planner in 2013, Justin has been a Director for the last four years. A self-described generalist, he is currently involved in the leadership of three of our four divisions – Pre Contract, Post Contract and Advisory Services.

 

Justin has weathered his fair share of market ups and downs over the last ten years, and has seen firsthand the benefits of collaboration during the procurement process. Looking ahead to the next decade, he believes efficient procurement strategies will be key to navigating changing market conditions successfully.

 

“What I want to see in future is a well-considered competitive market. Well designed, well procured and well contracted.”

With New Zealand currently in a recession, we are seeing a shift from the previously perceived environment of minimal competition. Overall contractor and subcontractor capacity is coming back into the market as larger projects are completed and newer projects are slower to start.

 

This increased competition may cause some negative flow-on effects. Tough economic times mean tough decisions will be made, and the market may make commercial decisions in order to win work. But Justin remains cautious of this approach: “You want a value for money offer that gives certainty of successful project outcomes. We should always be dubious about abnormally low tenders, especially at this stage of the market cycle.”

 

Good procurement benefits all stakeholders of a construction contract, but this needs to be considered on a project-specific basis. Contract terms and conditions should be as realistic as possible, and not favour one party at the expense of the other. “To achieve a fair outcome, terms and conditions should reflect each project’s individual risk profile and specific requirements,” Justin says. “In order to achieve efficient management of risk, this should be allocated to the party best suited to manage it.”

 

Project stakeholders should also carefully consider advice for alternative or non-standard procurement strategies. Justin continues to favour traditional procurement approaches wherever possible: “Let’s challenge our thinking when asked to head down a pathway of hybrid procurement to ensure it delivers the best possible project outcomes.”

 

This article was contributed by Justin Maritz and Gemma Christall.

 

Procurement Advice

If you require procurement advice for your project, please feel free to contact our Advisory Division leads.

Jesse Conradie - Associate Director

Newly Promoted Associate Director Jesse-Paul Conradie, Advisory Division

Posted by white associates on

Jesse looks forward to continuing to promote a culture of dispute avoidance in his new role.

In 2019 we announced that Jesse-Paul Conradie had joined White Associates, bringing a powerful combination of risk management, dispute avoidance and dispute resolution expertise to our team.

 

Over the past four and a half years, Jesse has applied his unique skill set across White Associates’ wide spread of projects. “My passion has always been in dealing with contractual matters,” he says.

 

Jesse’s prior background in South Africa in various commercial management type roles has helped inform his current Advisory approach. “My responsibility was to protect the company’s contractual rights and interests. Dealing with a variety of challenges helped me gain an in-depth knowledge of EOT and prolongation claims, avoiding and resolving disputes, and negotiating with clients. My experience as arbitrator motivates me to approach contentious matters differently and seek amicable solutions to arrive at reasonable outcomes.”

 

In recognition of the value Jesse has added to the company and its clients, he has been promoted to Associate Director.

 

Director Justin Maritz describes Jesse’s promotion as a logical move, and common sense from a business point of view. “Jesse’s passion and ability to navigate complex contractual matters has an obvious synergy with the growth of our Advisory team. I look forward to continuing to grow the Advisory Division alongside him,” Justin says.

 

Excited for the future of the Advisory Division, Jesse says its primary focus will be to add value to the industry by promoting a culture of dispute avoidance. “This approach will be beneficial to all stakeholders by protecting relationships, spending less time and money on lengthy dispute resolution procedures, and shaping a better environment for the industry as a whole.

 

“We are confident that our contractual experience in both the construction and consulting arenas enables us to provide balanced advice and solutions. This approach reduces formal legal involvement.”

 

White Associates looks forward to our Advisory Division supporting your current and future projects.