The BCRP (Building Contract Review Program)
All builders intending to do work requiring home building compensation cover (currently only available through the HBCF) must first apply for eligibility through their appointed Distributor with us.
Obtaining eligibility means that you’ve been assessed by our Eligibility Risk Manager and have been granted the entitlement to apply to us for certificates of insurance or cover for individual home building projects.
Eligibility is granted as a combined limit of Approved Open Job Value and Approved Open Job Number, with a Maximum Contract Value limit placed on jobs according to their Construction Type (C01 to C09).
Other conditions can be placed on a grant of eligibility including the requirement to participate in the Building Contract Review Program (BCRP).
The purpose of the BCRP is to provide an independent review of a Builder’s preparation to contract for building project (Project) and their
competency to manage the completion of that Project to acceptable industry standards.
The BCRP is intended to test the competence of the Builder to complete a Project and not their compliance with building standards.
BCRP services are intended to be a transition phase for Builders to gain meaningful experience through the support of a BCRP Service Provider.
The BCRP aims to assist the following builder groups with access to Home Building Compensation scheme eligibility who might not meet the eligibility requirements otherwise:
new entrants to the building industry who have never before entered into a building contract with a home owner of $50,000 or more (or has never been a key manager within a building business that did so);
where the Builder has no demonstrated experience in commencing and successfully completing Projects of a similar nature to the ones requested for home warranty building
compensation cover; and
where the Builder’s Project gross margins have been identified as requiring further review as part of their Home Building Compensation Scheme eligibility assessment.
When all other relevant financial and non-financial requirements are met for HBCF eligibility, BCRP participation may be required for Builders who:
have never contracted and completed construction of a new single dwelling or alteration project;
are proposing to contract a larger or more complex project than their experience supports; or
have never before contracted with a developer and completed construction of a multi-unit project as the key manager within a building business.
BCRP Components
BCR Component 1 - Contract document review.
Review the contract documentation for each Project to ensure that:
(a) the correct parties to the residential building contract; site address etc. are identified;
(b) the correct name and licence number of the Builder’s trading entity is shown on all documentation (i.e. name on building contract, certificate of insurance application and licence is the same);
(c) the licence held by the Builder’s trading entity covers all the work being contracted;
(d) 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);
(e) the Project application for HBCF Insurance is consistent with the BCR Service Provider’s understanding of the Project; and
(f) review the Project’s construction schedule provided by the Builder to ensure that it is appropriate for the type and complexity of the Project.
BCRP Component 2
(a) Ensure that the Builder provides a detailed budget, providing for a gross margin that is reasonable for the Project requirements, type, size and value.
(b) Adequately test the Builder’s detailed budget for completeness and realistic costs including contingency allowance. Verify as much as possible likely contingencies including cost erosion and wage assumptions.
(c) 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 (i.e. progress payments do not exceed the cost of work performed and materials supplied under the contract plus margin).
BCR Component 3 – Builder performance review schedule
Determine the number of reviews (site visits and remote site assessments) that are required to be completed, taking into account the nature of the Project, in order to ensure that;
(a) the Builder’s supervision of the Project construction works is of an acceptable industry standard; and
(b) the Project is progressing to contractual completion date and budget.
NOTE 1: Site visits require attendance at the Service Site by the BCR Service Provider
NOTE 2: Remote site assessments do not require attendance at the Service Site by the BCR Service Provider.
BCR Component 1, 2 and 3 Confirmation OR Incomplete notice OR Project commenced notice
(a) BCR Component 1, 2 and 3 - Confirmation
(i) Confirm the cost of the BCR to the Builder.
(ii) Confirm the requirements of BCR Components 1, 2 and 3 have been completed satisfactorily, or have been adjusted so as to be satisfactory, (through the Distributor).
(iii) Provide the number and timing of site visits or remote site assessments required during the Project to the builder and the Principal (through the Distributor).
(b) BCR Component 1,2 and 3 –Incomplete notice
(i) In the event that the Builder does NOT satisfactorily complete the requirements of BCR Components 1, 2 and 3, the BCR Service Provider must notify the Builder, Insurance Agent and Principal of this fact within 7 days of the due date of the requested information.
(c) BCR Component 1,2 and 3 –Project commenced notice
(i) In the event that the Builder has already commenced works under the Project contract the BCR Service Provider must notify the Builder, Insurance Agent and Principal of this fact immediately.
BCR Component 4 - Builder performance review
(a) Obtain a copy of the certificate of HBCF 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.
(b) Undertake reviews as determined under BCR Component 3 - Builder performance review schedule
(c) At the time of each site visit or remote site assessment:
(i) review all scheduled progress payments invoiced to determine that progress claims were appropriate;
(ii) review all third party certificates (including engineers inspections, mandatory PCA inspections, trade compliance certificates etc.) issued since the time of the last BCR review;
(iii) review contract variations ensuring they are in writing and properly costed;
(iv) review progress in accordance with the Project construction schedule and terms of contract and investigate reasons for any significant delays;
(v) review the builder’s competence in site supervision for all works carried out since the last report, and any areas previously identified as a concern including:
1. set out and levels;
2. sequencing of tradesmen;
3. general standard of finish;
4. frame integrity;
5. cavity drainage integrity, external weep holes and termite barrier integrity;
6. sill and window flashings;
7. wet area treatment;
8. stormwater disposal; and
9. future integrity of footings against drainage and other works still required to be completed.
(d) For each site visit or remote site assessment complete a Builders Performance Review Report using the Principal’s standard templates and include dated photographs, concerns over works identified as 3.5(c)(v)(1) – (9) inclusive immediately above and any other concerns, as well as notes covering an observation of the following;
(i) general site presentation
(ii) work flow of trades and materials, and
(iii) competence of the trades and appropriateness of the materials being used.
(e) Immediately report to the Principal (through the Insurance Agent) any instances of 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 residential building contract) including copies of all Builder Performance Review Reports completed to that time.
(f) As requested by the Principal (through the Insurance Agent) provide timely copies of all completed Builder Performance Review Reports.
BCR Component 5 - Final report on completion of the Project
(a) On completion of the Project, prepare a final report using the standard HBCF template and provide a copy to the Builder and the Insurance Agent. The content of the final report is to include:
(i) confirmation that all Builder performance reviews identified in BCR Component 3 have been completed
(ii) details as to whether there are any unresolved issues of concern; and
(iii) comment on the progression or development of the builder’s competency relating to the specific areas that have been reviewed as part of the BCR for this Project.
BCRP Documents
Click on links below to view and download document: