Construction Defect Lists Explained

A defect list is a document that lists the final tasks remaining before a construction project -- or scope of work -- is considered complete. Builders add all work that does not conform to the specifications and drawings in the construction contract to the defect list. Items on a defect list typically include minor corrections, alterations or repairs that are required before the release of final payment.

Understanding defect lists is important for ensuring work is completed to specifications – as well as getting paid for that work. Keep reading to learn what defect lists are used for and what to include in one.

Australian Regulatory Framework

Before delving deep into the concept of defect lists, it's pivotal to understand the regulatory framework in Australia.

Depending on the state or territory, the rules may vary slightly, but overarching standards come from Standards Australia, the nation's peak non-government, not-for-profit standards organisation.

Builders and contractors must often align their practices with the standards outlined by this body. Moreover, specific state-based regulations play a role.

For instance, in New South Wales, construction standards and regulations are overseen by NSW Fair Trading. Similarly, Victorian builders would consult the Victorian Building Authority, and those in Queensland would look to the Queensland Building and Construction Commission. It's imperative to know the respective building authority for your state.

How Defect Lists are Used

Defect lists are generally the last step in the project in order to double-check that everything has been completed according to the owner-developer’s specifications. They can also be used progressively, throughout different stages of the project, to report (and resolve) defects as they are found in real time.

A well-formulated defect list outlines all the tasks that need to be addressed before the structure is ready for occupancy. Defect work items are usually minor fixes, which can include any incomplete or incorrect installations, as well as incidental damage on existing finishes or structures.

Examples of Defect List Items

A defect list will encompass various tasks – testing, adding, fixing or removing. The tasks are termed ‘defect work.’ Defect list items will vary widely depending on the type of project. 

A defect list for a monumental project like the Sydney Opera House would contrast sharply with one for a classic Queenslander home, given the stark differences between government or industrial infrastructure and residential or retail developments.

Items to Test

Testing is done to verify that all installed work, materials and equipment function as expected. Defect work often includes testing of:

• Appliances
• Equipment
• Doors and windows
• Plumbing fixtures
• Mechanical elements
• Communication systems
• Air conditioning systems
• Etc.

Items to Add

Defect work frequently includes items that were left off, whether intentionally or not. This includes items like:

• Light fittings
• Hardware
• Touch-up paint
• Coating/sealant
• Etc.

Items to Fix

While contractors and equipment remain on the job site, there is always the risk of damage to materials, equipment or systems that needs to be corrected. Defect work can include fixing:

• Water leaks
• Damaged materials
• Improper installation
• Cracks
• Faulty equipment
• Etc.

Items to Remove

Anything not included in the project deliverables should be removed before handover. A defect list often includes the removal of items such as:

• Rubbish
• Equipment
• Surplus materials
• Tools
• Protective covers

Responsibility for defect list items

Everyone on a construction site, from the builder to the subcontractors, has a role in fulfilling the defect list. Typically, the builder ensures all these tasks are completed before finalising the project. They may delegate defect work to subcontractors overseeing specific work areas.

Often, the builder will conduct a walkthrough with the client / client representative to identify any incomplete or non-compliant work and draft the initial defect list.

Depending on outstanding issues, certain subcontractors might return to the project to address these concerns.

If an architect is involved, they play a crucial role in reviewing the defect list to approve final payments. The builder will send their defect list to the architect, who then conducts their own assessment to ensure everything matches their design specifications.

The architect will update the defect list and send it to the owner and builder. The builder is tasked with distributing the defect list to the subcontractors and ensuring all work is completed.

Subcontractors play a pivotal role during the defect list process; they handle most of the defect work and compile all the necessary change orders and documentation, which the builder then forwards to the owner-developer. Starting the organisation of these documents early on, rather than at the project's end, is considered best practice.

Completing the defect list

Every project member should prioritise the defect list because it not only makes sure the building is ready for use, but also because it’s a key step before final payment. Typically, the client retains a portion of the payment until all defect list items are addressed.

When the contractor believes that they have reached Practical Completion (PC), they can request a “defect walk”  of the project. Hopefully, the defect work needed will be minimal, leading to a swift final completion and payment.

Typically, under most construction contracts in Australia, the final payment is held back until the items on the defect list are rectified to the satisfaction of the client or their representative.

Once these items are addressed, the final payment is released. The completion of the defect list can also be tied to the issuance of a Certificate of Practical Completion, which signifies the point at which the contractor has fulfilled their obligations under the contract, barring the rectification of defects.

While every project presents its unique challenges, a comprehensive and accurate defect list provides all project members with a clear roadmap to project completion.

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