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Saturday, January 8, 2011

Fletchers - Legal and Contractual issues

The Information Update mentioned in the previous post contains additional interesting pointers as the how Fletchers intend to conduct the rebuild process. The extract below is their position, as of November 2010, on how various legal matters will be handled.

The fourth paragraph is significant for "claimants", as they call us. It could be a good, or a bad, thing depending on how involved any of us might want to be.

Legal / contractual
Prior to commencing work, contractors will be asked to sign a short form (two page) contract agreement, along with Fletcher (as agent for EQC). This will be the principal document governing all work that the contractor/tradesperson performs under the EQR programme. Each new job will be initiated by a contract instruction containing details of the job.
The contractor will be responsible for the work it performs, and for that of its subcontractors, as in any normal contracting arrangement.
The contractor will be the responsible party under the Health and Safety Act and, accordingly, will be responsible for H&S requirements on each household site. Fletcher or an independent expert will provide oversight from time to time as agent for EQC and the contractor will be expected to comply with its obligations to provide a safe work site.
There will be requirements for the contractor to abide by a code of conduct appropriate to all work carried out under the programme. In particular, contractors should be aware of minimising "claimant fatigue" – ie. minimising the interactions with homeowners, and performing the work efficiently, promptly and courteously.
The full document can be found here.
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Friday, January 7, 2011

Repair work - Fletchers and Quality Control

Continuing with the quality theme, most of us will be out of our depth trying to determine whether work done on our behalf is of an acceptable quality and if suitable materials have been used.

Those who are "fortunate" enough to have a level of damage that puts us into the $10,000 to $100,000 band, have the opportunity to let Fletchers undertake it all for us. While little has been heard from Fletchers they do seem to be working away in the background.

On the 3rd of November Fletchers posted a newsletter, Information for  Contractors and Tradespeople Update # 1, on their website. Aimed at contractors and tradespeople who may be interested in working with Fletchers it sets out the basics of what will expected of contractors etc. by Fletchers, and what they can expect from Fletchers. The newsletter can be found here.

The topics covered by the newsletter are:
  • Purpose
  • Project management structure
  • Accreditation
  • Legal / contractual
  • Materials
  • Payments and Pricing
  • Insurance 
  • Adherence to Rules
  • Overall intentions
  • Rollout
An interesting insight into how Fletchers see quality issues can be found in the section on materials.
Contractors will use only accredited suppliers and merchants for their building materials and supplies. These suppliers and merchants will have been accredited through Fletcher procedures, so that the supplies are provided to NZ standards, with appropriate warranties, and to a maximum price acceptable to EQC. Suppliers will also have to have information systems that allow Fletcher to track orders placed by contractors for EQC work.
In practice, this means a contractor using (for example) a local ITM store will have a pre-agreed price list for these items, and materials will be supplied with the usual guarantees and warranties.
The major merchants and suppliers are being asked to provide net pricing, with no rebates or loyalty scheme points being applicable. Contractors will be asked to abide by these rules, and to be prepared to have their accounts audited by EQC if required.
It is a requirement that all arrangements be transparent, and instead of a materials rebate all contractors earnings will come from the agreed rates and recoveries (see below).

Thursday, January 6, 2011

Competent tradespeople - Licensed Building Practitioners (LBP)

A big unknown is who can be considered a suitable trades person when we need something looked at and fixed. The advice from the Department of Building and Housing is to choose a Licensed Building Practitioner (LBP).

The LBP scheme, which is administered by the Department of Building and Housing,  is designed to confirm that building practitioners are competent, and provide confidence to building owners. All LBPs are accountable for what they do via a complaints procedure operated by the Building Practitioners Board.

The Department of Building and Housing has a list of LBPs throughout the Canterbury region. You can find it here.

Background information about the LBP scheme can be found here.
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Wednesday, January 5, 2011

EQC - Complaints update

EQC have changed the information on their complaints page so that it reads:
"So, if you have questions or complaints about the service you have received or your claim, you can contact us and we will look into your concerns and get back to you."
The words in bold are what has been added. It is not clear whether this refers to the assessment of the claim, or the handling of the claim.

The EQC page is here. 
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Rebuilds - Salvaging items from the old house.

As with the previous post, the material here has been lifted directly from information developed in response to a list of questions from the CCC. It was provided by NZ Earthquake Commission and was correct as at the 24th of Dec 2010. A copy of the full response can be downloaded from here. 

It covers the situation where a homeowner wishes to remove items from their house before it is demolished.  Under some circumstances this is not permitted because the items belong to the insurer (EQC or insurance company). For instance, an ornate fire surround, hallway arch, or ceiling rose may have sentimental value. However, as they are attached/built-in to the house, they are considered part of the house and belong to the insurer. Note - I am not a lawyer so treat this as an unqualified observation and get professional advice before doing anything.

Start

Transferring assets between properties

In situations where a building has to be replaced, people can remove any undamaged contents or chattels. Any damaged contents on which a claim has been made cannot be salvaged. In addition, if a residential building is to be replaced, no part of that structure can be salvage by the insured person.

END

Once again, if this information is important please refer to the original document and check to see if there have been any updates. If there is something in the house you want check with EQC (or your insurance company if they are handling your case).
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Tuesday, January 4, 2011

Claims management for the Canterbury Earthquake (Detailed)

The material below has been lifted directly from information developed in response to a list of questions from the CCC. It was provided by NZ Earthquake Commission and was correct as at the 24th of Dec 2010. A copy of the full response can be downloaded from here.  

The paragraphs are not numbered in the original but have been here so particular items can be highlighted.

The material details the processes involved in making assessments, and what type of activities may take place. It seems different from what some have encountered and may reflect changes made in light of experience gained in the early assessment period.

Para 5. is key to the issue we have discussed of "what happens if we don't agree with the EQC assessment?".  Mention is also made of the EQC complaints procedure so, presumably, it is another avenue for challenging aspects of an assessment. Not mentioned in the paragraph is that, in some circumstances, EQC will refund the cost of an independent expert assessment.

Para 6. mentions that settlement cheques will be sent some time after an assessment is agreed. Some experiences to date have been that the cheque has arrived in advance of notice regarding the settlement.

If any of this information is important please refer to the original document and check to see if there have been any updates.

Start:

1.  Some assessments are fairly straight-forward and will require one site visit or, in cases of minor damage, a phone call and/or the filling out of a form.

2.  In the case of all but minor building damage and most contents claims, a loss adjuster and an estimator will spend some time at the home looking at every room, at roof spaces, roofs, walls, outbuildings and so forth. Once this has been done, they will provide a damage assessment, and ask the owner to sign a Statement of Claim (SOC). A SOC is a list of the damage.

3.  At the same time the assessors will take notes for a Scope of Works (SOW). The cost of repairs will be based on this document. In some cases the assessment of damage and the estimate of costs can be done at the end of the visit and the owner is given a letter about this at the time. If not, the letter will be sent once the work has been concluded.

4.  Once the loss adjuster and the estimator have visited, and, given agreement from the owner, the claim will be transferred to the EQC payment system.

5.  In some cases, it may take more than one visit by a loss adjustor and an estimator and perhaps an engineer and a valuer as well. Sometimes the owners will not agree with an assessment and EQC will usually look at the matter again. Owners are free to call in their own experts and EQC will look at the reports provided. EQC has a complaints and disputes resolution processes in place to address owners’ concerns.

6.  Once an assessment is agreed, what happens next with the payment depends on the nature and value of the damage:
  • for all claims under $10,000 (except for structural and/or chimney damage) and all contents claims up to EQC's limit of $20,000 plus GST, owners will be sent a cheque and some documentation including a copy of your SOC
  • building claims of approximately $10,000 to $100,000 + GST range are being referred to our project manager, Fletcher Construction, and EQC will pay them once the repairs are carried out
  • where a building claim is estimated as in excess of the maximum allowed to be paid by EQC i.e. $100,000 + GST, then what happens to the payment depends on whether the owner has a mortgage. Those with a mortgage will have their money paid to their mortgagee. Those without a mortgage will have the $100,000 paid directly to them
  • if the money is paid to the mortgagee, then what happens with the money will depend on individual circumstances. The main banks have said that typically they expect to use the money to repay lending and then work with customers in relation to any new lending and repair and rebuilding activity.
7.  Once owners have been advised that a settlement cheque will be sent, this could take at least two weeks and sometimes longer simply because of the volume of payments that need to be made.


End

Monday, January 3, 2011

EQC response to questions from CCC

The CCC has added more to its web page Answers to questions raised at recent Council community meetings.

The CCC put a number of unspecified questions to both the EQC and the Insurance Council of New Zealand. There is no sign of a response from from ICNZ however EQC provided a large response which is available for download from the CCC here.

Topics covered are:

EQC Insurance
  • EQC Cover
  • EQC's role and responsibilities

Canterbury Earthquake Claims Management
  • Claim Deadlines
  • Claim targets
  • Claims management for the Canterbury Earthquake (General)
  • Claims Management for the Canterbury Earthquake (Detailed)##
  • Priorities
  • EQC Contacts
  • EQC Agents
  • EQC Community Engagement
  • Future Insurance Cover
## This information will be the next item posted on this blog

Land Remediation
  • Relevant parties in the land remediation process
  • Land remediation for zones A, B, and C
  • Zone A
  • Zone B
  • Zone C
  • Process for land remediation
  • Land remediation costs
  • Impact on land property values
  • House damage of less then $100,000 + GST with land damage
  • House damage over $100,000 + GST with land damage

Repairs and Rebuilding
  • Process for rebuilding and repairs
  • Timing of building repairs when land remediation needs to occur
  • PMO role and responsibilities
  • Managing your own repairs
  • Temporary accommodation while repairs/remediation takes place
  • Reimbursements for making homes habitable and/or weatherproof i.e. emergency repairs
  • Options concerning chimney replacement
  • Overcharging
  • Transferring assets between properties +++
  • Ability to rebuild to a different specification
  • Demolition of buildings
+++ Note: This bit is important to avoid getting into legal strife.
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Cost of the Earthquake - RBNZ report

The headline news from the Reserve Bank's Monetary Policy Statement for December 2010 was that the total cost is now expected to reach $5 billion. Of this $3 billion will be for residential rebuilding and repairs, with the balance accounting for business and infrastructure repairs and rebuilding.

The Monetary Policy Statement, which covers all the key factors affecting the NZ economy, contains a section on the earthquake. That section includes a statement about the effect of the earthquake, along with information on the latest cost projections, estimates of the time that may be needed to carry out the repairs, and other impacts associated with the rebuilding activities. Some extracts from the report are below. The whole report can be found here.

The impact of the Canterbury earthquake

Initial impact

The short-term disruption to household and business activity following the Canterbury earthquake is estimated to have reduced GDP growth by 0.1 percent of GDP in the September quarter. This estimate is based on indications that rates of displacement of retail sales and manufacturing activity have been relatively modest. Further, the impact on some components of GDP is unlikely to be captured in the official data.

Rebuilding

Earthquake-related reconstruction spending is estimated to add around $5 billion to GDP (2.6 percent of nominal annual GDP). This is in line with updated estimates of damage to residential property from the Earthquake Commission (EQC). Most of this spending is assumed to occur over 2011 and 2012, with some pull-back in growth from late 2012 as reconstruction winds down. Uncertainty surrounds how the rebuilding will impact on other activity.

Residential building

Earthquake claims received by the EQC provide the best early indication of the likely total cost. Bank estimates of an average cost per claim generate a total residential rebuilding cost of about $3 billion.

It is likely that houses with minor damage will be repaired first, with the EQC aiming to settle claims below $10,000 by the end of this year. Given the relatively short lags involved in doing repair work, it is likely that some of these payments will translate to higher residential investment in the December 2010 quarter. At the peak of rebuilding, which we expect to be at the end of 2011, the level of residential investment will be lifted by nearly 20 percent, relative to non-earthquake related residential investment.

Infrastructure and commercial building

The Bank continues to assume damage of $1 billion to commercial buildings and $1 billion to infrastructure assets in the Canterbury region. To provide some context, the combined capital value of commercial and industrial property across the three affected council areas is about $15 billion, whereas the combined value of infrastructure assets is around $4.6 billion.

The timing of repair work is uncertain. Essential infrastructure repair is likely to be a priority, and this is assumed to occur in a relatively frontloaded fashion in the projection, with 85 percent complete by June 2012.

On the other hand, feedback from our business visits generally suggested that commercial rebuild could be a very drawn out process, and take several years. In addition, given the large amount of spare capacity in Christchurch City, it is possible that some businesses may relocate rather than rebuild. This projection assumes that only 50 percent of the commercial damage is repaired by the end of 2012.

Sunday, January 2, 2011

Earthquake-hit churches - Anglican

The website for Anglican churches in Christchurch has a page with photographs of their  churches which have been damaged by the earthquake and it's aftershocks. The page is here.

Our own Holy Trinity is featured, however their website does not seem to be working. The Christchurch Cathedral website has earthquake items here.   On this page you can find photographs of St John's Anglican church in Hororata.

Earthquake-hit churches - Catholic

Links to photographs of damaged churches and buildings can be found on this page. Pictures of St Paul's, Dallington, are here. 
 
There are also links for those looking for assistance or information.