When Builders Walk Off: How Inadequate Funding Can Derail Body - Corporate Projects

Why Underfunding Often Breaks Projects

For Body Corporates, when it comes to any construction project, from small long term maintenance requirements through to large capital remedial works for weathertightness or seismic issues, securing adequate funding is crucial. Without it, several challenges can arise, leading to significant delays and complications. Here are some key issues that often occur due to underfunding:

• Cashflow Gaps Widen: Construction contracts are staged around milestones - and if funds aren’t secured, scheduled payments can’t be made. This strains cashflow for builders, often causing them to pause work to avoid going under.
• Builders Get Paid Last: With limited funding, payments are often delayed. Contractors don’t tolerate cashflow uncertainty. As one construction adviser notes, “a builder’s biggest motivator is getting paid” - and if they know funds are guaranteed, they’re more likely to negotiate on materials and scheduling to save costs.

The Hidden Costs of Builder Walk-Offs

• Legal Disputes: Contractual claims; mediation or tribunal fees.
• Remobilisation Delays: Crew re-scheduling, repricing materials, and starting site setups.
• Inflation Adjustment: NZ construction inflation can raise costs significantly after delays.
• Contractor Premiums: Replacement contractors often charge mark-ups for short-term or urgent projects.
• Relationship Breakdowns: New hires take longer to integrate, and knowledge transfer is lost.

Even short delays can result in a 5–10% total cost increase—caused by these compounded factors.

Real-World Example

Legal firm, Grimshaw & Co., in their resource guide (published by Grimshaw & Co on their website), warns that stalled body corporate remediation work can “result in incomplete repairs and years of delay and frustration.” Litigation is common, especially after builder walk-offs - a legal process that draws out costs and erodes trust.

Aligning With Builders: Why Funding Certainty Matters

• Streamlined Negotiations: When a builder knows they’ll get paid reliably, they’re far more likely to offer competitive bids and absorb small cost variances - limiting overruns and saving you money.
• Efficient Project Flow: A fully-funded project supports better scheduling, subcontractor retention, and fewer stop-starts, reducing risk and boosting completion certainty.
• Cost Transparency: Builders are more willing to share insights, offer value-engineering suggestions, and propose savings when financial risks are minimized.

How MOD Finance Helps Keep Projects on Track

• Upfront Loan Funding: MOD Finance offers Body Corporate loans sized to the full scope of works—ensuring builder contracts can be fully secured from the outset.
• Payment Confidence for Builders: With funding in place, builders gain assurance—and often pass on savings via maintenance, bulk ordering, or timing efficiencies.
• Reduced Legal and Inflation Risk: No cashflow holes = fewer contract breaches, reduced legal disputes, and protection against rising costs due to delay.
• Relationship & Reputation Preservation: Successful, on-time projects build trust—not just with builders, but also among unit owners, ensuring future maintenance runs smoothly.

Final Take

Avoiding builder walk-offs isn’t just about project completion - it’s about protecting value, minimizing legal exposure, maintaining community cohesion and stress reduction for owners. Every delay deepens cost and frustration. Normally these happen near the end of a project when project fatigue is in full effect for not only the builder, but moreso for the unit owners in the Body Corporate.

With MOD Finance’s tailored Body Corporate loans, your remediation or upgrade projects gain certainty, momentum, and cost control. If your Body Corporate is about to launch - or has stalled - reach out. We'll help you get back on track and finish well.