What date is your price? The question rectification reports often leave out
Most arguments about rectification costs focus on scope and rates. What work is needed to fix the defect? What should that work cost?
Those are the right questions. There is a third that gets far less attention. At what date is the cost being measured?
The legal starting point
The High Court set the measure of damages for defective building work in Bellgrove v Eldridge. The owner is entitled to the cost of making the work conform to the contract, provided the rectification work is necessary to produce conformity and is a reasonable course to adopt.
"Necessary" and "reasonable" attract most of the argument. Yet the cost of necessary and reasonable work is not fixed. It moves with the market, and in recent years the market has moved a long way.
What the numbers show
The Australian Bureau of Statistics tracks the prices received by building construction businesses through its Producer Price Indexes. Between the September quarter 2020 and the June quarter 2024, those prices rose 31.1 per cent. House construction prices rose 40.8 per cent over the same period.
The increases have slowed but not stopped. In the June quarter 2026, building construction prices rose 1.4 per cent for the quarter and 4.9 per cent over the year. House construction rose 2.0 per cent in the quarter, the largest quarterly rise since September 2022. In Victoria, house construction prices were up 3.7 per cent over the year.
Construction disputes commonly take years to reach a hearing. An estimate prepared when the defects were first identified can be materially out of date by the time a tribunal is asked to rely on it.
Why this matters for the expert
Under the Federal Court's Harmonised Expert Witness Code of Conduct, an expert's report must state the assumptions and material facts on which each opinion is based. The price date is one of those assumptions, even when it is not written down.
When it is not stated, three problems follow. The tribunal cannot tell whether two competing estimates are even comparable. The opposing expert can attack the figure as out of date. And any escalation the expert has built into the rates is hidden from view.
A simple discipline
In my own reports, I treat the price base date as a headline assumption, not a footnote. That means:
• stating the date at which the costs are priced;
• keeping any escalation as a separate, visible adjustment rather than burying it in the rates;
• identifying the published index or data used for that escalation and why it suits the work; and
Where the proper date for assessment is itself in dispute, that is a legal question for the tribunal. The expert's job is to make the answer easy to apply. Presenting costs at one clearly stated base date, with escalation shown separately, allows the tribunal to adopt whichever date it prefers without rebuilding the estimate.
What lawyers should check
When you receive a rectification estimate, from your own expert or the other side's, ask three questions. What date are the rates priced at? Where did the rates come from: a first-principles build-up or a published cost guide? And has escalation been applied, and on what index? Differences in those three answers explain many of the gaps between competing estimates.
At Accura Consulting, our team of experts work with clients to create a tailored solution to problems. If you have an issue and want expert support, get in touch.
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When you receive a rectification estimate, from your own expert or the other side's, there are three key questions quantum expert witness, Paul McArd advises you ask.