1
Week 02: AS 4000 (1997) General Conditions of
Contract – Application to Site Operations
CSM80007 – Week 2
CSM80007 Construction Site Operations
Teaching staff: Dr Yogeswaran Kumaru
Study Resources
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Reading material
Available on the Blackboard website for this unit.
References
Occupational Health and Safety Act 2004
Occupational Health and Safety Regulations 2007 S.R. No. 54/2007 Version
as at 1 July 2007
Ottosson, H, Practical Project Management for building and construction,
Taylor & Francis Group
Holroyd, T. M., Site management for engineers, Thomas Telford
Valentine, R, Effective Contract Administration, ECAT Publications,
Melbourne Australia
A Guide to the Project Management Body of Knowledge (PMBOK Guide) –
Fifth Edition ; Published by Project Management Institute Inc.
HB 140—2000 Administration Manual for AS 4000—1997 General conditions
of contract2
Procurement of Goods, Services or Works
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Procurement is the act of finding, acquiring, buying goods, services or works
from an external source, often via a tendering or competitive bidding process.
The process is used to ensure the buyer receives goods, services or works at the
best possible price, when aspects such as quality, quantity, time, and location are
compared. Corporations and public bodies often define processes intended to
promote fair and open competition for their business while minimizing risk, such
as exposure to fraud and collusion.
Owner sets out to procure the services. Owner is referred to as Employer or
Principal or Client.
What are the services that are procured by owner ?
Project Management
Design Services
Construction
Maintenance
Procurement of Goods, Services or Works – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
1. Plan Procurement Management—The process of documenting project
procurement decisions, specifying the approach, and identifying potential
sellers.
2. Conduct Procurements—The process of obtaining seller responses,
selecting a seller, and awarding a contract.
3. Control Procurements—The process of managing procurement
relationships, monitoring contract performance, and making changes and
corrections as appropriate.
4. Close Procurements—The process of completing each project
procurement.3
Procurement of Goods, Services or Works – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Refer to Section 12 Project Procurement Management (PMBOK) for detail
processes.
Types of Contracts – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Fixed-price contracts. This category of contracts involves setting a fixed total price for
a defined product, service, or result to be provided. Fixed-price contracts may also
incorporate financial incentives for achieving or exceeding selected project objectives, such
as schedule delivery dates, cost and technical performance, or anything that can be
quantified and subsequently measured. Sellers under fixed-price contracts are legally
obligated to complete such contracts, with possible financial damages if they do not. Under
the fixed-price arrangement, buyers need to precisely specify the product or services being
procured. Changes in scope may be accommodated, but generally with an increase in
contract price.
Firm Fixed Price Contracts (FFP). The most commonly used contract type is the
FFP. It is favored by most buying organizations because the price for goods is set at the
outset and not subject to change unless the scope of work changes. Any cost increase due
to adverse performance is the responsibility of the seller, who is obligated to complete the
effort. Under the FFP contract, the buyer should precisely specify the product or services to
be procured, and any changes to the procurement specification can increase the costs to
the buyer.4
Types of Contracts – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Fixed Price Incentive Fee Contracts (FPIF). This fixed-price arrangement gives the
buyer and seller some flexibility in that it allows for deviation from performance, with
financial incentives tied to achieving agreed upon metrics. Typically such financial
incentives are related to cost, schedule, or technical performance of the seller.
Performance targets are established at the outset, and the final contract price is
determined after completion of all work based on the seller’s performance. Under FPIF
contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of
the seller, who is obligated to complete the work.
Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This
contract type is used whenever the seller’s performance period spans a considerable
period of years, as is desired with many long-term relationships. It is a fixed-price contract,
but with a special provision allowing for pre defined final adjustments to the contract price
due to changed conditions, such as inflation changes, or cost increases (or decreases) for
specific commodities. The EPA clause needs to relate to some reliable financial index,
which is used to precisely adjust the final price. The FP-EPA contract is intended to protect
both buyer and seller from external conditions beyond their control.
Types of Contracts – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Cost-reimbursable contracts. This category of contract involves payments (cost
reimbursements) to the seller for all legitimate actual costs incurred for completed work,
plus a fee representing seller profit. Cost-reimbursable contracts may also include financial
incentive clauses whenever the seller exceeds, or falls below, defined objectives such as
costs, schedule, or technical performance targets. Three of the more common types of
cost-reimbursable contracts in use are Cost Plus Fixed Fee (CPFF), Cost Plus Incentive
Fee (CPIF), and Cost Plus Award Fee (CPAF). A cost-reimbursable contract provides the
project flexibility to redirect a seller whenever the scope of work cannot be precisely
defined at the start and needs to be altered, or when high risks may exist in the effort
Cost Plus Fixed Fee Contracts (CPFF). The seller is reimbursed for all allowable costs
for performing the contract work, and receives a fixed-fee payment calculated as a
percentage of the initial estimated project costs. A fee is paid only for completed work and
does not change due to seller performance. Fee amounts do not change unless the
project scope changes.5
Types of Contracts – PMBOK
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Cost Plus Incentive Fee Contracts (CPIF). The seller is reimbursed for all allowable
costs for performing the contract work and receives a predetermined incentive fee based
upon achieving certain performance objectives as set forth in the contract. In CPIF
contracts, if the final costs are less or greater than the original estimated costs, then both
the buyer and seller share costs from the departures based upon a prenegotiated costsharing formula, for example, an 80/20 split over/under target costs based on the actual
performance of the seller.
Cost Plus Award Fee Contracts (CPAF). The seller is reimbursed for all legitimate costs,
but the majority of the fee is earned only based on the satisfaction of certain broad
subjective performance criteria defined and incorporated into the contract. The
determination of fee is based solely on the subjective determination of seller performance
by the buyer, and is generally not subject to appeals.
Procurement – Competitive Tendering
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Tendering / Bidding Process
Bidder’s considerations
Do we meet the basic tender requirements?
Requirement 1
Requirement 2
Requirement 3 etc.
Can we show relevant enough experience?
Are the requirements clearly defined and feasible? Is the proposal and delivery time
frame realistic?
Is the work a core competence of our business?
Does contract value exceed 20%-30% turnover?
Have we sufficient trading history?
Is cost a major factor in selecting the winning bid? Are there penalties for not delivering
on time/budget?
Are the contract terms and conditions acceptable?6
Procurement – Competitive Tendering
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Tendering / Bidding Process
Bidder’s considerations
Internal Considerations
Is this opportunity aligned with our business strategy?
Do we have the resources, skills and will to win?
Do we have the resources and ability to deliver?
Can we realistically manage the risks, if we win?
If additional resources are needed, can we get what we need?
How well are we known within this business sector?
Do we have a relationship with this prospect and is it favourable?
Are partners needed, and if so, will they be easy to work with?
Can we demonstrate a previous working relationship?
Do we have differentiators that will improve our chances of winning?
Can we afford the investment needed to pursue this opportunity?
Will winning put any of our existing business at risk?
Can we contractually protect our intellectual property?
Procurement – Competitive Tendering
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Tendering / Bidding Process
Bidder’s considerations
Market / Competitive Information
Do we know who the other bidders are, if any?
Is a competitor an incumbent, and does that pose a threat?
Is a competitor favoured by prospect decision makers or influencers?
Does the solution involve new or unproven technologies?
Will winning enhance our reputation in the market?
Will winning open up new market opportunities?
Will winning give us an advantage over our competitors?7
Procurement of Goods, Services or Works – Selection Criteria
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Possible Source Selection Criteria:
understanding of need. How well does the seller’s proposal address the
procurement statement of work?
overall or life-cycle cost. Will the selected seller produce the lowest total
cost of ownership (purchase cost plus operating cost)?
technical capability. Does the seller have, or can the seller be reasonably
expected to acquire, the technical skills and knowledge needed?
risk. How much risk is embedded in the statement of work, how much risk will
be assigned to the selected seller and how does the seller mitigate risk?
Management approach. Does the seller have, or can the seller be
reasonably expected to develop, management processes and procedures to
ensure a successful project?
technical approach. Do the seller’s proposed technical methodologies,
techniques, solutions, and services meet the procurement documents
requirements or are they likely to provide more or less than the expected
results?
Procurement of Goods, Services or Works – Selection Criteria
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Possible Source Selection Criteria:
Warranty. What does the seller propose to warrant for the final product, and
through what time period?
Financial capacity. Does the seller have, or can the seller reasonably be
expected to obtain, the necessary financial resources?
Production capacity and interest. Does the seller have the capacity and
interest to meet potential future requirements?
Business size and type. Does the seller’s enterprise meet a specific
category of business such as small business (disadvantaged, specific
programs, etc.) as defined by the organization or established by
governmental agency and set forth as a condition of the agreement award?
Past performance of sellers. What has been the past experience with
selected sellers?
references. Can the seller provide references from prior customers verifying
the seller’s work experience and compliance with contractual requirements?8
Procurement of Goods, Services or Works – Selection Criteria
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Possible Source Selection Criteria:
Intellectual property rights. Does the seller assert intellectual property
rights in the work processes or services they will use or in the products they
will produce for the project?
Proprietary rights. Does the seller assert proprietary rights in the work
processes or services they will use or in the products they will produce for the
project?.
Reference : A Guide to the Project Management Body of Knowledge - PMBOK
Guide, Fifth Edition, Project Management Institute, 2013
Procurement of Goods, Services or Works- Construction
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Owner who is procuring construction works, procures design and construction
services.
Domestic House Owner: Procures design and construction.
Public Works Sector procures deign services and construction services either as
a package or separately depending on the type of contract.
For Public Works Projects, AS 4000 is chosen to define the contractual
relationship when procuring the construction services.9
Australian Standard – General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
What is General Conditions of Contract ?
Terms and conditions that set the rights and obligations of the contracting parties,
when a contract is awarded or entered into. These include 'general conditions'
which are common to all types of contracts, as well as 'special conditions' which
are peculiar to a specific contract (such as, contract change conditions, payment
conditions, price variation clauses, penalties).
Australian Standard – General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
What is General Conditions of Contract ?
General conditions of contract for public construction must provide for:
allocation of risk to the party best able to manage the risk;
prompt and fair entitlement to payment;
requirement that the head contractor must provide the contract principal with
proof of payment to subcontractors and suppliers;
co-operative approach to dispute resolution to minimise adversarial action;
and
requirement to use standard subcontract conditions compatible with the head
contract (where applicable).
Under the Victorian Building and Construction Industry Security of Payment Act
2002 contracts recommended or approved for public construction must not
include:
'pay when paid' or 'pay if paid' clauses in subcontracts; or
amendment of clauses relating to payment timing in standard subcontracts.
http://www.dtf.vic.gov.au/Infrastructure-Delivery/Public-construction-policy-and-resources/Constructioncontracts-and-conditions10
Australian Standard – General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
AS 2124-1992 General conditions of contract
This standard is widely used and preferred by government bodies. It may be
used for Lump Sum or a Schedule of Rates type of contract. The bill of
quantities may or may not form part of the contract or it may form part of the
specification.
AS 4000- 1997 General Conditions of contract
This document updates AS2124-1992 to cater for changes in construction
practice and law and the AS4000-1997 series of documents are probably the
most widely used in major works.
AS 11000 – 2015 (Draft)
A new draft has been released AS 11000: General Conditions of Contract
It is being proposed to merge AS2124 – 1992 and AS 4000 – 1997 into a new
suite of Standards, AS 11000: General conditions of contract.
AS 4000 Suite of Contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
The head contracts in the AS 4000 suite of contracts (currently in use)
Construct only contracts
Design and construct contracts
Supply of equipment, etc., contracts
Management contracts
Service and maintenance of assets contract
Minor works contract
Construct only subcontracts
Design and construct subcontracts
Trade contracts11
AS 4000 Suite of Contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
The head contracts in the AS 4000 suite of contracts (currently in use)
Construct only contracts
AS 4000–1997 is intended for use as General conditions of contract primarily for construct only
projects of a major nature.
AS 4000–1997 can be used when payment is to be made by way of lump sum or by way of a
schedule of rates or a combination of both.
AS 4000–1997 has provision for a bill of quantities which may be used as part of the Contract
(Alternative 1 of subclause 2.2) or not as part of the Contract (Alternative 2 of subclause 2.2).
Alternative 2 of subclause 2.2 also provides that a bill of quantities not forming part of the Contract
may nevertheless be priced if that is required.
AS 4000–1997 also provides for selected contractors (see subclauses 9.3 and 9.4) and for novation
by the Principal of a prior subcontract to the Contractor (see subclause 9.4).
AS 4000–1997 requires administration by a Principal-appointed Superintendent who may appoint
Superintendent’s Representatives.
AS 4000 Suite of Contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Design and construct contracts
AS 4902–2000 General conditions of contract for design and construct is the appropriate Standard.
That Standard caters for situations where the Principal provides only a ‘brief’ (in that Standard called
the Principal’s project requirements), with or without a preliminary design.
Supply of equipment, etc., contracts
If this delivery system is required, Australian Standard AS 4910–2000 General conditions of contract
for the supply of equipment with installation should be used
If this delivery system is required, Australian Standard AS 4911–2000 General conditions of contract
for the supply of equipment without installation should be used.
Where delivery or supply of equipment or goods is required on a long term basis, AS 4912–2000
General conditions of contract for periodic supply of goods should be used.
Management contracts
For project management delivery systems’ AS 4915–2000, Project management—General conditions
should be used.
For construction management where a Principal utilises a construction manager, or a managing
contractor, to manage a construction project, usually as an agent for a disclosed principal, Australian
Standard AS 4916–2000, Construction management—General conditions should be used.12
AS 4000 Suite of Contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Service and maintenance of assets contract
For the service and maintenance of assets, AS 4919–2000 General Conditions of Contract for the
Provision of Asset Maintenance and Services (Superintendent’s version) or AS 4920–2000 General
Conditions of Contract for the Provision of Asset Maintenance and Services (Principal’s version)
should be used. A short form of this contract (AS 4921–2000) has also been developed.
Minor works contract
If the project is of low value and does not require a bill of quantities, AS 4905–2000 Minor works—
contract conditions (Superintendent’s version) be used especially if the contract value is likely to be
less than $250 000.
AS 4906–2000, Minor works—contract conditions (Principal’s version) is a similar document for use
where there is no Superintendent appointed to administer the contract
Reference
Administration manual for AS 4000—1997 General conditions of contract
Subcontracts in the AS 4000 suite of contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Construct only subcontracts
AS 4000–1997 has a compatible subcontract AS 4901–1998 Subcontract conditions with similar features
as for “Construct only Contracts”
Design and construct subcontracts
AS 4902–2000 General conditions of contract for design and construct has a compatible subcontract
AS 4903–2000 Subcontract conditions for design and construct.
AS 4902–2000 also has compatible Consultant’s—Conditions of engagement being AS 4904–2000.
This can be used where the head contract will be AS 4902–2000 and the consultant is either to be
engaged by the Principal to effect a preliminary design or where a head contractor wishes to engage
a consultant to effect design.
AS 4904–2000 is also suitable for use when a consultant is to be engaged by a subcontractor who is
contracted to a head contractor under AS 4903–2000, General conditions of subcontract conditions
for design and construct.
Subcontractors who do not have any design responsibility but are to be a subcontractor to a design
and construct head contractor, could be engaged by that head contractor under AS 4901–1998
Subcontract Conditions for construct only work.
Reference
Administration manual for AS 4000—1997 General conditions of contract13
Subcontracts in the AS 4000 suite of contracts
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Trade contracts
Standards Australia has published a Trade contract (AS 4917–2003) for use as part of a construction
management delivery strategy. Sets out general conditions of contract for a construction management
trade contract, to be used for trade works. This practical trade document is part of a suite of conditions of
contract based on AS 4000-1997.
Reference
Administration manual for AS 4000—1997 General conditions of contract
AS 4000 1997 Construct only contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Some key features
Definitions
All definitions in AS 4000–1997 are now contained in clause 1 .
Seven italicised definitions continue to be used also with an initial capital letter. They are Item, Principal,
Contractor, Superintendent, Superintendent’s Representative, the Works and Contract. All other defined
terms always have a lower case initial letter except when used to start a sentence. In order to avoid
confusion with the use of italics for defined words ‘work’, ‘work under the Contract’ and ‘the Works’, it
was decided to abbreviate the expression ‘work under the Contract’ to WUC. Likewise ‘extension of time’
has been abbreviated to EOT.
AS 4000–1997 defines the rights and obligations of each of the contracting parties and the role and
functions of the Superintendent appointed by the Principal.
Reference
Administration manual for AS 4000—1997 General conditions of contract14
AS 4000 1997 Construct only contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Some key features
Documents which do not form part of the Contract
AS 4000–1997 also refers to other documents which may not form part of the Contract and therefore
may not be Contract documents. These documents are
Bill of quantities: if Alternative 2 of subclause 2.2 applies to the Contract, the bill of quantities is
specifically agreed not to form part of the Contract
Schedule of prices: AS 4000–1997 does not provide for a schedule of prices to be a Contract
document, but a schedule of prices may nevertheless be used to price variations or deemed
variations pursuant to subclause 36.4(c).
Principal-supplied documents: - some of the principal supplied documents do not form part of the
contract
Contractor-supplied documents: These documents, to which subclause 8.3 refers, would usually not
be Contract documents.
Optional Clauses
AS 4000–1997 provides for options in 2 subclauses both of which are marked with an asterisk.
These subclauses are:
■ subclause 8.6, Media;
■ subclause 29.2, Quality Assurance
Reference
Administration manual for AS 4000—1997 General conditions of contract
AS 4000 1997 Construct only contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Some key features
Alternative clauses
AS 4000–1997 provides for alternatives as follows:
■ subclause 2.2, Bill of quantities
■ clause 16, Insurance of the Works;
■ clause 17, Public liability insurance;
■ Item 10(a) of Annexure Part A is relevant to subclause 2.2;
■ Item 20(a) of Annexure Part A is relevant to clause 16;
■ Item 21(a) of Annexure Part A is relevant to clause 17.
Reference
Administration manual for AS 4000—1997 General conditions of contract15
AS 4000 1997 Construct only contract- List of Clauses
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Clause Title Page
1 Interpretation and construction of Contract 1
2 Nature of Contract 5
3 Provisional sums 6
4 Separable portions 7
5 Security 7
6 Evidence of Contract 8
7 Service of notices 9
8 Contract documents 9
9 Assignment and subcontracting 10
10 Intellectual property rights 11
AS 4000 1997 Construct only contract- List of Clauses
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Clause Title Page
11 Legislative requirements 12
12 Protection of people and property 12
13 Urgent protection 13
14 Care of the work and reinstatement of damage 13
15 Damage to persons and property other than WUC 14
16 Insurance of the Works 15
17 Public liability insurance 16
18 Insurance of employees 17
19 Inspection and provisions of insurance policies 17
20 Superintendent 1816
AS 4000 1997 Construct only contract- List of Clauses
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Clause Title Page
21 Superintendent’s Representative 19
22 Contractor’s representative 19
23 Contractor’s employees and subcontractors 19
24 Site 20
25 Latent conditions 21
26 Setting out the Works 21
27 Cleaning up 22
28 Materials, labour and construction plant 23
29 Quality 23
30 Examination and testing 24
AS 4000 1997 Construct only contract- List of Clauses
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Clause Title Page
31 Working hours 25
32 Programming 25
33 Suspension 26
34 Time and progress 27
35 Defects liability 29
36 Variations 29
37 Payment 30
38 Payment of workers and subcontractors 32
39 Default or insolvency 33
40 Termination by frustration 3717
AS 4000 1997 Construct only contract- List of Clauses
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Clause Title Page
41 Notification of claims 37
42 Dispute resolution 38
43 Waiver of conditions 39
Annexure Part A 40
Annexure Part B 50
Annexure Part C 51
Construction Contract – Contract Documents
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
The Contract documents incorporating AS 4000–1997 would normally include:
a) Formal instrument of agreement
b) General conditions of contract AS 4000–1997
c) Special conditions (if any)
d) Specification
e) Drawings
f) Notice of acceptance of tender
g) Conditions of tendering (where appropriate)
h) Form of tender (if appropriate)
i) Other documents which also evidence the parties’ consensus18
Construction Contract – Contract Documents
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
The following additional documents, if they form part of the Contract, should be
included in the formal instrument of agreement:
■ Any Special Conditions;
■ Specification (suitably identified);
■ Drawings (suitably identified);
■ Construction program (suitably identified);
■ Bill of quantities (if Alternative 1 of subclause 2.1 applies);
■ Schedule of rates (if applicable);
■ Notice of Acceptance of Tender;
■ Conditions of Tendering (if appropriate);
■ Form of Tender (if appropriate);
■ Any other documents which also evidence the parties’ consensus (e.g.
correspondence, minutes of pre-acceptance meetings and the like).
In appropriate cases, post-tender correspondence or other documents created
post-tender, may be Contract documents.
Construction Contract – Contract Documents
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
a) Formal instrument of agreement
Agreement made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . .20 . . . . between (the Contractor)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and (the Principal) . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iI is agreed that the annexed documents listed as follows: Tender, dated . . . . . . . . . . . . . . . . . . . . . . . Letter of
acceptance of tender, dated . . . . . . . . . . . . . . . . . . . . . . . AS 4000–1997 General conditions of contract and annexures
Specification no. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drawings nos: . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other documents: . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . shall together comprise the contract between the parties and if
the Contractor or the Principal is two or more persons then they shall be bound jointly and severally.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signed by or on behalf of the Contractor
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signed by or on behalf of the Principal19
Construction Contract – Roles
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Role and functions of the Superintendent under AS 4000–1997
The Superintendent as certifier
The Superintendent as assessor
The Superintendent’s pricing and valuing functions
Summary of functions
Functions of the Principal under AS 4000–1997
Functions of the Contractor under AS 4000–1997
Construction Contract – Roles
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Function Clause Required/
Option
Notice
Required
To notify the Superintendent of any inconsistency,
ambiguity or discrepancy the Principal discovers
in any document prepared for the purpose of
carrying out WUC
8.1 Required
To give possession of the site or sufficient of the
site to enable the Contractor to commence WUC
24.1 Required P58
To have defective work carried out by others if the
Contractor fails to do so after due notice from the
Superintendent
29.3 Option Yes, by
Superintendent
Functions of the Principal under AS 4000–1997
Example20
Construction Contract – Roles
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Functions of the Principal under AS 4000–1997
Form P58
Subclause 24.1
Notice Giving Possession of Site
Date . . . . . . . . . . . . . . . . . . . . . . . . . . .
To Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contract No. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pursuant to subclause 24.1 of the contract conditions, the Principal gives the Contractor possession of the portions
of the site as follows: Portion of site (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . Date possession is available (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Principal)
Instructions
Notes…….
Construction Contract – Roles
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Function Clause Required/ Option Notice
Required
To price and extend all items included in a bill of
quantities required to be priced
2.3(a) Required, if bill of
quantities is to be
priced
C1
To have recourse to the Principal’s security if the
Principal fails to pay moneys due and payable to
the Contractor
5.2 Option, if Principal
provides security
Yes, at least 5
days written notice
required
To notify the Superintendent, as soon as
practicable after due notice from the
Superintendent, whether a proposed variation can
be effected and if so, the Contractor’s estimate of
its effect on the construction program and cost
36.2 Required, if within
the scope
C120
Functions of the Contractor under AS 4000–1997
Example21
Construction Contract – WUC
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Start of WUC (Work under the Contract)
The site
Working hours and working days
Legislative requirements
Protection
Appointment of representatives
Setting out
Insurances
Forms
Construction Contract – WUC
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Duration of WUC (Work under the Contract)
Care of the work and protection of people and property
Directions
The role and functions of the Superintendent
Legislative requirements
Discrepancies in documents
Supply of documents
Setting out the Works
Materials, labour and construction plant
Access by Principal and others
Discovery of minerals, fossils, relics, etc.
Latent conditions
Quality of work
Defective work
Examination and testing
Cleaning up
Insurance claims
Forms22
Construction Contract – WUC
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Progress of WUC (Work under the Contract)
Interpretation and construction
Working hours
Programming
Suspension of WUC
EOT
Liquidated damages
Bonus
Delay damages
Substantial breaches relevant to progress of WUC
Miscellaneous provisions relevant to the progress of WUC
Forms
Construction Contract – WUC
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Variations to WUC (Work under the Contract)
Variations generally
Directing variations
Proposed variations
Variations for Contractor’s own convenience
Deemed variations
Pricing of variations
Forms23
Construction Contract – Payment and Certificates
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Payments, claims and certificates
Provisions relevant to payment claims, payments and payment certificates
Assessments and certificates by the Superintendent
Moneys due and moneys due and payable
General obligation as to payment
Calculation of the payment
Unfixed plant and materials
Final payment claim and final certificate
Notification of claims
Miscellaneous payment provisions
Final payment
Forms
Reference : HB 140—2000 Administration Manual for AS 4000—1997 General conditions of
contract
Construction Contract – Security of Payment and Completion
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Security of payment
Specific provisions
Additional provisions relevant to security of payment
Forms
Completion
Practical completion
Defects liability
Final payment claim and final certificate
Forms
Termination and Dispute Resolution
To be discussed in separate lecture24
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Standards Australia provided the following background in respect of the
proposed changes in AS 11000:
Standards Australia (SA) Technical Committee MB-010, General Conditions of Contract,
is currently revising the suite of Standards related to general conditions of contract, AS
2124: 1992 and AS 4000: 1997. Under the proposed revision, the two existing Standards
are to be merged into a new suite of Standards, AS 11000: General conditions of
contract. The proposed AS 11000 is meant to supersede AS 2124:1992 and AS
4000:1997.
The subcommittees and working group dealt with the following issues:
• Risk allocation; • Good faith; • Programming; • Extensions of time; • Payment
provisions; • Impact of the various Security of Payment Acts on the General
Conditions; and • Dispute resolution.
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
A wide range of stakeholders were identified as having an interest in the revision of the
General Conditions. These stakeholders include:
• Australasian Procurement and Construction Council
• Australian Institute of Architects
• Australian Land Development Engineers
• Australian Constructors Association
• Australian Consulting Architects
• Australian Industry Group
• Australasian Health Infrastructure Alliance
• Australian Institute of Project Managers
• Australian Institute of Building
• AUSTROADS
• Civil Contractors Federation
• Construction Industry Engineering Services Group
• Consult Australia
• Dispute Resolution Board of Australia
• Engineers Australia
• Housing Industry Association
• Master Builders Association
• Public Transport Authority, Western Australia25
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Abrahamson’s Principle
"A Principal should not ask a Contractor to price an unquantifiable risk which is within the
control of the Principal." Applied to all three Australian Standards.
Major Changes to AS 4000
1. Clause 2 contains two basic obligations on the parties. Subclause 2.1 requires each party to act in
good faith towards the other and sub clauses 2.2 to 2.5 initiate an early warning procedure whereby
events and circumstances, which may become an issue under the Contract, are required to be notified
by either party or by the Superintendent to attempt prompt resolution of the issue by the parties and the
Superintendent.
2. Coupled with the early warning procedure above, are more flexible dispute resolution procedures in
clause 45. Proposed is an option for the parties to choose to resolve disputes either by a conference
followed by arbitration, or by a conference followed by expert determination. Other forms of dispute
resolution procedures such as Facilitation and Dispute Resolution Board are referred to in clause 45
and a separate Standard, at this stage, anticipated to be numbered AS 11001, is foreshadowed to
enable the parties to utilise these alternative forms of dispute resolution procedures if the nature of the
project lends itself to either of those more formalised forms of Contract management procedures
throughout a project.
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
3. Provisions have been included to enable compliance with the various “Security of Payment” Acts of
the States and Territories. In particular, time in the proposed Standard is to be calculated in business
days. The General Conditions incorporate into the Contract a definition of business day as defined in
the relevant Security of Payment Act of the jurisdiction of a State of Territory, and where a Security of
Payment Act does not define a business day, (for instance in Western Australia and Northern Territory)
the business day definition set out in subclause 1.2(b) of the proposed Standard will apply.
4. Amendments to the payment clause (40) will facilitate the administration of the Contract by giving
the Superintendent power to receive and issue documents on behalf of the Principal so as to comply
with the relevant SOP Act, where the relevant Act requires such documents to be received or issued by
the Principal rather than the Superintendent.
5. Clause 4 deals specifically with Bills of Quantities and requires any Bill submitted, whether or not it is
to form part of the Contract, to be priced. A separate clause 5 deals with Schedule of Rates.
6. In respect of “Service of Notices”, service by email is now catered for.26
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
7. In clause 12, it is proposed that the Main Contractor will be required to use AS 11002 subcontract
conditions, containing no other amendments or additions to those subcontract conditions except those
necessary to reflect the Contract between the Principal and the Contractor. Failure to comply with this
requirement is proposed to be a substantial breach by the Contractor.
8. In clause 17, Care of the work and reinstatement of damage, the “excepted risks” have now been retitled as “Principal’s risks”.
9. Substantial proposed changes have been made to the Principal's obligations with respect to the role
of the Superintendent. A return to and clarification of the regime of AS 2124 in this regard is proposed
in the new Standard, in particular, where the Superintendent is required to certify, assess, price,
measure or value work qualities of time, or to act reasonably, the Superintendent must act impartially,
otherwise the Superintendent acts as agent for the Principal.
10. In relation to quality in subclause 32.1, the Contractor is now under a specific obligation upon
becoming aware of work that does not comply with the Contract to rectify such work without the
necessity for the Superintendent to give a direction to do so.
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
11. Extensions of time are now measured in working days. A working day is now a defined term in
subclause 1.1, whilst with the giving of notices however, time is always calculated in business days.
12. In clause 35, substantial changes have been proposed to strengthen the programming provisions of
clause 35 and in addition to the three specific programming requirements in subclause 35.5, the parties
can also agree to additional requirements as set out in Annexure Part E. Subclause 35.10 also gives
the Superintendent power to accelerate the Works. The existing power to change the sequence and
order of work remains in subclause 35.4.
13. There is now a specific obligation in subclause 37.2 on a party to notify delays promptly and in any
event within 5 business days by giving the Superintendent and the other party written notice of the
cause and estimated delay. The subclause also requires the Contractor to state in its notice of delay
whether the Contractor anticipates it will be claiming an extension of time in respect of such cause of
delay.
14. The causes of delay have now been clarified further in these Contract Conditions in subclause 37.4.
For events beyond the reasonable control of the Contractor which cause delay and which occur before
the date for practical completion, the Contractor is entitled to an extension of time if practical completion
is or may be delayed, whilst delays occurring after the date of practical completion either by a variation
or by a Principal’s act of prevention (which no longer includes a variation as it did in AS4000) are
separate grounds for an extensions of time.27
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
15. Subclause 37.6 clarifies overlapping delays in that where a delay occurs which would otherwise
enable the Contractor to be entitled to an extension of time, and that delay overlaps a delay for which
the Contractor is not entitled to an extension of time, the clause allows the Contractor an extension of
time but no delay damages even if another overlapping cause of delay is an act of prevention by the
Principal.
16. Substantial proposed changes have been made to the assessment of extensions of time. The
Superintendent now has an option in subclause 37.9 either to assess and direct an extension of time
within 20 business days or to give a notice within that time notifying the Contractor that the
Superintendent requires more information to enable an assessment of extension of time. If the
Contractor complies with the written direction to provide such additional information within the stated
time, the Superintendent has a further 20 business days to assess the extension of time. Failure by the
Superintendent to do so within the time required will entitle the Contractor to an extension of time as
claimed as though the Superintendent had assessed the same, provided the early warning procedure
has not in the meantime, been invoked by a party or the Superintendent.
.
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
17. Subclauses 37.22 now allows delay damages only for delay to practical completion by a Principal’s
act of prevention whilst delay costs are now payable for delays to practical completion due to a
variation. There is now a differentiation between “delay damages” and “delay costs.
Delay damages are assessed and certified by the Superintendent under clause 44.5 for every working
day which is the subject of an EOT, and a prescribed notice under clause 44. Delay costs are assessed
by the Superintendent under clause 39.14 and include overheads but not profit.28
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
18. A substantial change has been proposed to the variation clause 39. In particular subclauses 39.3
and 39.4 introduce a new regime that if the Contractor considers a direction to be a variation, the
Contractor, within 5 business days of receipt of the direction, may notify the Superintendent that the
effect of the direction constitutes a variation and the Superintendent is then required within 5 business
days to respond. If the Superintendent disagrees that it is a variation then the early warning procedure
contained in subclauses 2.2 to 2.5 can be invoked.
19. In relation to pricing variations, rates and prices generally are to include allowance for overheads
and profit unless otherwise stated, whilst there is a specific right to recover delay costs for delays
caused by a variation if not already priced as part of the variation under subclause 39.2.
20. Subclause 40.1 provides, if the relevant SOP act applies, that the Superintendent has the authority
to act as the Principal’s agent in receiving payment claims and issuing payment schedules under the
relevant SOP act.
21. The dual certificate regime of AS 4000 has been abandoned and the Superintendent now issues
only one certificate for the amount payable to a party, thus enabling the certificate to comply with the
relevant SOP Act as a payment schedule under that Act.
AS 11000 – 2015 (Draft) General Conditions of Contract
CSM80007 – Week 2, Semester 1, 2017 (Yogeswaran Kumaru)
Major Changes to AS 4000
22. Also, a major change has been proposed to the regime of pre-payment for unfixed items.
Subclause 40.10 contains two Alternatives, the first of which provides that the Contractor is not entitled
to pre-payment for unfixed items whilst the second Alternative allows pre-payment subject to the
conditions set out in subclauses 40.12 and 40.13 being satisfied by the Contractor.
23. Notification of claims clause 44 retains the same procedures and effect as clause 41 of AS 4000,
save and accept that the clause dealing with liability of failure to communicate a claim is now placed at
the end of the clause rather than the middle of it.
24. An updated Annexure Part A has been included in the document to clarify, where appropriate, the
options that are given to the parties in relation to the formation of the Contract.
Reference : STANDARD AUSTRALIA , STATEMENT, Embargoed until 23 January 2015