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Definitions – Clause 2
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Security – Clause 5 - Form of Security
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ABH323 (Week 13)

Overview and Revision

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Definitions – Clause 2 - Contract Sum - Contractor - Date of Acceptance of Tender - Date of Practical Completion - Date for Practical Completion - Day - Practical Completion - Provisional Sum - Site - Superintendent - Superintendent’s Representative
Security – Clause 5 - Form of Security Cash retention or bank guarantee or insurance bond etc
Security – Clause 5 - Limits only apply to ‘building work’ under QBCC Act - Maximum security that can be withheld prior to PC – 5% contract sum - Maximum security that can be withheld after PC – 2.5% contract sum - BUT limits do not apply to unfixed materials
Security – Clause 5 - Limits only apply to ‘building work’ under QBCC Act Under head contract, parties can agree to more security as long as contract includes express provision referencing s67K(2) and parties initial that provision
Security – Clause 5 - Limits only apply to ‘building work’ under QBCC Act - Limits apply to total security provided regardless of form e.g. 2% BG plus 3% cash retention, not 5% BG plus 5% cash retention
Security – Clause 5 - Subcontractor can replace cash retention with other form of security e.g. cash retention replaced with BG but not other way around unless contract permits it
Security – Clause 5 - Recourse to security - When permitted by contract, typically only when debt is owed - If QBCC Act applies, must give notice under s67J
Security – Clause 5 - Release of security must understand when contract requires release and note QBCC Act if ‘building work’ – offence for failing to release security when required by the contract unless subject of a dispute
Contract Documentation – Clause 8 - Documentation errors/discrepancies / dimensions - Each party must notify the other party and Super if error, discrepancy or ambiguity found – Super directs how to resolve it and possible variation if cost more / less than what contractor could reasonably have anticipated at time of tendering if it is in a principal supplied document
Contract Documentation – Clause 8 - Supply of documents by Principal / Contractor Both principal and contractor must supply one electronic copy of its documents unless contract says otherwise
Contract Documentation – Clause 8 - Must understand all documents that form part of the Contract E.g. quote/tender may not form part of the Contract => check the contract terms (clause 6 says what documents are part of the Contract)
Assignment & Subcontracting (cl 9) - Requirements and obligations on both parties - Generally, cannot subcontract the whole of the WUC - Contractor cannot assign the contract or any payment etc without principal’s agreement
Assignment & Subcontracting (cl 9) - Contract may require a particular form of subcontract to be used – check the contract
Assignment & Subcontracting (cl 9) - Don’t forget to check QBCC licence number if doing ‘building work’ and check ABN to confirm legal entity being contracted
Assignment & Subcontracting (cl 9) - Understand that head contractor is always liable for actions of all subbies (i.e. subcontractors are within head contractor’s legal control regardless of physical control)
Assignment & Subcontracting (cl 9,10) - Understand difference between nominated subcontractor and selected subcontractor and how it affects the contract - Nominated sub => principal selected the subcontractor and noted in Request for Tender Docs - Selected sub => head contractor selected the subcontractor from a list provided by the principal in Request for Tender Docs
Assignment & Subcontracting (cl 9,10) - BUT principal is not responsible for actions of subcontractors even if nominated or selected subcontractor - Understand rights of subcontractors if not paid by head contractor
Provisional Sums – Clause 11 - What is a provisional sum? - is an allowance for work that could not be priced at time of tendering - can include prime cost item, or other monetary sum not payable unless directed by superintendent to do that work
Provisional Sums – Clause 11 - How do they get adjusted? - priced under cl 40.5 - includes P&OH on provisional sum work
Provisional Sums – Clause 11 - Why use a provisional sum? PS items are good for work that cannot reasonably be scoped prior to contract e.g. demolition, opening up/strengthening etc or item not yet selected
Site Conditions – Clause 12 - What is a latent condition? (1) Physical condition that could not be reasonably have been anticipated at time of tender/contract despite examination and inspection
Site Conditions – Clause 12 - What is a latent condition? - Doesn’t cover change in design – only a change to something physical like rock underground if soil test didn’t encounter rock and there are no outcrops of rock in the area around the site, steel posts inside an existing wall to be demolished, damaged electrical wiring, termite damage etc (possibly asbestos but depends on age of the building)
Site Conditions – Clause 12 - What is a latent condition? (2) Not a weather condition or physical condition that is a consequence of a weather condition
Site Conditions – Clause 12 - Requirements and obligations of both parties - Contractor must notify with “Early Warning” Notice as soon as possible but no later than 1 BD of becoming aware of LC and, where possible, before disturbing LC – if Super requests info, need to identify latent condition, what work needs to be done to overcome LC, what cost and time is associated with that additional work etc
Site Conditions – Clause 12 - Requirements and obligations of both parties - Superintendent must direct what to do - Entitled to variation if incur extra costs due to LC - Entitled to EOT if cl 35.3 permits it - not entitled to costs incurred more than 5 BD before notifying super of LC
Site – Clause 27 - Possession of Site Principal must give possession of site or sufficient portion to allow contractor to carry out WUC – contract provides when possession must be given. Not a breach of contract unless exceeds max given in Annexure if applicable
Site – Clause 27 - Access for the principal and others Contractor has possession of site but must allow reasonable access for principal and other contractors of the principal
Site – Clause 27 - Discovery of items of value Any minerals, fossils, relics, things of value found on the site is principal’s property and cannot be disturbed without direction of super
Site – Clause 27 - Use of the Site Site can only be used for purposes of carrying out the WUC
Materials & Work – Clause 30 - Quality of Works Must carry out works in acc with contract and use suitable new materials
Materials & Work – Clause 30 - Defective Works (1) Contractor must rectify defective work at its own cost
Materials & Work – Clause 30 - Defective Works (2) Principal can engage another contractor to rectify and recover cost from contractor if contractor fails to rectify as soon as practicable. Cannot happen without prior written notice of this possible action and at least 10 BD have passed from notice
Materials & Work – Clause 30 - Defective Works (3) Contractor may request principal to accept defective work – contract sum adjusted to reflect change in value of the Works and any loss suffered by P
Progress & Programming – Clause 33 - Construction program (1) Program may be required to be given in tender or if not, must be submitted within timeframe in contract or if no time, within 10 BD of date of acceptance of tender
Progress & Programming – Clause 33 - Construction program (2) - Contractor must revise program to reflect actuals and critical path - used for EOT claims i.e. delay must be a delay on critical path on program (cl 35.3(a)(iii))
Progress & Programming – Clause 33 - Rate of progress - Must progress works expeditiously and without undue delay - Super may direct contractor to take all reasonable steps to achieve necessary progress if contractor is unable to demonstrate it will reach PC by date for PC at contractor’s cost
Progress & Programming – Clause 33 - Acceleration - Super may notify contractor of proposal to accelerate WUC - Contractor must provide info in cl 40.2(a) for proposed variation - Super may direct acceleration to bring forward date for PC or instead or granting an EOT - Contractor is entitled to costs of acceleration direction
Suspension – Clause 34 (1) - Superintendent may direct contractor to suspend whole or part of the WUC - Cannot suspend without superintendent’s approval unless suspension because of principal’s breach of the contract under clause 44.3(a)
Suspension – Clause 34 (2) - Entitled to costs of suspension if suspension is due to act or omission of principal, super etc and contractor incurs more/less cost than it would - Valued under cl 40.5 - Otherwise, contractor bears cost of suspension
Times for Commencement and PC – cl 35 - Understand different contractual milestones Contractual milestones are critical and must be defined in the contract so there is an understanding of when the milestone is reached.  PC in particular must clearly set out what is required for PC e.g. Form 16 certificates, O&M manuals etc.
Times for Commencement and PC – cl 35 - Commencement Contractor must give at least 5 BD notice to super of date it proposes to commence work on site and must commence within 10 BD after given possession
Times for Commencement and PC – cl 35 - Notices of Delay - If either party become aware of a possible delay and contractor may become entitled to an EOT for that delay, the party must notify super (“Early Warning” Notice) ASAP but no more than 1 BD - In NCW4, NOD is a precondition to an EOT i.e. if don’t give NOD, not entitled to EOT
Times for Commencement and PC – cl 35 - Extensions of time claims (1) generally only entitled if works as a whole have been delayed. Not enough for one part to be delayed. Not entitled for concurrent delay.
Times for Commencement and PC – cl 35 - Extensions of time claims (2) - Principal may extend time even if contractor has not requested it – reqd to protect principal’s right to LDs if the contractor is entitled to EOT e.g. principal caused delay - EOT only for working days
Times for Commencement and PC – cl 35 - Liquidated damages must be reasonable pre estimate of loss that would be suffered for late completion considered at time of entering into the contract. Don’t need to prove loss is actually suffered if late. If too high, penalty = unenforceable
Delay Costs – cl 36 - Delay Costs: (1) - Only if EOT is granted - Only for some causes of delay
Delay Costs – cl 36 - Delay Costs: (2) Delay costs rate is determined from Annexure B Commercial Framework or if not included in Annexure B, valued by superintendent to cover reasonable additional costs but not profit, loss of profit or loss of opportunity
Defects Liability Period – cl 37 - Defects Liability Period: (1) - Commences 4pm on date of PC - Ends on last day of period noted in Annexure A (typically 12 mths) - Contractor must rectify defects notified to it ASAP at its own cost - Superintendent may direct contractor to commence and complete by specified dates
Defects Liability Period – cl 37 - Defects Liability Period: (2) - Superintendent may extend DLP for any rectified works - If contractor does not comply with direction within timeframe specified in direction, principal may have rectification works carried out by others and recover cost from contractor
Variations – Clause 40 - Definitions Any change whatsoever to the contract whether incurs additional cost or not
Variations – Clause 40 - Proposed variations Proposed vars are at request of superintendent
Variations – Clause 40 - Pricing variations - Pricing of vars by cl 40.5 in order of precedence - Entitled to P&OH if it is for additional WUC
Variations – Clause 40 - Variations for convenience of contractor - Only with superintendent’s approval - Contractor bears all costs including principal’s reasonable costs in assessing the proposal
Variations – Clause 40 - Valuation of variations & BOQs - If no rates in contract, but priced BOQ exists, then those rates to be used if reasonable to do so. - Unless noted otherwise, rates are deemed to include P&OH
Variations – Clause 40 - Contractual claims from contractor If contractor believes it received a direction for variation from super, must notify superintendent within 5 BD of receipt of direction
Certificates & Payments – Clause 42 - Making payment claim - May be claimed at date in the month or stages of WUC stated in Annexure A - Must give all items listed in contract with each payment claim
Certificates & Payments – Clause 42 - Responding to payment claim - Superintendent must respond within 10 BD - Must give ALL reasons for withholding payment including retention
Certificates & Payments – Clause 42 - Times for payment as per contract – should not exceed maximums in QBCC Act if contract is for ‘building work’ b/c max is 15 BD from when claim is given for head contracts, 25 BD for subcontracts
Certificates & Payments – Clause 42 - Unfixed plant and materials - Alternative applying to be selected - Typically not permitted to claim for what is not yet incorporated into the work unless agreed. May agree to provide additional security to cover value of unfixed plant and materials so payment can be made
Certificates & Payments – Clause 42 - Setoffs by principal - Principal can setoff amounts owed by contractor to principal under contract or under an unrelated contract between principal and contractor. Otherwise, must pay what super certifies. - Payment is on account and is not evidence of value of work carried out
Certificates & Payments – Clause 42 - Certificate of Practical Completion - contractor must give super 10 BD prior notice of when expect to reach PC. - Super inspects the works and must give a Certificate of PC or reasons why it doesn’t within 10 BD of receipt of contractor’s notice
Certificates & Payments – Clause 42 - Final Payment Claim - standard form NCW4 requires “Final Payment Claim” at PC which is not typical. The Final Claim would typically be permitted at end of DLP - in NCW4, Final Payment Claim must include all moneys contractor believes it is entitled to under the contract
Certificates & Payments – Clause 42 - Final Payment Schedule - Must be given by super within 10 BD after receipt of Final Payment Claim - Is conclusive evidence of final financial position under the contract except disputes
Certificates & Payments – Clause 42 - Certificate of Final Completion - typically evidence final position between the parties except for fraud, dishonesty, things that couldn’t be seen at end of DLP etc - Standard form NCW4 does not provide for it but typically it would be required at the end of the DLP in response to final claim
Bill of Quantities - Annexure B - Different alternatives can apply - Contract price may be based on lump sum or SOR (with or without BOQ) - BOQ – may form part of contract or not; maybe only used for variation purposes – need to read the contract
Bill of Quantities - Annexure B - Understand when to apply the limit of accuracy (to Schedule of Rates) Limits of accuracy (if provided in Annexure) apply to SOR so that SOR apply to quantities that are within limits of accuracy. If outside the limits, then value under cl 40.5
Bill of Quantities - Annexure B - Pricing and lodgment Priced BOQ must equal contract price
Bill of Quantities - Annexure B - Errors in BOQ must be adjusted in acc with cl 40.5 if more than error listed in Annexure
Traditional Contracts - Project Delivery Methods - Management contracts - Managing contractor (e.g. DEPW) - Project management contracts (AS4915-2002) - Construction management contracts (AS4916-2002) - Construction management trade contracts (AS4917-2003)
Traditional Contracts - Project Delivery Methods - Design – Construct – Maintain (DCM) - Engineering – Procurement – Construct (EPC) - Engineering – Procurement – Construction Management (EPCM)
Relationship Contracts - Project Delivery Methods - Partnering Contracts - ECI Contracts - Project Alliance Contracts
Procurement - - Strategic procurement - Outsourcing
Procurement - Tendering - Tendering Code (AS4120) - What is it? Sets out how the tender documents are to be prepared, how the tender process is to be set up and applied, how the tenders are to be processed and how feedback is to be given to all tenderers
Procurement - Tendering - Tendering Code (AS4120) - What are the main objectives? Encourages high ethical standards for tendering projects
Procurement - Tendering - Tendering Code (AS4120) - Roles and responsibilities of the parties
BIF Act 2017 - Main chapters: - Chapter 2 – Statutory Trusts - Chapter 3 – Progress Payments - Chapter 4 – Subcontractors’ Charges
BIF Act 2017 - Statutory Trusts: - Applies to some projects now - Phased rollout – next phase pushed back to April 2025
BIF Act 2017 - Progress Payments: - Must understand: - reference dates - how to make a valid payment claim - how to respond with a valid payment schedule - how to calculate the due date for payment - what to do if not paid (adjudication, suspension, court)
BIF Act 2017 - Subcontractor’s Charge: - Must understand: - who can use it - what happens if you give a subcontractor’s charge after a chapter 3 BIFA payment claim and vice versa
BIFA Payment Claims - All payment claims must: - be in writing - be given to the person liable to payment to the Contractor - describe construction works or related goods and services - state the amount claimed - include a request for payment - be given from (i.e. on or after) a reference date
BIFA Payment Claims - ‘request for payment’ = written document bearing the word ‘invoice’ but doesn’t have to be an invoice Other examples: ‘claim’, ‘due date’, ‘payable now’
Description of the works/services - Describe construction work or related goods and services: Bad examples: - ‘Claim 1’ - ‘Completion of works’ - Concrete works (possibly not enough of a description)
Description of the works/services - Describe construction work or related goods and services: Good examples: - ‘Completion of tiling works to building 3 ground floor’ - ‘Completion of painting works to units 3 and 4’ - ‘landscaping works’
Description of the works/services - Describe construction work or related goods and services: Doesn’t need to be understood by others, but must be capable of being understood by respondent so that claim can be assessed
BIFA Payment Claims - Reference Date: - date from which a claim for payment may be made as stated in the Contract - if nothing is stated in the Contract, the last day of each month
BIFA Payment Claims - Only one payment claim may be given for each reference date - A reference date does not ‘go away’ if not used; can be used for a later payment claim if not used for a valid BIFA payment claim
Reference Date - Cannot give a claim PRIOR to reference date i.e. early claim is not a valid BIFA payment claim (1) E.g. if reference date is 25th June, and claim is given on Friday 24 June, it is likely to be an invalid payment claim
Reference Date - Cannot give a claim PRIOR to reference date i.e. early claim is not a valid BIFA payment claim (2) E.g. claim may be made on completion of the Stage 1 works, and is given before completion has been reached = not a valid BIFA claim or contractual claim
Reference Date - Take care with contracts that provide that an ‘early claim is deemed to have been received on the date that the claim was to be given’ = not relevant to a BIFA claim but entirely relevant to a contractual claim. That provision will make an early contractual claim a valid claim but cannot make an early BIFA claim, into a valid BIFA claim
Reference Dates - Bad examples: - Claims to be submitted by 20th of each month Not good because contract does not ‘state’ a date for when a payment may be claimed because contractor has the power to decide what day the claim will be submitted i.e. any time prior to 20th of each month so default reference date applies
Reference Dates - Bad examples: - Claims to be submitted monthly - Not good because confusion with regard to when the ‘monthly’ applies from. Court has said from anniversary of the first day that construction work is carried out and every month after that - i.e. if work started on 3rd of the month, then reference date is 3rd of every month
Reference Dates - Good examples: - ‘Claims may be submitted on 25th of each month up to the Date of Practical Completion and at end of the Defects Liability Period’ - ‘Claims may be submitted on the last business day of each month in which work is carried out’
Payment Claim - Can give a claim on or after the reference date (as long as it is within 6 months of when at least one part of the work was carried out)
Payment Claim - Can claim for work carried out up to reference date but not after (unless contract expressly states that a payment claim can claim for work done after e.g. submit claims for payment on 28th of each month for work completed to the end of the month)
Payment Claim - If claim for work after reference date, not entitled to make the claim but may not invalidate the payment claim
Payment Schedules - Payment Schedule must be given within the earlier of: - time stated in the Contract for responding to a payment claim; - 15 business days from when the payment claim was given
Payment Schedules - Payment Schedule does not need to be given if full payment of the amount claimed is made by the Respondent by the Due Date for Payment
Payment Schedules - Payment Schedule must: (1) - be given to the person who gave the Payment Claim; - be in writing; - refer to the Payment Claim;
Payment Schedules - Payment Schedule must: (2) - state the amount the Respondent proposes to pay (Scheduled Amount); - if the Scheduled Amount is less than the amount claimed, why it is less (all reasons to be stated in the Payment Schedule)
Payment Schedule Examples - ‘We refer to your payment claim 3 dated 20 May 2024 claiming $45,000 excluding GST. However, we have assessed the payment claim and will be paying $30,900 excluding GST because the concrete work is only 70% complete. We have also deducted $5,600 excluding GST for the cost to rectify the defective work that you failed to rectify in building 3, ground floor entrance area.’
Due Date for Payment - Due Date for Payment is: (1) if stated in the Contract, the date for payment stated in the Contract;
Due Date for Payment - Due Date for Payment is: - if stated in the Contract, and provision is void because: - exceeds the maximum time for payment under s67U or s67W of the Queensland Building and Construction Commission Act 1991 (QBCC Act); - is a ‘pay when paid’ clause
Due Date for Payment - Due Date for Payment is: - if not stated in the Contract, 10 business days after the Payment Claim was given.
Due Date for Payment - QBCC Act: - maximum time for payment of head contracts = 15 business days from receipt of payment claim (s67W) - maximum time for payment of subcontracts = 25 business days from receipt of payment claim (s67U)
Due Date for Payment - ‘Pay when paid’ (3 limbs): 1) Liability to pay depends on payment by someone else e.g. you don’t get paid until I get paid
Due Date for Payment - ‘Pay when paid’ (3 limbs): 2) Due date for payment is dependent on due date for payment under a separate contract e.g. subcontract due date is 10 BD after head contract due date
Due Date for Payment - ‘Pay when paid’ (3 limbs): 3) Liability to pay or due date for payment is dependent on another contract e.g. I’ll return your retention when I get my retention back
Contract Sum = means the amount determined and described as such in the Commercial Framework included as Annexure B, subject to adjustment in accordance with the Contract.
Contractor = means the person bound to carry out and complete the work under the Contract; stated in Item 2.
Date of Acceptance of Tender = means the earlier of: a) the date of execution of the formal instrument of agreement (if any) by the last of the parties to execute that document; or b) the date which appears on the notice in writing of acceptance of the tender (if any)
Date of Practical Completion = means: a) the date stated in a certificate of practical completion as the date upon which practical completion was reached; or b) where another date is determined in any dispute resolution procedure as the date upon which practical completion was reached, that other date.
Date for Practical Completion = means: a) where Item 5 provides a date for practical completion, the date; b) where Item 5 provides a period of time for practical completion, the last day of the period, as adjusted under the Contract.
Daywork = means work carried out by the Contractor for which payment is made on the basis of daily time and cost records for labour, plant, materials, services and other items as provided in clause 41.
Provisional Sum = means a sum included in the contract sum and identified as a provisional, monetary, prime cost, contingency or other sum or allowance for the work specified in the Contract against that sum.
Site = means the lands and other places to be made available by the Principal to the Contractor for the purpose of executing the Works.
Superintendent = means the person appointed by the Principal to be the Superintendent pursuant to clause 23.
Superintendent’s Representative = means the natural person appointed in writing by the Superintendent under clause 24.
Cash retention – A percentage is withheld from each progress payment – Typically half is released on Practical Completion – Remainder is released at the end of the Defects Liability Period
Bank guarantee A promise from a bank to cover losses if the contractor defaults
An insurance bond (also called a surety bond or contract bond) is a third-party guarantee provided by an insurance company or surety to ensure... that a contracted party (e.g., a contractor) fulfills its obligations under a contract. If the contractor fails to perform, the surety (insurer) compensates the contracting party (e.g., the principal) for financial losses up to the bond amount.
Created by: Asher - S
 

 



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