CONTRACTS

Question 1

1. What would be included in a set of contract documents? Who puts it together?

Answer 1

Client and contractor details, Contract, Schedules, Specification, Drawings, Consultant drawings and information, Bill of Quantities (if required), Addenda
The Architect. They must assemble all copies for signing.

Question 2

2. When using the ABIC lump sum contract, who are the parties that sign the contract documents?

Answer 2

Owner and Contractor

Question 3

3. Name 3 different standard forms of lump sum building contracts used in NSW.

Answer 3

ABIC suite (BW, SW, MW), - architects as CA
AS 4000, AS 2124 - commercial or larger resi
MBA Lump Sum - wieghted towards builder
GC21 - mainly gov projects over $1M
HIA - for resi projects
Fair Trading

Question 4

4. Which contract would you recommend for a small residential project and why?

Answer 4

ABIC SW‐2008: it has been prepared in conjunction with the AIA and MBA to create a fair contract that benefits the interests of the parties involved, but also for the architect/administrator. It correlates with the Institute Client/Architect Agreement.

Question 5

5. Which contract would you recommend for a large commercial project and why?

Answer 5

ABIC MW‐2008 – it has been prepared in conjunction with the AIA and MBA to create a fair contract that benefits the interests of the parties involved, but also for the architect/administrator. It correlates with the Institute Client/Architect Agreement.

Question 6

6. Describe at least 3 separate non traditional forms of procurement.

Answer 6

Cost‐Plus Contract, Design and Construct, Novation.

Question 7

7. What role does the architect play in the commonly used standard lump sum contracts?

Answer 7

As the contract administrator and independent assessor of claims, variations etc that are processed throughout the construction of a building. They are not a party to the contract and therefore have no financial interest in it. This allows them to remain autonomous during their administration.

Question 8

8. What are the fundamental obligations of the owner in a standard lump sum contract?

Answer 8

To give the contractor possession of the site to carry out the works, to pay any claims or variations as assessed by the architect, to allow the architect to carry out their work independently.

Question 9

9. What are the fundamental obligations of the contractor in a standard lump sum ABIC contract?

Answer 9

1. To take possession of the site and begin work within 10 days of signing the contract,
2. to perform the works in a competent and diligent manner,
3. keep site clean and tidy, comply with Architect’s instructions,
4. obtain all official docs required,
5. comply with legislation,
6. bring the works to PC,
7. provide owner with the Consumer Buying Guide.

Question 10

10. What is the purpose of the schedules in an ABIC form of contract?

Answer 10

To detail particular requirements or conditions of a contract (site info, doc order of precedence, prime cost sums, provisional sums)

Question 11

11. Can you use an AS 2124 contract for residential work in NSW?

Answer 11

“Not without amending the contract so it aligns with the home Building Act “

Question 12

12. Can you use an ABIC contract for residential work in NSW?

Answer 12

Yes. You can use any of the ABIC contracts (Basic Works, Simple Works, and Major Works). The most suitable will be chosen for the complexity and scale of the project.

Question 13

13. Who are the parties who sign the ABIC contract?

Answer 13

Owner and Contractor only.

Question 14

14. Who are the parties who sign the AS 2124 contract?

Answer 14

Owner and Contractor only.

Question 15

15. Who are the parties who sign the AS 4000 contract?

Answer 15

AS4000 only includes the Conditions of contract. A LOA needs to be added for signing by the owner (Principal) and the Contractor.

Question 16

16. Your client and the builder want to use a MBA standard form of lump sum contract. Is there any problem with this proposal?

Answer 16

This kind of contract is prepared by the Master Builder’s Association and been prepared to protect the interests of the contractor, and usually with little concern for the architect’s as administrator, or client.

Question 17

What are some elements of an AS2124 contract?

Answer 17

1. fixed price
2. Fixed timeframe for completion.
3. Practical completion is a date entailing when a construction project can be used practically.
4. Contractors are liable for liquidated damages.
5. There are express time bars - claims must be made within timeframes.
6. If the contractor encounters any latent conditions, they bear the burden of any additional costs but may claim for an extension of time.
7. Contractors may claim for unfixed plant and materials provided it meets certain conditions.
8. In relation to late progress payments, interest under AS 2124 is compounded six monthly.

Question 18

What is different about a GC21 contract?

Answer 18

‘Co-operative contracting’
1. Removes traditional dual agent/
certifier role for the superintendent (Authorised Person is agent of Principal or Contractor)
2. Includes use of a valuer to assess disputed claims
3. replaces the traditional
concept of practical completion with ‘defects free completion’
4. includes contracting workshops (start up, close out etc) that assist in avoiding disputes.
5. Completion amount (security) is retained out of >50% payments
6. uses milestones
7. $1M - $1B

Question 19

What are some advantages of lump sum contracts?

Answer 19

1. very well understood across the building and construction industry.
2. Limited risk for the owner and contractor,although contractor carries more.
3. There are a number of well-known standard form contracts (particularly Australian Standard contracts)
4. Known price
5. Requires clear well defined scope of works

Question 20

What are some disadvantages of a lump sum contract?

Answer 20

1. Often the construction phase begins prior to the completion of design documents which gives rise to issues as to what’s included in the contractual scope of works. Subsequently, the contractor’s claims for additional costs often arise from variations to the scope of the final documentation.
2. Preparing the design prior to commencing construction can increase the total time the project takes.
3. Preparing the design prior to commencing construction also means the principal doesn’t receive the contractor’s input and the project is less adaptable.