advice and administration
Expert legal advice on drafting and administrating construction contracts that will help prevent future disputes.
Whether you’re developer, a builder, a subbie or a home-owner, getting the construction contract right is one of the most important things you can do to protect yourself from a bad outcome in any build.
Almost all of the disputes that we see in the construction space arise because of a one-sided or poorly-drafted contract. A well-drafted, well administered contract will prevent disputes from arising, and will also help to ensure that, when disputes do arise, you win them.
So, if you are about to embark on a building project, you should first seek advice from a lawyer in relation to the contract.
Once the contract is executed, it is important that you understand how to properly administer it.
We can assist you with both contract drafting and administration.
Get in touch with the lawyers at CCS legal to get expert advice on construction contracts and administration.
Construction contracts take many shapes and forms including:
1. An oral agreement between two parties to undertake works;
2. One party signing another party’s standard terms and conditions; and
3. An amended standard form, sent for iterations of comment between solicitors, prior to signing.
They can range from one page to thousands of pages. There is no ‘one size fits all’ solution.
Good construction contracts ordinarily contain provisions dealing with the following matters:
- General obligations to perform works;
- Provisions for instructions, including variations;
- Valuation and payment;
- Liabilities and insurance;
- Provisions for quality and inspection;
- Completion, delay and extensions of time;
- Role and powers of the certifier or project manager; and
Standard forms are prevalent in the construction industry and are published by numerous bodies. These include the:
- Australian Standards (AS) suite of construction contracts (along with various forms for associated works and services);
- Australian Building Industry Contracts (ABIC), jointly published by Master Builders Australia Ltd and the Australian Institute of Architects. They are intended for use in building projects where an architect administers the contract; and
- Housing Industry Association (HIA) contracts for residential construction. We are very familiar with all of the common standard form contracts and can provide you with clear advice in this regard.
The parties to a building contract can make decisions that clearly allocate responsibility and risk. Such allocations are reflected in the contract documents that the parties execute. The most common approaches to this are:
- Traditional, whereby the principal’s consultant team is responsible for the design, and the principal contractor is responsible for the building works only;
- Design and construct, whereby the principal produces a concept design, or specifies the project’s requirements and the principal contractor is responsible for undertaking a detailed design, and is also responsible for the construction work. This approach allocates most of the risk to the principal contractor, and is generally the most comprehensive and effective way for a developer to minimise their risk. Naturally, the risk profile and additional work can tend to increase the cost if this model is adopted;
- Construction management, which takes on various forms. Most commonly the trade packages are direct with the principle, and the construction manager takes a fee to manage the construction; and
- Collaborative approaches, including supply chain collaboration, whereby risks are shared, and a pain-gain sharing mechanism is often agreed.
We are very familiar with all of the common approaches to contracting, and we can advise you on the best option for your particular project.
During a project, the builder often submits the following to the principal or owner:
1. Requests for information;
2. Variation requests;
3. Notice of delays;
4. Extension of time requests;
5. Requests for instructions/directions;
6. Payment claims; and
7. Early warnings
Some contracts necessitate the role of contracts administrator/ superintendent, to determine the above claims. A competent contract administrator is fair and reasonable, determining claims within the prescribed times, potentially diverting disputes from crystallising, by providing robust determinations.
We can assist with contract administration, including by undertaking it ourselves or training our clients to undertake it ‘in house’.