FEATURE: New and amended conditions of contract
NEW AND AMENDED CONDITIONS OF CONTRACT FOR NON-RESIDENTIAL CONSTRUCTION Three new conditions of contract were released by Standards New Zealand in late 2013: • NZS 3910:2013 – updated conditions of contract for building and civil engineering work • NZS 3916 and 3917 – a new contract based on NZS 3910, for use where the contractor is responsible for both design and construction • NZS 3917:2013 – a new contract, also based on NZS 3910, for fixed term contracts such as maintenance work NZS 3910:2013 NZS 3910:2013 Conditions of Contract for building and civil engineering construction is the form of contract, administered by an independent “Engineer” to the contract. The 2013 edition is the first revision in 10 years of the home-grown contract used for about three quarters of non-residential and civil construction work in New Zealand. What’s new, what’s changed? NZS 3910 has not been completely rewritten, but there are many changes, which address: • Process improvement and clarity • Insurance section completely rewritten, with some new requirements. • Payment processes clearer and better aligned with the CCA • Changes to bonds • New interest entitlements • Discipline and accountability for Engineer and Contractor • Tightening of variation pricing and response/ approval process • New early warning requirement for cost, delay or quality issues • Greater Engineer’s powers to ensure timely defect remediation and urgent work • New schedules for practical and final completion, off site payments, warranties • Upgraded requirements and time limits for deliverables, including programme, safety plan, quality plan • Tightened procedures for cost reimbursement contracts, which all too frequently end up in dispute • User-friendly schedules which are locked to prevent unauthorised changes. 38 INHOUSE | FEB/MARCH 2014
Peter Degerh
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Some changes were designed to reduce the need for clients to include extensive Special Conditions in tender documents. Every job now requires at least a basic programme. Contractors who fail to provide other deliverables such as safety plans may be prevented from starting work or getting paid. The improved presentation and consistency of wording, along with more helpful guidelines and explanatory notes, should help users to understand their contractual obligations. An early warning requirement is intended to encourage collaboration, and the Contractor could be penalised for failing to notify the Engineer in advance of cost, time or quality issues. Contractors should inform their bank and insurance broker of the new bond forms and schedules in advance to avoid delays when bond or insurance certificates are required. The improved document doesn’t significantly change the usual risk allocation, but it should reduce the need for onerous special conditions. Everyone using the NZS 3910 contract – including Contractors, Principals, Engineers, QS’s and design consultants – should be familiar with the updated contract. Two new standards The NZS 3910 revision has spawned two new Standards: NZS 3916 – Conditions of contract for building and civil engineering – Design and construct Anyone involved in non-residential construction contracts in which the builder has principal responsibility for the design and construction of the project should be familiar with NZS 3916, a design and construct contract based on NZS 3910. It offers a sound contractual platform for the majority of design and construct contracts where the work is to be supervised by an independent “Engineer”.