6.Notes for 9.2 Contracts PDF

Preview

Summary

Download 6.Notes for 9.2 Contracts PDF

Description

Slide 1

Building Estimating Finishing Works and Contract Types

9.2 Contracts

Welcome to this presentation on contracts Image: Contract by folksonomy, PD,

Slide 2

Copyright Notice

Please note. (For Internal Audiences)

Slide 3

Common Australian Construction Contracts • Standard forms • Similar •

Variations, Provisional Sums, failure to pay, reimbursement as a result of delay and liquidated damages.

• Different •

Form of procurement such as lump sum, design and construct, construction management or cost plus.

• The contracts govern how the parties to the contract behave and how or who administers the contract.

There are several popular standard forms of construction contracts currently used in Australia. All are fairly consistent with their approach to some common items such as variations, Provisional Sums, failure to pay, reimbursement as a result of delay and liquidated damages. Some contracts are differentiated by the form of procurement such as lump sum, design and construct, construction management or cost plus. The contracts govern how the parties to the contract behave and how or who administers the contract.

Slide 4

Australian Building Industry Contract ABIC MW-1 or ABIC SW-1 • • • • • • •

Developed by AIA and the MBA Plain English Steers risk away from the architect Used where an architect is engaged to administer the contract. MW-1 is the Major Works version for contract values from $250k - $25m, SW-1 is for Small Works intended for contract values from $50k - $3m. Used for lump sum fixed price contracts.

So let’s look at the Standard Forms of Contracts in Australia, starting with the Australian Building Industry Contract – ABIC MW-1 or ABIC SW-1 This was developed jointly between the AIA (Australian Institute of Architects) and the MBA (Master Builders Australia). It does use plain English and steers risk away from the architect & is generally used where an architect is engaged to administer the contract. MW-1 is the Major Works version for contract values from $250k - $25m, SW-1 is for Small Works intended for contract values from $50k - $3m. Used for lump sum fixed price contracts.

Slide 5

Australian Standard General Conditions of Contract AS2124-1992 • Preferred by clients, in particular government. • Not plain English • Lump sum contract.

The Australian Standard General Conditions of Contract AS2124-1992 is the preferred document for many clients, in particular government. DPTI, for example, use this on the majority of their lump sum fixed price building contracts with a number of amendments for insurances, variations, superintendent roles etc. Whilst not plain English, it is fairly clear provided it is administered properly and understood by all parties. Lump sum contract. Image: Lump sum contract by Nick Youngson CC3.0

Slide 6

Other Contract Types Australian Standard General Conditions of Contract AS4000 This contract updated AS2124-1992 to cater for changes in construction practice and law and is the most widely used document in the private sector. It is used in lump sum fixed price contracts. Australian Standard General Conditions of Contract AS4902 This is a contract used on design & construct contracts where the contractor is allocated design obligations and risk. It is still a lump sum fixed price contract. Australian Standard General Conditions of Contract AS4916 This is for projects carried out under a Construction Management type contract where the client contracts directly with the trade contractors and the construction manager (who manages the project on behalf of the client for a fee).

Slide 7

Pricing for Contracts Types • Tender documents include the proposed contract • Tenderers know type of contract • Estimator knows contract type and include costs in tender • Additions where a contract other than AS4000 is being used.

It is important to be aware of what a builders estimate must consider when putting together a tender submission. Tender documents will include the proposed contract (or at least indicate what the contract is) and tenderers as part of a select tender list would know in advance the type of contract the project will work under. The estimator should be aware of the requirements of different types of contracts and what needs to be costed and allowed for in the tender. In most cases, a price for constructing the project still needs to be estimated, with additions where a contract other than AS4000 is being used. Image: Calculator by Coyau / Wikimedia Commons

Slide 8

Contract Requirements AS4000 – Lump sum fixed price Conditions of Contract Tender drawings – architect, structural & civil engineer, services engineer, other Specification Tender Conditions Tender Schedules Outcome: Lump sum fixed price submission AS4902 – Lump sum fixed price Conditions of Contract Tender drawings – architect, structural & civil engineer, services engineer, other (note the drawings may only be completed to a schematic level) Principals Project Requirements (or a Design Brief) Tender Conditions Tender Schedules Outcome: Lump sum fixed price submission including design fess

These are the requirements for each of the contract types

Slide 9

Differences to allow for: AS4000 • Standard contract used in the majority of building work across Australia. • Estimator needs to submit a tender based on: • Subcontractor and supplier quotes • Cost for own labour where applicable • Preliminaries • Margin • Any omissions or ambiguities in the documents are at the clients cost. • Design Consultants paid for by client • Variations are at the client’s benefit/cost • Contractor has essentially no responsibility for design

When preparing pricing for an As4000 contract, which is a standard contract used in the majority of building work across Australia, the estimator needs to submit a tender based on subcontractor and supplier quotes, cost for own labour where applicable, preliminaries, and margin. Any omissions or ambiguities in the documents are at the clients cost. In this contract design consultants are paid for by client and any variations are at the client’s benefit/cost. The contractor has no responsibility for the design (although watch for some amended contracts which pass on an assumption of ‘reasonable competence’ to the contractor which passes some risk of design responsibility onto the contractor).

Slide 10

Differences to allow for: AS4902 • Popular design & construct contract for building work across Australia. • Estimator needs to submit a tender based on: • Subcontractor and supplier quotes • Cost for own labour where applicable • Preliminaries • Design fees • Margin • Consultants are novated to the contractor to complete the design. • Any omissions or ambiguities in the documents are at the contractors cost. • Client design change is the responsibility of the client. • PPR is the minimum requirement for the project. • Contractor decides how project completed

When preparing pricing for an As4902 contract, which is a popular contract used in building work across Australia, the estimator needs to submit a tender based on subcontractor and supplier quotes, cost for own labour where applicable, preliminaries, design fees and margin. Consultants are novated to the contractor who then engages the consultants to work for the contractor and complete the design. Any omissions or ambiguities in the documents are at the contractors cost. If the client initiates a design change, the cost or saving as a result of the change is the responsibility of the client. The Principles Project Requirements PPR, is the minimum requirement for the project, it is up to the contractor to decide how the project is completed, subject to approvals from the client.

Slide 11

Differences to allow for: AS4916 • Clients familiar with construction • Estimator needs to submit a tender based on: • Management fee • Preliminaries • Access documents, Program, Preliminaries • Contractor management fee • Contractor • Tenders • Recommends trade contractors • Assesses progress claims • Assesses variations • Recommends payment

The AS4916 contract is used by those clients who are well versed in construction. Estimator needs to submit a tender based on Management fee and Preliminaries. Instead of providing a price to build the project, the contractor needs only to assess the documents, put together a program and work out the preliminaries costs. In addition, the contractor puts forward a fee, normally based on a percentage of the construction cost, to manage the project. The client engages the consultants and is responsible for the design. The contractors prelims and fee will take into account the requirement to be involved during design documentation to provide constructability & costing advice and commence tendering of early works trades to ensure a quick start on site. The contractor tenders the works, recommends trade contractors to the client and assesses progress claims & variations & recommends payment to the client. Image: Lokey building site by Jun Seita, CC2.0, .

Slide 12

Building Estimating Finishing Works and Contract Types

9.2 Contracts...