This guideline has been prepared to assist Health Services / Agencies and the members of governance bodies such as Steering Committees (SC) or Project Control Group (PCG) to understand and manage their responsibilities during the construction and contract administration phase of a building project. The guide has been prepared for non-technical members of the SC/PCG who may have little or no experience in the building and construction industry, although it does provide guidance to consultants and project managers regarding government and departmental requirements.
Contract administration formally commences when the building contractor is formally engaged to deliver the building project and associated works. The Contract Administration phase covers all construction, subcontracting, procurement and installation of engineering services, commissioning, handover, defects rectification works, and extends to the final financial close of the project.
Contract Administration is undertaken during the construction and delivery phase of a project and the contract is managed by or on behalf of the Principal to the contract. The Principal is the entity entering into the contract with the building contractor. The purpose of contract administration is to
The guideline covers the normal procurement arrangements used by the Department including use of the standard forms of contract. It is envisaged that the normal arrangement is a lump sum contract using standard terms and conditions. However the principles would also apply to other forms of procurement such as construction management, design and construct and other forms of contracting in standard use in Victoria.
Where alternative procurement methods are used, contract administration requirements will vary according to contract terms and conditions. The Department's Project Manager will provide advice regarding alternative procurement methods which may be used. Contract Administration practices may need to be tailored for alternative arrangements such as for Public Private Partnerships, maintenance & performance contracts and minor works contracts or.
The Victorian Code of Practice for the Building & Construction Industry sets out the acceptable behaviours for all parties to a building contract.
The contract administration policies of the Government have been set out in the Code of Practice and reference should be made to the Code. In addition, projects in receipt of Federal Government funding must also comply with the National Code of Practice where applicable.
The Building Contract is a legal arrangement and usually comprises:
The standard form of lump sum contract approved for public construction in Victoria is the Australian Standard General Conditions of Contract, AS 2124 - 1992 which must be used with the Victorian Government approved special conditions of contract. The contract allocates various contractual roles to the different parties to the contract, as well as to the Superintendent.
The key parties involved in the contract administration phase are:
In larger / more complex projects:
The Principal to the contract is the party responsible to procure the works and is generally the ‘client' or ‘owner' of the facility, or the person representing the Agency which manages or will manage the facility.
The role of the Principal includes:
• making payments;
• ensuring the builder is notified of the appointed Superintendent, who will be responsible for directing the works, and
• accepting the works at handover.
It is common practice for the Principal to appoint or delegate the responsibility for day-to-day activity to an officer who is then the Principal's Representative. This is separate from the contractual role of the Superintendent.
The Building Contractor must be a legal entity and with the appropriate Building Contractor Registration. A tender from a building contractor will be offered in response to a request for tender. The acceptance of a tender, which must be in writing, evidences that a contract exists. See the guideline on Tendering, Evaluation and Acceptance for more details.
The principles in this guideline are equally applicable to Building Contractors, trade contractors and subcontractors as well as Construction Managers. Note that Construction Management contracts are not lump sum contracts, but usually involve the letting of separate sub-contract supply and trade contracts.
For some projects, it is desirable to undertake a series of separate contracts, such as:
a. demolition, removal of hazardous materials and early works to prepare a site that may be followed by
b. construction contract, or
c. develop a facility in several stages.
These may be separate contracts, and will need to comply individually with these guidelines.
The Superintendent is appointed as the contract administrator, to manage the interaction between the Contractor and the Principal.
It is essential that the contract administration role be undertaken by a person having the necessary expertise and qualification to do so.
It is the Principal's role to ensure the contractor is notified of the appointed Superintendent and if there are any limitations to that appointment. If the role of Superintendent has not been included at the time of engaging consultant team members, then the appointment should occur as soon as practicable after the acceptance of the contract and must occur before the contractor is given the authority to start work on site.
Key roles of the Superintendent are set out in the contract. The Superintendent is responsible for the day-to-day administration of the contract and specific tasks including:
The Superintendent is obliged to follow the provisions of the Contract Agreement and Contract Documents, must interpret and administer the Contract in accordance with the documents and must act with due consideration for their intent.
Certain clauses require the Superintendent to act as:
and in other clauses:
In both instances, the Superintendent is required to act reasonably, but particularly when acting as a certifier, there will be an expectation from the Builder/Contractor that the Superintendent acts impartially.
There are many matters calling for the Superintendent's view. Some examples are:
On Government projects, the Superintendent has the additional responsibility of taking into consideration government regulations and policies, particularly in respect of OH&S regulations and the Security of Payment Act. The Superintendent must act in a manner consistent with these requirements to ensure that the Principal is not exposed to risks or liable for additional payments.
Restrictions to the Superintendent's powers normally apply to Department funded contracts. The Superintendent cannot engage in the following actions without the direction of the Principal and approval of the departmental Director:
An example template for a letter of nomination of the Superintendent is contained at the end of this guideline.
Health Services/Agencies (acting as Principal to the contract) and consultants (as Superintendent or Superintendent's Representative) should be aware of their technical, legal and financial obligations and responsibilities, as failure to do so may involve disruptive and costly compensation claims.
The Health Service/Agency is to note that the engagement of a Superintendent is not a substitute for discharging their responsibilities in regard to the matters of OH&S. These requirements are to be taken as shared duties and obligations, and cannot be wholly delegated to others. Health Services/Agencies must ensure that these items are regularly monitored and reported on and where necessary action taken to address issues as they arise.
The Health Service/Agency is to note that the engagement of a Superintendent is not a substitute for discharging their responsibilities in regard to the matters of SOP. The responsibilities are shared and cannot be wholly delegated. Health Services/Agencies must ensure that these items are regularly monitored and reported on and where necessary action taken to address issues as they arise.
Many construction projects are undertaken whilst buildings are occupied. It is essential that health service delivery standards be maintained for the facility during construction. In addition to careful planning, and appropriate organisational and contractual arrangements, full co-operation between the Principal, Superintendent and Contractor is essential. Important issues to be considered include: