Contracts relating to building and construction works (including roads and bridges) primarily involve four entities - the Principal, the Contractor, the Superintendent and Subcontractors. In turn, these entities enter into the following contracts:
- between the Principal and the Contractor;
- between the Principal and the Superintendent (where the Superintendent is an independent Contractor or Consultant); and
- between the Contractor and the Subcontractor(s).
The Status of the Principal to a Construction Contract
Except where a statute specifically confers contracting power (eg upon the Director of Housing under the Homes Act 1935 or upon a corporate body such as the Forestry Corporation under the Forestry Act 1920), the appropriate party to a contract which is to be entered into by the Crown is "The Crown in Right of Tasmania" (Treasurer's Instruction 1203).
This means that 'The Crown in Right of Tasmania' should be named as the contracting party (Principal) and execution of the contract on behalf of the State will be either by the Minister or such officer as delegated by the Minister in accordance with the Instruction .
Procurement for all building and construction projects must be undertaken in accordance with the Treasurer's Instructions and any relevant Procurement Practice Manuals.
The Principal's obligations
The Principal has obligations prior to the award of the contract, and further obligations once the contract is in place.
The Principal's initial obligations prior to the award of the contract include:
- preparation of the client brief;
- preparation of the functional brief;
- preparation of the design brief;
- preparation of the detail design and documentation;
- possession of the site; and
- selection and appointment of a Contractor.
Under AS 4120-1994 Code of Tendering, the Principal also has an obligation to:
- arrange project funding before commencing the procurement process;
- proceed with the project;
- advise persons submitting offers of the evaluation criteria;
- ensure that the conditions of tendering are the same for each potential supplier;
- ensure that appropriate addenda procedures are in place;
- provide all information known to the Principal which is relevant to enable potential suppliers to evaluate the risks in the project;
- ensure that reasonable time is allowed, for both the procurement process and the construction; and
- provide positive encouragement to potential suppliers to incorporate maximum innovation while still satisfying the Principal's basic commercial and technical objectives by allowing them to submit options in addition to a conforming offer.
Under the contract between the Principal and the Contractor, the Principal's obligations include:
- where the Principal is responsible for the insurance, the effecting of a policy of insurance for the works and/or public liability;
- the appointment of a Superintendent;
- the provision of access to the site; the timely supply of information to the Contractor; where relevant, the assigning of a designated or nominated sub-contract;
- the making of progress or final payments;
- avoiding variations;
- retention and release of security and/or retention monies.
The Principal's Representative
The Principal for building construction contracts is "The Crown in Right of Tasmania".
The Principal delegates powers, duties and discretions under the contract to the Principal's representative and the Superintendent, but these delegations do not prevent the exercise of such powers, duties, discretions or authorities by the Principal himself.
The delegations are usually made to persons who are skilled and experienced in building or road and bridge construction and who are able to offer the best advice and service to the Principal.
The role of Principal's representative is very important and the appointee must be a person who has expert knowledge of the building and construction industry and who is able to give the Principal the best advice, protection and service.
The Principal's representative is the person stated in the Annexure to the General Conditions of Contract (the Annexure) and is appointed, in writing, by the Principal to be the Principal's representative and notified as such in writing to the Contractor by the Principal.
The Principal's representative will come from the agency.
The delegation as Principal's representative carries with it all power and duties vested in the Principal under the contract but usually with the exception of two clauses. They are:
- Clause 6.2 The right to execute the Formal Instrument of Agreement.
- Clause 44 Default or bankruptcy of the Contractor.
Clause 23 of the General Conditions of Contract, AS 2124-1992, states that the Principal shall ensure that at all times there is a Superintendent and that in the exercise of the functions of the Superintendent under the contract, the Superintendent:
- acts honestly and fairly;
- acts within the time prescribed under the contract or, when no time is prescribed, within a reasonable time; and
- arrives at a reasonable measure or value of work, quantities or time.
The Superintendent is the person stated in the Annexure as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal; and this, so far as concerns the functions that can be exercised by a Superintendent's representative, includes a Superintendent's representative.
The obligations of the Superintendent apply equally to the role of the Superintendent as agent for the Principal and to the role of the Superintendent as certifier under the contract.
It is considered appropriate that the procuring agency has a role and thus a responsibility in the performance of the contract. Therefore, under the procurement arrangements, the role of Superintendent will be the responsibility of the agency. The agency is responsible for ensuring that a suitably qualified and experienced Superintendent is appointed for all major or high risk projects.
The terms of the engagement are for the Principal to determine. The Principal can appoint a State Service employee, or any other person, as the Superintendent. The terms of appointment would require the Superintendent to fulfil the functions set out under the terms of the contract.
The agency should be quite clear in the appointment of a Superintendent whether the Superintendent is acting as an independent certifier or as an agent of the Principal, or both.
The Superintendent as administrator of the contract has the dual role of acting as agent for the Principal in conveying the Principal's instructions to the Contractor, and as certifier for the purpose of issuing certificates and making decisions as to reasonable measures or values of work, quantities or time.
The functions of the Superintendent vary depending on the form of the contract utilised. The degree to which the Principal and the Contractor are bound by the determinations of the Superintendent also varies depending on the form of contract employed.
Superintendent as Certifier
The Superintendent has an obligation to act independently in the certifying functions, these functions usually include:
- the proper execution and completion of the works;
- quality of materials and workmanship;
- assessing extensions of time;
- assessing extensions of time costs;
- issuing the practical completion certificate;
- assessing progress certificates;
- assessing liquidated damages;
- valuation of variations;
- assessing costs arising from latent conditions;
- costs of postponement of work;
- costs of disposal of minerals and antiquities; and
- issuing final payment certificate.
Superintendent as Agent
The Superintendent, as agent of the Principal, could be authorised to issue instructions to the Contractor in respect of:
- the carrying out of the works;
- extent of variations;
- discrepancies, ambiguities, errors or other faults in the contract documents;
- matters arising from site conditions;
- the identification of nominated Subcontractors and suppliers;
- provisional sums;
- the omission or execution of work;
- the removal of persons from the works;
- statutory requirements;
- substitute materials or workmanship;
- the opening-up of work covered up and testing of materials or goods;
- the removal and/or re-execution of any work;
- the making good of any defects in the works;
- the disposal of minerals, relics or antiquities;
- non-correction of defects; and
- the postponement of any work to be executed under the provisions of the contract.
The extent of the Superintendent's obligations to issue instructions is defined by the terms of the Superintendent's appointment, and by the terms of the contract.
In addition, the Superintendent would normally:
- issue instructions and directions to the Contractor;
- supply copies of documents in accordance with the contract;
- supply further information in accordance with the contract; and
- make all necessary decisions required to be made by the Superintendent.
The General Conditions of Contract, Clause 23, AS 2124-1992, states that the Principal shall ensure at all times that there is a Superintendent. The superintendent is the person named in the Annexure to the General Conditions of Contract as the Superintendent. The Superintendent may appoint a Superintendent's representative, in writing, to exercise defined powers or duties on the Superintendent's behalf.
The obligation of the Contractor is the performance of the contract works, in accordance with the terms and conditions of the contract, and in accordance with the General Conditions of Contract, specifications and drawings. The obligations of the Contractor would normally include:
- compliance with all statutory, legal and award requirements relative to the works;
- the provision of competent, experienced management and supervision throughout the contract. The supply and organisation of the necessary labour to perform the works within the contract period;
- the supply of all materials required to complete the works as specified;
- the provision and maintenance of all site facilities to enable the efficient performance of the works;
- the establishment, and updating, of the overall contract program and supplementary sub-contract programs;
- the management of industrial relations in accordance with the relevant awards;
- the maintenance of site safety in respect of all personnel on site and the public generally who may be affected by the works. In this regard, the Contractor shall ensure that all personnel on site are adequately trained and observe safe working procedures;
- the administration of the contract works, such as financial management, co-ordination of all aspects of the works and maintenance of all necessary site and contract records; and
- the implementation of quality assurance systems for aspects of the works when specified.
The Contractor enters into sub-contracts for various components of the work under the contract. The terms of the sub-contract would normally require the Subcontractor to:
- complete the sub-contracted works -
- within a time
- to a price
- to a specified quality; an
- in accordance with the provisions of the sub-contract, the drawings and specifications;
- provide all labour and material necessary for the performance and completion of works as above;
- meet specified performance requirements;
- co-operate with those entitled to possession of the site in its use;
- provide such information and assistance as may reasonably be required for the Contractor to program and co-ordinate the works;
- manage the industrial relations in respect of the Subcontractor's own employees in co-operation with and having due regard for the other employers on site and the Principal;
- keep the workplace safe, adopt safe methods of work, and comply with the common law and the Work Health and Safety legislation;
- co-operate with the Contractor in performance of the works in general;
- where design is required of the Subcontractor, provide competent design;
- provide the specified quality assurance system or quality control procedures; and
- comply with awards, statutes and standards.
The client agency is not specifically mentioned in the contract documents, but the Superintendent is generally engaged by the agency to prepare the design and document the tender. The Superintendent is required to administer the contract and report to the agency on all matters pertaining to the project.
Role of the Department of Treasury and Finance
The Department of Treasury and Finance has developed Prequalification Criteria for contractors, selected specialist subcontractors and consultants. The criteria are to "best practice" standards and similar processes are in use in other jurisdictions.
The Department of Treasury and Finance has an interface role that encompasses industry leadership to effect the Government's commitment to building and construction industry reform by providing initiative in the development and implementation of an integrated package of reforms with industry-wide relevance. This includes developing procedures, standards and guidelines which will engender a consistent and professional approach by the State Sector to construction tendering and contracts practice. A set of strategies has been developed for the procurement of building works whereby all tenders for particular categories and values of work are called with the provision that only prequalified contractors may tender.
Parliamentary Standing Committee on Public Works
The Parliamentary Standing Committee on Public Works approval process is a legislative requirement for public works projects valued in excess of $5 million. The review process conducted by the Committee is an integral part of the legal framework for asset procurement by the Tasmanian Government. The Committee's charter is set out in the Public Works Committee Act 1914.
The Committee includes Members of the Government, Opposition and Independents drawn from both the House of Assembly and the Legislative Council. The Committee reports to the House of Assembly or, if the House is not sitting, His Excellency the Governor.
The Committee scrutinises major Government public works projects, and in particular reports on the "...necessity or advisability of carrying [the project] out" (Public Works Committee Act, Section 15(2b)) and on the "present and prospective public value of the work" (Public Works Committee Act, Section 15(2c)).
For more information refer to Parliamentary Approval.