In June 2019, Austroads and the Australian Procurement and Construction Council (APCC) released a new General Conditions of Contract for Construction and dubbed it the National Capital Works 4 (NCW4).

The NCW4 is intended primarily for Construct Only contracts and is aimed at public sector works.

So What’s New?

The Austroads website outlines the potential benefits of the new contract, including:

  • improved project delivery efficiency
  • reduced potential for disputes
  • reduction in cost of doing business with the private sector
  • lessen the need of legal advice during the tendering process
  • make it easier for contractors to transfer their services across jurisdictions

As the NCW4 was designed for Construct Only contracts, it would not be suitable for Design & Construct contracts or where services are procured as part of the contract.

The following is a brief overview of some key clauses in the NCW4:

Item Clause What does it say? What does it mean?
Provision of security and recourse 5.1 The Contractor must provide the amount of security specified in Item 6 (if any) within 10 business days of the date of acceptance of tender. The NCW4 only requires security to be provided by the Contractor.
5.1 (h) The Contractor must not take any steps to prevent the Principal making a demand against the security, or to prevent the provider complying with the demand. No notice is required by the Principal to call upon the security and the Contractor must not take steps to prevent the Principal from having recourse.
Construction documents 8.8 The design documents provided by the Principal may not be fully complete. The Contractor must complete any minor or incidental design and detail. Even if the contract is limited to a construction only contract, the Contractor must complete any minor or incidental design and detailing.
Role of Superintendent 22 (a) The Superintendent may only direct that works are to be separable portions if part of the work has reached practical completion, but another part has not reached that stage, or the parties otherwise agree for the works to be divided. The scope for the Superintendent to direct separable portions has been limited.
23 The Superintendent acts as the agent of the Principal and does not act as an independent certifier, unless expressly stated. The Superintendent is only required to act honestly and impartially when expressly stated to be acting as a certifier for the Principal.
EOT & Delay 35.3 (a)(iii) The Contractor is entitled to an EOT if the delay is to an activity that is on the critical path of the current contract program and the work is proceeding in accordance with the program. This creates an incentive for parties to create and provide accurate construction programs.
35.3 (h) If two or more events are causing delay simultaneously and the cause of at least one of those events is a cause that does not entitle the Contractor to an EOT, then to the extent of the overlap, the Contractor is not entitled to an EOT. If there is an overlap of a non-qualifying and qualifying cause of delay, the Contractor is excluded from claiming an EOT for that period of overlap.
Variations 40.1 If the Contractor considers that a direction by the Superintendent in whole or in part constitutes a variation, then within 5 business day of receipt of the direction and before commencing the work, it must notify the Superintendent giving reasons why it considers it is a variation. This will assist in establishing whether a direction that is agreed by the parties constitutes a variation prior to the parties incurring costs.
40.4 The Contractor may make a written proposal for a variation for the Contractor’s convenience.
The Contractor bears all costs associated with proposing the variation, costs reasonably incurred by the Principal in assessing the proposal and associated costs in carrying out the variation, if approved.
This mirrors the requirements that the Principal is to bear the Contractor’s costs for Principal initiated variations.
Contractor’s indemnity and warranties 9.1 (f) The Contractor indemnifies the Principal against all claims, actions, loss, or damage arising out of any actions or omissions of subcontractors. The Contractor should obtain back-to-back protection from their subcontractors.
17.1 (c)(iv) The Contractor’s indemnity to the Principal does not include damage which is an unavoidable result of the works in accordance with a construction method specified by the Principal. The indemnity will not apply if the construction method was specified by the Principal.
12.1 (d) Any interpretation, deductions, opinions or conclusions set out in the documents provided by the Principal in relation to site conditions are to be non-reliance information and use of that information is at the Contractor’s risk. Warranties have been established in relation to ‘reliance information’ and ‘non reliance information’ as listed in Items 9 and 10.

Takeaways:

  • The aim of the NCW4 is to improve the efficiency of project delivery and reduce the potential for contractual disputes.
  • The NCW4 should not be issued as a contract for services or professional services.
  • The NCW4 is designed primarily for use in construct only contracts

For more information on how the NCW4 can be used in your operations, please get in touch here.


Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.