Technical Advice

Technical Advice by Malcolm Abernethy

Construction Contracts Act – Column for March 2004

I write frequently about the use of the Construction Contracts Act and the procedures required to comply with the Act.

I get many calls as to how a contractor may recover money from a client or a main contractor and when asked how payment claims have been prepared it is apparent that the Procedures are not being followed.

Refusal of a Variation – April 2004

Recent enquiries from Local Authorities and contractors have asked who approves a variation under the Standard Conditions of contract NZS 3910:2003. Does the Principal have the right to refuse a variation?

It is necessary to consider the role of the Engineer and the role of the Principal when considering both variations and payments. The 2003 version of NZS3910 incorporates payment provisions from the Construction Contracts Act 2002.

Variation Price Request – May 2004

When a contractor has a contract to perform work or build a project and the engineer requests an estimate AND asks for a solution to a problem then that request for an estimate is a variation! At the very least, it is a variation price request.

The original project required mainly earthworks and effluent pipe work to an outfall. The outfall is from a distribution pipe on top of a row of gabions with the effluent permitted to trickle down the bank to the river. The bank has become unstable and slumped into the river presumably because of the effluent discharge. A direct result of the work the contractor was originally contracted to build.

Successful Projects – June 2004

The majority of technical advice enquiries I receive are related to variations under both the Construction Contracts Act and NZS 3910 Standard Conditions of Contract for Building and Civil Engineering Construction.

There are few construction projects that are completed without variations occurring. Successful projects are those that are well planned, designed and administered by the client with the assistance of the Engineer with few if any variations. Projects that have adequate investigation and design and well informed and professional contract management contribute to a profitable outcome for all parties involved....

Value of a Variation and Removal of Work from a Contract. – July 2004

Recently I have provided advice about the removal of work from a contract that is required for the project. The variation work was then offered to an alternative Contractor. There are two issues associated with this being the value of a variation and the removal of work from a contract.

NZS 3910 specifies many reasons for a variation to be issued including omitting work from the contract.

Variation Price Request (Sealing and Roading)– August 2004

As head contractor, a Variation Price Request for sealing work was requested by the engineer. The head contactor uses a sub contract for sealing and roading work. Delays occurred due to design and documentation errors pushing the job into the winter months. It was agreed verbally that the base course would be held until the weather improved and the trimming prior to sealing would be treated as a variation. The sub contractor provided a price with a margin. The contractor forwarded the subcontract price with a small margin to the engineer. The engineer did not like the price received and requested a breakdown directly from the sub contractor of how the variation valuation was made.

NZS 3910:2003 – September 2004

It is now slightly more than twelve months since NZS 3910:2003 was published which superceded the previous version yet there are many reports from Contractors that engineers are still referring to the 1998 version. By referring to the older standard engineers need to include payment provisions to accommodate the Construction Contracts Act. Some examples I have seen although not contrary to the act are wordy and unclear as to when payment claims are to be submitted and do not fully cover the requirements of the payment schedule process.

Variation Work Sheet

[an Excel worksheet – not sure how to deal with it??]

Safety Related Law

See safety_related_law.pdf at NZIPS.govt.nz

If you require anymore Technical Advice from Malcolm then contact him on 027 249 2513 or Email malcolm at malcolm@nzcontractors.co.nz