Changes to the Construction Contracts Act (WA)
The State Government has tabled the review by Professor Philip Evans of the Construction Contracts Act 2004 (WA) (Act).
The report by Professor Evans was submitted in September 2015, following a review of the Act. It is expected that the full report will shortly be available from the Department of Commerce.
Whilst the precise details remain to be seen, the proposed amendments to the Act are expected to include the following:
- The time limit for an applicant to commence an adjudication will be increased from 28 calendar days to 90 business days.
- The existing 14 day timeframes for the preparation of a response and the determination will remain. However, the time limits in the Act are expected to be amended to business days (rather than the exisiting calendar days).
- The period between 24 December and 7 January and Good Friday to Easter Monday are to be excluded from the counting of days – good news for those required to prepare responses during holiday times.
- The Act is to be amended to expressly allow an applicant to withdraw an application for adjudication by writing to the prescribed appointor (where no adjudicator is appointed) or to the adjudicator (where one is appointed) and the other party. This change will clarify the previous uncertainty that existed as to whether or not applications could be withdrawn and the process to be followed where the parties have negotiated a settlement of the relevant matters in dispute.
- An amendment to the Act to clarify that an application is valid and should not be dismissed provided that there has been substantial compliance with the Regulations.
- An amendment to permit an adjudicator in his or her discretion to adjudicate two or more payment disputes simultaneously (which at present requires the consent of both parties).
- A change to reduce the maximum time that a head contractor can take to pay a subcontractor to 30 business days (presently 50 day maximum payment terms).
Despite some opposition and suggestion that they should be removed, the ‘mining exclusion’ in the Act is expected to remain.
Project Bank Accounts – BMW Projects
In addition to proposed changes to the Act, it is expected that new measures will be introduced from 30 September 2016 mandating the use of Project Bank Accounts (PBAs) in respect of Building Management and Works construction projects valued at between $1.5 million and $100 million.
PBAs have the potential to offer improved certainty and timing of payment to subcontractors in government projects.
Code of Conduct – Government Projects
It is also expected that the State Government will develop and implement a Code of Conduct for contractors working on government projects and that a failure to comply with the requirements of the Code may see contractors ‘blacklisted’ and prevented from working on future government projects.
What should I do?
Look out for the changes when they are made!
If the time frames are amended as expected (to 90 business days from a ‘payment dispute’ to launch an adjudication):
- we may see an increasing number of applications under the Act
- applicants will have the benefit of significantly longer than previously available to prepare and launch an application
If you are supplier of goods or services under a construction contract, you need to know how best to utilise your rights under the Act and when and how to apply to adjudicate.
If you are a principal, you need to be prepared to respond to adjudication applications under tight time constraints.