In early September 2013, Standards Australia formed a technical committee to conduct a revision of the AS 2124-1992 and AS 4000-1997 General Conditions of Contract, and associated forms of contract and documents.
After almost four years, which included reviewing the existing standards, drafting the new standard, releasing a comprehensive draft for public comment and receiving those comments, on 4 April 2017 Standards Australia announced that all work on the draft AS 11000 had ceased. They went on to confirm that it would not be released as an Interim Standard or an Australian Technical Specification since ‘the document was not supported by the full spectrum of interests’.
Why – AS11000
The Australian Standard contracts are widely used to deliver high value, complex projects throughout Australia. Both AS2124 and AS4000 are still widely used despite it being over 20 years since they were developed. There has been great changes in the Australian legal landscape since that time and errors, inconsistencies and improvements have also been identified in these standards. These include:
- new legislation relating to tax (GST), payments (security of payment), liability (proportionate liability) and safety in most jurisdictions;
- new philosophies around contracting, with a tendency towards relationship and collaborative contracts;
- developments in dispute resolution procedures including Dispute Resolution and Avoidance Boards (DRBs and DABs);
- technology changes and the growing use of emails; and
- continued uncertainty regarding contract governance and the role of the Superintendent.
The AS11000 was a chance to create an updated, uniform industry standard that reflected current legislation, and clarified commonly disputed aspects of the contract and its governance that remained uncertain.
Key issues addressed
The changes proposed in the new standard would have addressed some identified problems with the current standards and had important implications for principals, owners, superintendents and contractors. The key changes proposed in the AS 11000 are set out below:
- Clause 2 set out obligations on the parties to act in good faith and follow early warning procedures.
- Clause 10 provided for service of notices can be made by email.
- Clause 35 listed the specific requirements for programming that the contractor must include.
- Clause 37.4 aimed to replace the ‘qualifying cause of delay’ definition used in AS 4000 with the "causes of delay” which included events beyond the reasonable control of the contractor.
- Clause 37.2 stated the contractor is obliged to provide the superintendent with a notice of delay within five business days of becoming aware of anything that could cause delay, and advise whether it intends to claim an extension of time (EOT) for the delay.
- Clause 37.9 offered the superintendent 20 business days (compared to the previous 28 days) to make its assessment of an EOT and also entitled the superintendent to request further information from the contractor, which could practically extend the timeframe for another 20 business days.
- Clause 32.1 referred to ‘non-compliant work’, rather than ‘defective work’ and the contractor was required to rectify any work not complying with the contract without having to wait for the superintendent to issue directions.
- Clause 45 offered alternative dispute resolution options to suit a range of different construction projects such as mediation, arbitration, conferences, expert determination, and litigation as well as the option for a contract facilitation or dispute resolution board.
Consequences and where to from here
A number of entities were in a ‘holding pattern’ waiting for the arrival of the new standard to consider if they adopted the new standard or continue to use their existing, amended, old standards (if that was an option as Standards Australia were controversially considering removing the old standards from use altogether).
Now that the development of this new standard has stopped (whether permanently or temporarily), parties and particularly principals, should revisit their current standards and consider whether they should review them to improve/correct those matters identified by Standards Australia, consider developing their own bespoke contract, or use an alternate more up to date standard from another source.