CONTRACT ADMINISTRATION BASICS
INTRODUCTION
This topic is directed to the key features of engineering contracts.
The major criteria which impact on any engineering contract are time, cost and quality. Those three criteria form the substantive part of this discussion.
Each of the issues considered in this topic is necessarily brief.
The topic is set out as follows:-
1. Contract Documentation
2. Parties to the Contract
3. The Superintendent
4. Time Under the Contract
5. Payment Under the Contract
6. Quality
7. Insurance
8. Security
9. Default/Termination
There are many types of engineering contracts, and engineering contracts can differ dramatically in nature.
Engineering contracts, for example, differ fundamentally in nature from sales contracts, in that engineering contracts impose obligations of performance over a prolonged period of time whereas sales contracts, by comparison, could, theoretically, be performed instantaneously. (In this respect, however, a true "turnkey construction contract’ is more akin to a sales contract than to a traditional construction contract.)
Some engineering contracts involve aspects of sales contracts, for example in an equipment supply and installation contract.
This topic attempts to discuss some features which are typically a part of engineering contracts.
1. THE CONTRACT DOCUMENTS
The Contract Documents, in theory (there is usually an express term of the Contract that the written contract contains the whole of the agreement, though in fact, in addition to every such contract, there will always be a number of terms implied into such contracts) include all of the terms of the Contract.
The Contract Documents should usually include all of the following (at least):-
Formal Instrument of Agreement
This document should simply set out all of the documents which comprise the Contract Documents, and the execution clauses.
Conditions of Contract
The Conditions of Contract (which may or may not be based on a standard form document) set out the detailed contractual terms.
Specifications
Drawings
Post-tender Correspondence (if any to be incorporated)
From time to time, usually through inadvertence, the Contract Documents are not clearly defined, or are not finalised before the work begins. In such circumstances, the terms of the Contract may need to be identified later by a Court or an arbitrator.
From time to time, though the Contract Documents are adequately
defined, disputes may arise as to whether particular work forms part of the Contract, or
whether the work is, in fact, a Variation.
In either case, the adequacy of the Contract Documents will be bcontractors to perform
parts of the works
he will be required to repair or re-perform defective works
he will be required to bring the Works to Practical Completion by the Date for Practical Completion
he will be required to return to the site, after he has handed back the site at practical completion, during the Defects Liability Period, to rectify defects during that period
The terms of the Contract will vary project to project.
The key issue is that the Principal and the Contractor are the only parties to the Contract.
3. The Superintendent
3.1 Dual Role of the Superintendent
The Superintendent is not a party to the contract; he is a person named in the contract by the two parties to the contract (the Proprietor and the Contractor) and given certain functions under that contract by those two parties.
The role of the Superintendent would usually include:-
Accordingly, though the Superintendent is usually appointed by and paid by the Proprietor (and may sometimes be the Proprietor's original design consultant), the Superintendent's role is principally to decide major issues of potential dispute under the contract between the Proprietor and the Contractor.
In such contracts there is (at least) an implied term that the Superintendent will act fairly. There is a strong contractual argument that if the Superintendent does not act fairly towards the Contractor, this constitutes a breach of contract by the Proprietor.
(Interestingly, in AS2124-1992, following on from AS2124-1986, clause 23 expressly provides that the Proprietor is to ensure that the Superintendent acts fairly at all times.)
The dual role of the Superintendent (on one hand he is retained and paid by the Proprietor, yet on the other hand he has a quasi-certifier role between the two parties to the contract) has been the subject of judicial comment.
The Institution of Engineers Australia Code of Ethics requires, in clause 5 (b):-
"....in our capacity as Superintendent administering a Contract, we must be impartial in our interpretation of the Contract..."
The role of the Superintendent is complex. It requires substantial engineering skills, a sound understanding of the law of contract, and in particular the provisions of the particular project documents.
The Contract will usually provide expressly that the Principal’s agreement to allow subcontracting, or approval of particular subcontractors, does not affect the position of the Head Contractor.
In recent years, as result of a number of major contractors going into liquidation leaving unfinished projects, some principals have chosen to require collateral warranties (separate direct contracts) to be entered into between the principal and certain of the key subcontractors on a particular project.
The position remains, however, even where this occurs, that the Head Contractor is responsible for the delivery of the Works.
The Superintendent has two distinct roles under a traditional form of construction contract.
On one hand he has a number of functions in which he acts, either expressly or impliedly, as the agent of the Proprietor. On the other hand, the two parties to the contract agree, at the time of entering into the contract, that the Superintendent is to perform certain assessment/certifier functions under the contract. Those functions are quite district.
In most instances, the Superintendent will be either an employee of the Principal (typically on major public sector contracts the Superintendent is a senior person from that public sector organisation) or a paid consultant of the Proprietor (usually, a senior engineer from a private engineering consulting firm). Accordingly, where there is a dispute under the Contract, the Contractor, if dissatisfied with the decision of the Superintendent, will usually assert that the Superintendent is biased in favour of the Proprietor.
The dual role of the Superintendent under such construction contracts has been recognised by the Courts. The leading case in this area is a decision of the New South Wales Supreme Court (Macfarlan J) in Perini Corporation v. Commonwealth of Australia [1969] 2 NSWR 530.
In the Perini case, Perini Corporation had contracted with the Department of the Postmaster-General to construct the Redfern Mail Exchange. During the project, the Contractor claimed a number of extensions of time, some of which were granted, some of which were refused, and some of which were granted but not to the full extent claimed. As was common at the time, the work was undertaken on behalf of the Commonwealth of Australia by the Department of Works. The Superintendent under the contract was the Director of Works.
The Court had to consider the role of the Superintendent.
It was asserted by the Contractor that the Director of Works was obliged to exercise his own discretion in considering whether there was an entitlement to an extension of time and that, in fact, the Director had been guided by "Departmental policies". Effectively, the Contractor was saying that the Director of Works had acted as a rubber stamp of the Proprietor.
The Court made the following observations in relation to the role of the Director of Works:-
"The second matter on which I will speak generally concerns the position of the Director of Works. This gentleman is undoubtedly an important officer in the Commonwealth Public Service. Unlike other senior Commonwealth public servants, there is not any provision made by statute for his appointment or duties. However, his position appears to be fairly clear. At the head of the permanent administrative staff of the Department of Works is the Director-General of Works who is charged with the general supervision of the Department and its activities throughout the Commonwealth. In each State there is a Director of Works who, in relation to the State for which he is appointed, discharges the same general duties as the Director-General does for the Commonwealth...
The fundamental basis upon which the plaintiff sought to litigate its case against the defendant was that the defendant was in breach of certain terms implied in the agreement... the plaintiff's argument was that in the discharge of the duties imposed upon him by clause 35, the Director of Works, with the encouragement and support of the defendant, acted in a manner that was outside his mandate."
The Contractor argued that the Departmental was liable for damage suffered by it, in consequence of the error of the Director of Works, on three different bases:-
(i) the Department was vicariously liable for anything that the Director did wrongly;
(ii) the Director of Works, in relation to his functions under clause 35 was a certifier and, as such, the Department was obliged under the contract to ensure that the Director performed his role as a certifier properly or, at least, was required to refrain from taking any action or course of conduct which would oblige or influence the Director to act otherwise than in accordance with his duties as certifier; and/or
(iii) the Director of Works was an arbitrator and, accordingly, was obliged to act judicially.
The Court concluded (without much trouble) that there was no basis for interpreting that the Director of Works was to act as an arbitrator (this was not pressed in the trial).
The Court then considered the issue of vicarious liability and, in particular, the position of the Director of Works having regard to his public service obligations. In this respect the Court said, at page 536:-
"In my opinion the cases make plain that throughout the period of performance of all these duties, the senior officer remains an employee of the government or semi-government body, but that in addition and while he continues as such an employee he becomes vested with duties which oblige him to act fairly and justly and with skill to both parties to the contract. The essence of such a relationship in my opinion is that the parties by the contract have agreed that this officer shall hold these dual functions and they have agreed to accept his opinion or certificate on the matters which he is required to decide... ".
The Court then went on to consider the particular duties of the Director of Works, at page 536:-
"It is now necessary to consider the duties of the Director of Works. He, of course, has not bound himself by contract with either the plaintiff or the defendant. The plaintiff and the defendant are the only parties to the agreement but in it they have agreed that the Director of Works shall have the powers and duties stated in it. Many of these powers and duties are administrative and supervisory in their character and are performed by the Director of Works as a servant and agent of the Commonwealth. I have already expressed the opinion that in respect of the duties imposed upon him by clause 35 of the general conditions that he is a certifier. The word "certifier" does not have an exact meaning but is used to describe a function which is somewhere between those of a servant and those of an arbitrator."
The Court then concluded that in the present case the terms of the contract required the Director of Works to exercise his own discretion in relation to certain functions. At page 538, the Court said:-
"On behalf of the plaintiff it was said that if a decision with respect to a particular application were decided by reference to "Departmental policy" that indicated that the Director was not making a personal decision but was bowing to the established policy of the Department. A similar criticism to the one I have just mentioned was that the Director was not entitled, if he were to make a proper decision, simply to "rubber stamp" the opinion of another officer, or even to adopt the recommendations of a subordinate. This, it was argued was to surrender his duty to somebody else and he was not permitted to do it....
I have formed the opinion that subclause (2) does confer a discretion upon the Director. The operation of subclauses (1) and (2) in my opinion is that if there shall be a delay "in the execution of the works" and that delay has been caused by some relevant factor, then sub-clause (2) confers a discretion upon the Director to say whether the cause is sufficient or not to justify an extension of time. Considerable discussion occurred during argument about the true limits of this discretion and learned counsel for the defendant submitted that the limits were confined within a range of matters that were relevant to the interest of both parties under the contract. In a sense I am of the opinion that this is correct but that the interest to which the Director must pay attention is not simply a desire by the plaintiff for financial convenience or reasons of its own, to have an extension or, on the other hand, desire by the defendant to have the building completed within the time originally specified in the contract, or in an ulterior sense, the desire of those representing the Postmaster General to be given occupation at the earliest possible date. The kind of interest which must govern the exercise of the Director's discretion is the interest of each party as it appears from all the provisions of the agreement."
In summary, the Court concluded:-
1. the Director of Works was a certifier under the Contract and as such had certain duties imposed on him by the Contract;
2. the Director of Works had a discretion as to whether or not he would grant an extension of time;
3. in making his decision, the Director was entitled to consider departmental policy but would be acting wrongfully if he were to consider himself as controlled by departmental policy;
4. there was an implied term in the Contract that the Commonwealth would not interfere with the Director of Works' duties as certifier; and
5. there was an implied term of the contract that the Commonwealth would ensure that the Director of Works properly performed his duty as certifier.
This, it is suggested, is the current law on the status of the dual role of the Superintendent under a traditional form of construction contract.
Finally, it may be convenient to briefly mention clause 23 of AS2124-1992. That clause provides, so far as relevant, as follows:-
"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 -
(a) acts honestly and fairly;
(b) acts within the time prescribed under the Contract or when no time is prescribed, within a reasonable time; and
(c) arrives at a reasonable measure of value of work, quantities or time."
(emphasis added).
Clause 23, in the 1992 edition and in the 1986 edition, imposes a direct contractual obligation on the Principal to ensure that the Superintendent acts in a manner consistent with honesty, fairness and reasonableness. (It also imposes a contractual warranty on the Prinicipal that the Superintendent's measure of work, quantities or time is, itself, reasonable.)
3.2 Functions of the Superintendent
(i) as assessor/certifier under the Contract
The Superintendent is appointed by both parties to the Contract to perform certain functions as assessor/certifier. Those functions will include, principally:-
The critical considerations in respect of these functions are as follows:-
1. in his role as a certifier/assessor, the Superintendent has a duty to act fairly/impartially;
2. the Superintendent must exercise this role independently; and
3. the precise nature of this role will vary from case to case depending on the terms of the Contract.
With this background, we now turn to the primary functions of the Superintendent in his certifier/assessor role:-
In all traditional standard form contracts, the Contractor is required to periodically deliver, to the Superintendent, progress claims for payment under the contract.
The Superintendent is usually required to assess those progress claims (by reference to the degree of completeness and the quality of the materials and workmanship). The Superintendent must calculate the amount due, at that time, having regard to:-
The Superintendent has to make more than a complex technical assessment. He is also be required to make a legal assessment of complex legal causes of action upon which a Contractor might base a claim for additional payment.
(This process is referred to in more detail in Topic 5.)
The Superintendent is required to regularly exercise legal judgments under the Contract in the authorisation and valuation of variations.
There are two separate issues.
The Contractor may assert from time to time that particular works which he has been required to perform (either in accordance with the contract documents, or alternatively pursuant to a direction of the Superintendent) constitute a Variation. The test applied by the Courts is, in substance, that particular work constitutes a variation if it is work outside the works upon which the Contractor tendered/contracted, having regard to the terms of the Contract
The second complex area of assessment for the Superintendent in relation to variations is in the valuation of variations.
(Again this issue is considered further in Topic 5.)
The assessment of claims for extension of time is extremely complex.
Typically, under a traditional form of construction contract, the Contractor would be entitled to extensions of time in the following circumstances:-
1. where delays are caused by the Proprietor (for example, if the Proprietor fails to deliver the site on the agreed date, or the design drawings/specifications are wrong requiring further work to remedy the error);
2. where delays are caused through events beyond the parties' control (for example, inclement weather or industrial strife).
The first task of the Superintendent in assessing claims for extension of time by the Contractor is to determine whether, having regard to the express terms of the contract, the Contractor is entitled to an extension of time at all.
In each case, it will be a complex analysis for the Superintendent to determine whether an extension of time is due to the Contractor at all.
The more complex calculation, however, comes in relation to the quantification of extensions of time. A delay might occur because of two days rain....but the effect of the two days rain may be to delay work commencing on the site for a further three days. Alternatively, a delay may occur to one part of the works which is non-critical to practical completion of the total project.
The Superintendent is required to assess claims for extension of time and grant such extensions as are due to the Contractor under the Contract.
(A more detailed discussion of extensions of time is set out in Topic 4.)
The parties define the works to be performed under the contract, in the contract documents.
Those documents consist, typically, of the drawings and specifications, but may also include, in certain circumstances, post-tender correspondence, and other technical descriptions of the proposed works.
The parties, at the time of entering into the contract, appoint the Superintendent to check the quality of materials and workmanship against the contract documents and to take such steps as are set out in the contract to effect the requisite quality standards.
The Superintendent's role is, traditionally, to watch over the works, to give directions to remedy work which is not in accordance with the provisions of the contract, and where that direction is not complied with, to take the steps provided in the Contract to remove part of the work from the Contractor and to have that work remedied by others at the cost of the Contractor.
(A more detailed discussion of quality issues is contained in Topic 6.)
(ii) as agent of the Principal
The Superintendent has a dual role. This paper has discussed, above, some of the instances where the Superintendent is required to act as a certifier/assessor. In performing that role there is, clearly emerging from the cases, an obligation to act fairly, impartially and not at the direction of one or other of the parties (usually the Proprietor.
The other part of the Superintendents role, however is completely different.
The Superintendent is also required to act as the agent/adviser of the principal in respect of certain other functions.
There are a number of functions which the Superintendent will be likely to be required to perform in this role, including:-
In addition to the above, the JCC Standard Form Contracts set out, in clause 5.02, a listing of functions of the Architect when acting as the agent of the Proprietor (in addition to a similar listing of functions when acting as an assessor, valuer or certifier). That list of functions in which the Architect is to act as the agent of the Proprietor sets out the matters in relation to which the Architect should issue instructions, to the Contractor, principally:-
Each of these functions (the list is far more extensive than the items referred to above), are examples of the types of function upon which the Proprietor usually relies on its professional advisers for advice, before, during and after the performance of the works by the Contractor under the contract.
In relation to this role, the Superintendent must:-
(i) comply with the instructions of the Proprietor (irrespective of whether those instructions are reasonable, fair or contrary to the interests of the Contractor); and
(ii) the Superintendent owes a duty of care to the Proprietor in the performance of those functions.
If the Superintendent fails to perform those functions in accordance with paragraphs (i) and (ii) above, the Superintendent may be liable to the Proprietor for breach of contract and/or in negligence.
3.2.3 Liability of the Superintendent
(i) to the Proprietor
The Superintendent is in a contractual relationship with the Proprietor to perform his functions (all of his functions whether as agent of the Proprietor or as an assessor/certifier under the construction contract).
This liability will arise, potentially, both in contract and in tort. (See Brickhill v. Cooke [1984] 6 BCLRS 47 in which the New South Wales Supreme Court, Court of Appeal, held that a client could sue an engineer in tort as well as in contract.)
The Contract of the Superintendent to the Proprietor may be in writing, oral, and/or implied.
In many instances, there will be a written contract between the Proprietor and the Superintendent. Those terms of engagement may or may not include provisions relating to the services to be performed, the payment to be made in respect of those services, and, possibly, limitation of liability and extent of professional indemnity insurance cover.
In other cases, there may be no written engagement. In that case the contractual obligation arises through the conduct of the parties in the Proprietor requesting the Superintendent to do certain work and the Superintendent being entitled to be paid a reasonable sum for those works.
Where the Superintendent is an employee of the Proprietor, there will be an employment contract whether in writing or otherwise between the Proprietor and the Superintendent.
The terms of such a professional engagement contract are, again, beyond the scope of discussion in thisUnit.
In addition to their contractual relationship, the Superintendent will owe the Proprietor a duty of care in the performance of his functions.
Until 1974, there was a view that certifiers were somehow immune from liability (to anyone) in the performance of their certification functions. As late as 1973 this "immunity" was still thought to exist.
In Sutcliffe v. Thackrah, the House of Lords considered the earlier cases, including Arenson v. Arenson, and held that there was no such immunity.
The Superintendent, therefore, in the performance of his functions under the contract, both as agent of the Proprietor, and as an assessor/certifier under the contract, is potentially liable to the Proprietor if he fails to perform the obligations either in accordance with the terms of his contract with the Proprietor, or alternatively, if he fails to perform his task to the requisite standard of care.
(ii) to the Contractor
The Superintendent has no contractual relationship with the Contractor. Accordingly, to the extent that he may have potential liability to the Contractor at all it will only be in tort.
We have already seen, above, that the Superintendent is not immune in tort in relation to his performance of his role as assessor/certifier.
The Superintendent's potential liability to the Contractor, depends on whether he owes a duty of care to that Contractor in all the circumstances and whether, in the performance of those functions, he has performed those functions to the requisite degree of care and skill.
On first principles, there seems little doubt that the Superintendent and the Contractor are in a sufficiently proximate relationship that the Superintendent ought to owe a duty of care to the Contractor
One notes, however, in the final analysis that there have not been many cases (if any) in which a Contractor has succeeded in negligence against the Superintendent in relation to performance of his functions.
In Junior Books v. Veitchi which has been limited to its factual situation (nominated sub-contract heavily relied on for its expertise) the House of Lords concluded that a nominated sub-contractor (no contract with the owner) could owe a duty of care to an owner in relation to the construction of a tiled floor by the nominated subcontract.
It seems, to me, that various parties likely to be involved on construction contracts, albeit that there is no contractual relationship between the particular parties, nevertheless have those other parties in mind when they are performing their particular roles on the project. It seems to me that it would be likely, in 1994, that a Contractor could establish a sufficiently proximate relationship in an action in negligence against the Superintendent.
There are, however, obvious strategic difficulties with bringing such a claim, in particular:-
(i) the Proprietor would usually be a better defendant for the Contractor where the conduct complained of is a failure by the Superintendent to perform his assessor/certifier role. (Although, conceivably, such an action against a Proprietor might be time-barred, yet an action in negligence against a Superintendent might still be available...);
(ii) in performing an assessor/certifier role, a subjective assessment is likely to involve exercise of discretion by professional men, accordingly it is unlikely to be the type of decision which would easily be established as having been negligent (although, again, one might conceive actions where, through perhaps mere inadvertence error had occurred...); and
(iii) the failure by a Contract\or to explore his remedies through to arbitration/litigation (where the Superintendent's decision would be re-visited in any event) would usually be a complete answer to a claim in negligence against the Superintendent by the Contractor.
On balance, therefore, it seems to me that an action in negligence is available to a Contractor against the Superintendent but practical reasons make it unlikely that such an action would usually be pursued.
4. time under the contract
4.1. PRACTICAL COMPLETION
The obligation of the Contractor under the Contract is to bring the Works to practical completion by the Date for Practical Completion.
"Practical Completion" has no meaning other than the meaning defined in a particular Contract. It is not a term of art.
The usual elements of practical completion are:-
(a) the completion of the Works except for minor omissions and minor defects -
(i) which do not prevent the works from being reasonably capable of being used for their intended purposes;
(ii) in relation to which there are reasonable grounds for
not promptly rectifying them;
(iii) the rectification of which omissions or defects will not prejudice the convenient use of the Works; and
(b) all tests required under the Contract have been completed; and
(c) any other particular requirements (for example, the completion of "as completed" drawings) have been completed.
The requirements set out above are generally to be found in this form in
such major standard form contracts as AS2124, JCC, NPWC3 and others.
From time to time, particularly in project - specific contract documentation, the Principal will define a number of further pre-requisites to Practical Completion (for example, the obtaining of certificates from the Fire Insurance Council of Australia...).
The obligation on the Contractor, therefore, is not to bring the Works to
"perfect" completion by any particular date, but to bring the works to
"Practical Completion" by the "Date for Practical Completion".
Where the Contractor fails to bring the Works to Practical Completion by
that Date for Practical Completion, the Contract will usually provide for the payment of "liquidated damages" by the Contractor to the Principal (we refer to this further below). Those damages represent the damages for breach of contract which the Principal will be entitled to recover from the
Contractor because the Contractor has breached the Contract, namely by
failing to bring the works to Practical Completion by the required date under the Contract.
Separable Portions
From time to time, in particular contracts, there may be several stages
and/or several relevant parts of the Works which are required by the
Principal to be brought to Practical Completion by a particular date.
In such circumstances, the Works are divided into "separable portions"
(alternatively referred to, from time to time, as "Separable Parts").
In such circumstances, the separable portions are expressly defined in the Contract and there will be a separate regime of Dates for Practical Completion in respect of each separable portion, and liquidated damages in respect of each separable portion.
4.2 EXTENSION OF TIME
4.2.1 Delays
The Contractor’s obligations to bring the Works to practical completion by the Date for Practical Completion.
A failure to bring the Works to practical completion by that date will usually expose the Contractor to a claim for damages (usually "liquidated damages") by the Principal.
Accordingly, where the Principal somehow acts so as to prevent the Contractor from achieving practical completion of the Works by the Date for Practical Completion, or where certain circumstances arise which are expressly provided for in the Contract which have the effect of delaying the Contract in achieving practical completion by the Date for Practical Completion, the Contractor will usually be expressly entitled to an extension of time of the Date for Practical Completion.
Delays enabling the Contractor to claim an extension of time under the Contract could usually characterise as follows:-
(i) Delays caused by the Principal
Certain delays under a construction contract are caused by the Principal. Such delays might include, for example, delays in providing clear access to the site, delays in providing detailed drawings and specifications, errors in the drawings and specifications, or failure to provide certain matters to be provided under the Contract by the Principal (for example, water, electricity, gas...).
Where the Principal delays the Contractor in the performance of the Works, the Contract should expressly provide that the Contractor is to be entitled to an extension of time. (The Contract also should provide that the Contractor is expressly entitled to payment for the costs associated with that delay, usually referred to as "delay costs", in the absence of such an express provision the Contractor will have a claim for damages for breach of contract in any event).
There is a substantial body of law as to the effect of such delays where the Contract does not expressly provide the Contractor with a right to an extension of time and/or delay costs. A discussions of those cases is beyond the scope of this topic. The "prevention principle", however, is to the effect that the Principal, if he prevents the Contractor from performing his contractual obligations, is unable to enforce his contractual remedies against the Contractor in respect of any failure to perform those obligations.
Accordingly, modern construction contracts usually expressly provide an entitlement in the Contractor to both an extension of time and to delay costs where delays are caused by the Principal to the Contractor in the performance of the Works.
(ii) Delays caused by the Contractor
Certain delays are caused by the Contractor.
For example, the Contractor might be late in arriving on site. Alternatively he might perform the Works at too slow a rate to complete the Works by the Date for Practical Completion. Alternatively, he might perform the Works but perform them in a defective manner or in the wrong location.
In such circumstances, the Contract should not (and rarely does) provide that the Contractor is entitled to an extension of time and/or additional payment in respect of those delays.
These are all matters for which the Contractor is contractually responsible.
(iii) Neutral delays/force majeure
Certain delays which occur on major engineering contracts are not caused through the fault of either party but are referred to, from time to time as "force majeure" delays or events.
Such delays might include, for example, inclement weather, nationwide industrial stoppages, civil wars...
It is a matter for the parties, at the time of entering into the Contract as to whether particular force majeure events will or will not entitle the Contractor to an extension of time and/or an adjustment of the Contract Sum.
Where the Contract expressly provides that the Contractor is to be entitled to an extension of time for such events, one might expect lower tender prices. Where the Contract does not expressly provide for an extension of time in such events, one might expect higher tender prices.
Similar reasoning applies in relation to the express provision in the Contract of an entitlement to delay costs where such delays occur.
The nature of delays, and the assessment of claims for extension of time, are one of the major areas for potential dispute under engineering contracts.
4.2.2 Procedure
Where delays occur under a construction contract and the Contractor intends to claim an extension of time (and/or delay costs) the Contract usually expressly provides for a notification regime for the notification of and assessment for default such claims.
The usual requirements of such a Contract are:-
(i) Notification of a Claim
The Contractor is usually expressly required to give notice of circumstances which might lead to a delay of any kind, immediately the Contractor becomes aware of such circumstances. This provision usually applies not only to circumstances out of which the Contractor might ultimately claim an extension of time, but to all circumstances where the Contractor is likely to be delayed in achieving practical completion by the Date for Practical Completion (even where, for example, the delay was caused through the Contractor’s own fault and the Contractor is not entitled to such an extension of time).
In some contracts, there is a two-tier notification requirement, namely that the Contractor notify the Superintendent (or the Principal as the case may be) immediately upon becoming aware of the likely occurrence of a delay, and again, providing details of the extent of the delay and other such matters, within a reasonable time of the Contractor being able to calculate the extent and likely cost and effect on the construction program of that delay.
(ii) Time Bars
The Contract will usually provide that where the Contractor fails to give the necessary notice (or as the case may be, either of the necessary two notices), the Contractor will be barred under the Contract from bringing a claim for an extension of time and/or delay costs.
There is a substantial body of law as to the effect of such time bar clauses. From time to time, the Courts have declined to give effect to such time bar clauses for various reasons. In each case it will depend on the circumstances. The Contractor who wishes to make such a claim should strictly comply, however, with such time bar notice provisions.
(iii) Criticality/float
A pre-requisite to claiming an extension of time, often expressly included in the Contract, is that the Contractor will, in fact, be delayed in achieving practical completion by the Date for Practical Completion.
In effect, the Contract will usually provide that even though a delay might occur, unless that delay occurs to a critical activity (namely, an activity which, if delayed, will consequently delay the Works from being brought to practical completion by the Date for Practical Completion), the Contractor is not to be entitled to an extension of time.
This has been referred, from time to time, as the issue as to "Who Owns the Float?".
On one view, where a Contractor has carefully arranged his affairs (or "husbanded" his time) so as to make certain activities non-critical, then delays which are caused to the Contractor, for which the Contract provides an extension of time, should result in an extension of time (thereby, in fact, giving the Contractor even more time "up his sleave"). The opposite view is that the Contractor, where delayed on a non-critical activity, should not be entitled to an extension of time because he will not, in fact, be delayed under the Contract.
Contract provisions usually expressly provide for the latter (namely, that the Contractor is not entitled to an extension of time unless that delay is likely to delay him in achieving practical completion, i.e. that the delay occurs to a critical activity only). Despite this, the Courts have tended towards a view that the Contractor, where he has carefully husbanded his time in a particular way, should not be penalised by being denied an extension of time in such circumstances.
Such issues will need to be resolved in each case depending on the particular provisions of the Contract. The likelihood is, however, that a Court would prefer to find in favour of a Contractor where a delay is caused by the Principal (albeit to a non-critical activity) where such an interpretation is available to it.
4.3 LIQUIDATED DAMAGES
The Contractual obligation on the Contractor, in respect of time under the Contract, is to bring the Works to practical completion by the Date for Practical Completion.
Where the Contractor breaches the Contract by failing to bring the Works to practical completion by the Date for Practical Completion, the Principal would, in the absence of any other provision, have a contractual entitlement to sue for general damages.
The convention has evolved, for the common convenience of the parties, that such damages are pre-agreed at the time of entering into the Contract. For this purposes, such damages are usually referred to as "liquidated damages" (in this context, the use of the word "liquidated" means, a specific amount rather than an amount to be determined by the Courts).
In fact, though such liquidated damages are to be paid by the Contractor to the Principal (usually, in fact, they are deducted by the Principal from monies due to the Contractor, where the Principal decides to deduct such liquidated damages at all), the liquidated damages provision is in fact, primarily for the benefit of the Contractor.
The operation of a liquidated damages clause effectively limits the potential exposure of the Contractor to damages for late completion.
There are a number of issues which arise in respect of liquidated damages as follows:-
4.4 DELAY COSTS
Where the Contractor is delayed in completing the Works, he will usually be exposed to additional costs, irrespective of who caused the delay.
Such "delay costs" will usually arise out of the continuing costs to be borne by the Contractor (for example, crane hire, site shed hire, foreman salaries, other continuing costs including the contribution which the particular project is required to make to the head office overheads...).
Where, therefore, the delay is caused by a breach of contract on the part of the Principal (for example, delay in providing access to the site, or in the provision of drawings and specifications, or through a failure by the Principal to perform activities required of the Principal...) the Contractor will suffer financial loss in addition to the mere loss of time. The Contractor will therefore wish to claim an adjustment to the Contract Sum, or "delay costs", in addition to claiming an extension of time to the Date for Practical Completion.
The best drawn Contracts will usually expressly provide for the Principal to pay such "delay costs" to the Contractor (on the reasoning that in the absence of such an express clause the Contractor will nevertheless have an entitlement to damages against the Principal). Further, the clause will usually expressly limit the Contractor’s entitlement in such circumstances.
Interestingly, in AS2124-1981, the delay cost provisions of the Contract referred to the entitlement of the Contractor to claim "extra costs necessarily incurred". On one view, this entitlement somehow limited the Contractor’s entitlement (for example, when compared to the similar provisions in the JCC Contract which referred to "loss ,damage or expenses"). This (effective) clause disappeared in the 1986 revision!
Accordingly, not only will the best drawn Contracts usually expressly provide the Contractor’s entitlement to delay costs in particular circumstances, but may seek to limit the extent of that recovery.
5. PAYMENT
5.1 PROGRESS CLAIMS/PROGRESS CERTIFICATES/PROGRESS PAYMENTS
In all traditional standard form contracts, the Contractor is required to periodically deliver, to the Superintendent, progress claims for payment under the contract.
The Superintendent is usually required to assess those progress claims (by reference to the degree of completeness and the quality of the materials and workmanship).
For example, in AS2124-1986, clause 42.1 provides, in part, as follows:-
"42.1 Payment Claims, Certificates and Time for Payment.
At the times for payment claims stated in the Annexure...the Contractor shall deliver to the Superintendent claims for payments supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include all amounts then due to the Contractor under the Contract or for breach thereof" (emphasis added)
Accordingly the Superintendent must calculate the amount due, at that time, having regard to:-
(i) work carried out by the Contractor in performance of the contract; and
(ii) claims for breach of contract.
This is a complex calculation.
It might be said that the value of works to be assessed in relation to paragraph (i) could be performed by a quantity surveyor. (In fact, on a number of major projects in the late 1980's, project financiers often preferred quantity surveyors, rather than engineers/architects/superintendents, to assess progress claims...this, possibly, was a preference of project financiers rather than Proprietors.) The difficulty with this type of assessment, however, is that it is necessarily linked to an assessment of quality of materials and workmanship. It is necessary to ensure that the works as completed are in accordance with the technical requirements of the drawings and specifications, and are free of defects. This assessment, in itself, may ultimately become the subject of technical debate.
But perhaps the more complex area is the assessment of payment claims for "breach" of contract.
Claims for breach of contract might include, for example:-
additional payment to the Contractor for latent conditions;
claims for delay costs arising out of extensions of time which were the fault of the Proprietor;
claims for variations which arose out of the Proprietor's failure to give access to the site, or additonal work caused by faulty design documentation;
claims for variations arising out of directions by the Superintendent relating to works not included in the contract/tender documents.
In addition, in recent times, the Superintendent might expect from time to time to receive even more complex claims, such as:-
restitution/quantum meruit claims (where the works as constructed are so different from that tendered on, that the contract sum is no longer applicable);
claims for negligence (for example, for additional works caused by negligent preparation of the design drawings specifications);
claims under the Trade Practices Act and/or Fair Trading Act.
Interestingly, this type of claim has traditionally, at least under AS2124-1986, not been required to be assessed by the Superintendent in assessing a progress claim. However, under AS2124-1992, this provision was amended to expand the nature of claims which were to be assessed by the Superintendent. The provision now reads as follows:-
The additional words (highlighted) seem to include the negligence/quantum meruit/TPA type claims.
In every case, the ambit of the Superintendent's assessment of progress claims will depend on the language of the Contract.
When the Superintendent has assessed the progress claim he would issue the Progress Certificate.
The Progress Certificate is provided to both the Principal and the Contractor. To the extent that either party disputes that Progress Certificate, they are required under the Contract to take certain steps within a particular number of days to dispute that Progress Certificate.
Failing any dispute arising in relation to the Progress Certificate, the Principal then becomes contractually obliged to make the Progress Payment to the Contractor, in accordance with that Progress Certificate, within the number of days as set out in the Contract.
5.2 CASH RETENTION/SECURITY
(i) Up to Practical Completion
The Superintendent, in issuing the Progress Certificate, will calculate the cash retention, if any which is to be taken into account in making any progress payment. (We refer to cash retention and security in more detail in Topic 7.)
The convention historically was for the Contractor to provide security for the performance of his obligations to the Principal by the Principal deducting cash retention from progress payments, usually of the order of 5% of the value of work completed to any point up to the Date of Practical Completion.
The typical provisions for cash retention were to permit the Principal to deduct 5% of the value of works completed up to the point of Practical Completion to enable the Principal, should the need arise, to use those funds to pay others (if necessary) to complete the Contract Works in part or in total as the case required.
In recent times, in fact, the cash retention security has been replaced by bank guarantee security (again, this is referred to in more detail in Topic 7).
From the time of commencing the work up until practical completion, therefore, when issuing Progress Certificates, the Superintendent will usually note the amount of cash retention to be deducted, or not, from such Progress Payments.
The Contract will usually provide that such cash retention or security is to be returned, in part (usually 50%) at Practical Completion.
(ii) Defects Liability Period
The Contract will usually expressly provide for a Defects Liaibility Period.
Typically such a period might be of the order of 12 months on a major construction contract, could be as little as 3 months on a minor construction contract, or could concievably be for 2 years or more on a complex industrial project requiring lengthy commissioning periods for equipment. In practice, however, on major works, the Defects Liability Period would usually be of the order of 12 months.
During that Defects Liability Period, the Contractor will usually be expressly obliged to return to the site and rectify defects which become apparent. (We refer to the defects liability provisions in more detail in Topic 6).
Accordingly, at practical completion, part of the cash retention or bank guarantees will usually be returned to the Contractor, and the balance of the cash retention or bank guarantees will be retained throughout the Defects Liability Period. That security which is retained throughout that period is retained for the purpose of, should the need arise, the Principal rectifying such defects.
(iii) Final Certificate
At the end of the Defects Liability Period the Contractor will receive the Final Certificate.
The Final Certificate will usually expressly exclude any further claims being made by the Contractor under the Contract. At that time, the balance of any cash retention or security monies will be returned to the Contractor (with deductions as may be necessary for uncompleted work, if any).
In some instances, the terms of the Final Certificate, and the relevant provisions of the Contract, may exclude any further claim under the contract by the Contractor.
5.3 VALUATION OF PROGRESS CLAIMS
5.3.1 Value of Completed Work/Value to Complete
The nature of a construction contract is that payment is to be made progressively throughout the completion of the Works until practical completion.
The Contractor’s entitlement to payment, however, will be in accordance with the Contract Sum, not the actual value of work. All being equal the two amounts (the Contract Sum, and the actual value of the work), should be reasonably similar. The Contract Sum, however, is a matter for the tenderers to compete on and, accordingly, one could imagine that the Contract Sum could be greater than or less than the actual value of the work.
Accordingly, when the Superintendent comes to value the progress claims, he will usually be more interested in the pro-rata percent completion of the Works relative to the Contract Sum than the actual value of work completed.
The Superintendent, in assessing progress claims, will usually make an assessment based on a pro-rata percentage of completed work as against Contract Sum.
There are, however, a number of possible alternative methods for valuation which would include:-
(i) the value of the completed work on a pure valuation basis;
(ii) the value of the work still to be completed under the Contract,
deducted from the total Contract Sum.
Where financiers are involved in the funding of construction work, the latter method of valuation has tended to be adopted from time to time, the financiers being concerned to ensure, for the purposes of their security, that there are at all times sufficient funds left in the finance facility to complete the work if necessary. Accordingly, in certain cases, the Superintendent in assessing the progress claims may be interested in the calculation of the value of the work to be completed, as opposed to the percentage of work completed on a pro-rata basis.
The Contract provisions usually require progress claims to be valued on the basis of the value of work done and will rarely provide for any valuation on the basis of value of work completed or otherwise.
5.3.2 Bill of Quantities/Fixed Price/Schedule of Rates
The Contract Sum which is included in the tenders is a matter for competition between the respective tenderers.
The Contract Sum will usually be a fixed price. From time to time, however, the Principal may prefer to seek tenders based on a Schedule of Rates rather than a fixed price (for example, where the rough quantities are known, but for flexibility and/or difficulty of calculation reasons, the exact final quantities are not known and the Principal prefers to compare the tenderers on the basis of their unit rates rather than a total fixed price).
The Contract Sum may be calculated on a number of different bases, depending on the nature of the particular Contract:-
In assessing progress claims, therefore, the Superintendent will sometimes be required to have regard to whether certain quantities for particular items are within a limit of accuracy expressly or impliedly included for particular items in either a schedule of rates or a bill of quantities.
Where such items are outside such a limit of accuracy (whether an express limit of accuracy or an implied limit of accuracy) the Contractor will potentially be entitled to claim payment based on a reasonable sum for the work performed (usually referred to as a "quantum meruit" claim, to which we refer further in Part 5.4.3 below and generally in Topic 10).
5.3.3 Payment for Offsite Goods
The Contract will usually expressly provide whether the Contractor is entitled to include, in progress claims, an amount for goods which have been either ordered, or supplied, but for particular reasons not yet delivered to the site.
Such items might include, for example, bulk steel where that steel has to be purchased and then shipped to a fabrication site prior to delivery to the construction site. The Principal is potentially exposed to loss where goods are to be paid for which have not yet been delivered to the site (for example, if the goods are lost, stolen, or damaged while offsite and out of the Principal’s control, or alternatively if the goods are not adequately identified and the Contractor, having received payment for the goods, then goes into liquidation, thereby exposing the Principal to a potential dispute over ownerhsip of the goods).
The Contract should always expressly provide for, at the minimum, the following where payment is to be made for offsite goods:-
(i) adequate written evidence of the passing of title in
the goods to the Principal, upon payment for those goods;
(ii) adequate identification of the particular goods, appropriate
labelling, and separation of those goods from other goods not
within the ownership of the Principal, at all times;
the Principal, so as, in the event of their loss, to enable the Principal at all times to have, at a minimum, a good claim against an insurer for the cost of those goods.
In the absence of any of the above, the Superintendent should never certify for payment of goods which have not yet been delivered to the site.
5.4 VARIATIONS
5.4.1 Whether Work Constitutes a Variation
The usual area in which the Superintendent is required to regularly exercise legal judgments under the Contract is in the authorisation and valuation of variations.
These are two separate issues.
The Contractor may assert from time to time that particular works which he has been required to perform (either in accordance with the contract documents, or alternatively pursuant to a direction of the Superintendent) constitute a Variation. The test applied by the Courts is, in substance, that particular work constitutes a variation if it is work outside the works upon which the Contractor tendered/contracted, having regard to the terms of the Contract. (A full discussion of what constitutes a variation is beyond the scope of this paper.)
A number of issues regularly arise in relation to whether or not work constitutes a variation, including:-
These types of variations differ from the easy to understand type of variation, namely where the Proprietor wishes to change the work described in the original contract documents and seeks a quotation from the Contractor prior to that work being performed, which quotation the Proprietor then accepts and orders the variation or not.
The Superintendent's assessment of whether or not work constitutes a variation is more than a technical assessment. It requires skills in interpreting contract documents, a judicial impartiality in listening to the views of the Proprietor and the Contractor, and an ability to interpret documents which often are non-specific in relation to the subject matter of the asserted variation.
As was the case in relation to the assessment of complex claims under the contract in certification of progress claims, the Superintendent is appointed by both parties to the contract to make this assessment. The choice of the Superintendent is, in theory, a matter for the parties at the time of entering into the contract, but is, in practice, a matter which is usually decided solely by the Proprietor.
5.4.2 Valuation of Variations
The second complex area of assessment for the Superintendent in relation to variations is in the valuation of variations.
The common contract regime for valuing variations is, generally, as follows:-
1. the Proprietor (usually through the Superintendent acting as agent of the Proprietor) and the Contractor attempt to agree on the value of the approved variation;
2. failing such agreement, the Superintendent assesses the value of the variation in accordance with any pre-agreed (at the time of entering into the contract) rates which may be applicable for such variations;
3. where there is no such applicable pre-agreement, the Superintendent determines a "reasonable sum", including an amount for the builders oncosts and profit (but, depending in all circumstances, on the express language of the contract).
This regime cannot be avoided.
Effectively, the Superintendent is being asked to put a valuation on works which, by definition, was not agreed between the parties at the time of entering into the contract. It is work which the Contractor is obliged to perform (the Contractor bound himself to do this by entering into a contract which included a variation clause). The parties did not agree, at the time of entering into the contract, on how much the Contractor would be paid for such work. They merely agreed on the valuation regime.
It is a contractual term, therefore, between the parties, decided upon at the time of entering into the contract, that the Superintendent is to have the last word on the valuation of variations.
5.4.3 "Quantum Meruit" Claims
In certain circumstances, the Contractor will be entitled to claim payment for Works performed for goods provided, outside the terms of the payment provisions of the Contract.
Where, for some reason, the Contractor provides services or goods but the Contract has somehow become inapplicable (for example, the rates for a particular item in a schedule of rates contract being based on particular quantities, those quantities have become widely inaccurate), the Contractor will be entitled to a claim in restitution, colloquially referred to in the construction industry as a "quantum meruit" claim. (We refer to the legal basis for this type of claim, in general, in Topic 10.)
Quantum Meruit claims can arise on construction contracts in a number of ways:-
In such circumstances, the Contractor will be entitled, as a matter of restitution, in the absence of an applicable contractual entitlement, to be paid a reasonable sum for the goods provided all services performed.
The nature of a Quantum Meruit claim is such that, typically, the entitlement in the Contractor to claim the Quantum Meruit "sneaks up" on the Principal without the claim ever having been foreseen.
The basis for such claim is that, the Contract being no longer applicable, the Contractor is required to a reasonable sum.
6. QUALITY
6.1 REQUIREMENTS UNDER THE CONTRACT
6.1.1 Quality Requirements in Contract Documents
The provisions, historically, which set out the quality requirements imposed on a Contractor are non-comprehensive, the provisions generally relying on the subject if assessment of a person such as the Superintendent.
Accordingly, when one looks at the standard form such as, for example, AS2124-1992, there is little or no guidance as to what is to be suitable in defining the standard of quality.
There is a comprehensive regime, however, of assessment as to quality by, for example, the Superintendent, and then the giving of directions to rectify defective work.
In recent times, this position has been changed by the introduction of quality assurance systems.
The substantive content of a quality assurance system relates to procedures whereby quality of work is checked, discussed, certain certificates are required to be completed by particular parties, and generally the procedures are set out which will ensure the delivery of appropriate quality on a contract.
Essentially, therefore, the determination of quality remains a subjective assessment by particular persons nominated under the particular contract.
6.1.2 Implied Terms
Most contracts will expressly provide that works are to be performed to achieve certain performance criteria, in particular that the work is to be:-
(i) fit for the purpose for which it was intended;
(ii) merchantable quality;
(iii) unless otherwise specified, new;
(iv) performed with reasonable care and skill....
These pre-requisites, usually expressly included in the contract, are common to many contracts, not merely engineering contracts.
In fact, were these requirements not to be expressly included in the contract, it would be likely that they would be implied into the contract in any event.
You will recall that we discussed, in Topic 1, the issue of implied terms.
There are a number of reasons why such terms as set out above are usually implied, (if not expressly included) in engineering contracts, including:-
Accordingly, in most engineering contracts, in addition to the express specification of the works required to be performed and set out in detail in the Drawings and Specifications, there will usually be a number of implied terms that the works be fit for the purpose for which are intended, that the goods be of merchantable quality, that the materials, unless otherwise specified, be new, and that the workmanship be performed to a standard of reasonable care and skill.
6.1.3 Codes
The nature of engineering contracts is such that a number of SAA (Standards Association of Australia) Codes and usually be expressly included in the specification, or where no express inclusion is made, may be implied into the contract.
For example, where structural steel work is required, one would expect that the code on structural steel work would be either expressly referred to in the specification, or if not expressly included, that there would be an implied term that all work conform to that Code.
A difficulty arises from time to time in preparing those contracts. On one hand, the natural intention of draftsman of such contracts, when preparing the Drawings and Specifications, is to expressly refer to particular SAA Codes, particularly related to the area of work to be performed under the contract. (For example, if there is to be structural steel work, the tenancy is to expressly refer to the SAA Code on structural steel work.)
On the other hand, however, there is an interesting contract interpretation issue, namely that where particular codes are expressly referred to in the specification, one could infer that other codes, not expressly included, do not need to be complied with.
The likelihood is, however, that in the absence of expressly excluding an obligation to comply with any particular code, that a Court if it ever needed to do so, would interpret any contract as to include an implied term, at least, that Codes, were relevant, were to be complied with.
There is a view (which is wrong), expressed from time to time, that it is a matter of law that all Codes be complied with. In fact an examination of the Codes in most instances, indicates an obligation to exercise an engineering judgment. Further, there is, in fact, rarely any express obligation pursuant to legislation and/or any building regulations that particular SAA Codes be complied with.
In all those circumstances, therefore, it is unlikely that one could simply presume that, as a matter of law, all SAA Codes must be complied with. They do not have the force of legislation.
Having regard to the common usuage of such Codes, however, and the usual practice of requiring, as a minimum, compliance with particular codes in relation to particular such work, it is likely, it seems to me, that the engineering contracts would usually be interpreted as including, at least, an implied term that codes were generally to be complied with.
6.2 DEFECTIVE WORK
6.2.1 Judgment of the Superintendent
In most engineering contracts there is a person in the role of the Superintendent (whether it be a Superintendent or the principal himself performing the same role).
The test on quality, historically, in engineering contracts, is exercised by that person subjectively.
The identification of defects in engineering works can be complex. It will usually require a personal engineering skill on the part of the person making the assessment. Further, such judgments are often the subject of bitter disputes. For example, a contractor may take the view that work has been satisfactorily completed, albeit that some minor defects are apparent (for example rough fabrication on steel work, or for example inaccuracies in fabrication elements), those minor defects being capable of easy rectification.
Accordingly, therefore, the Superintendent when making an assessment as to quality, we usually be required to exercise engineering judgment, and contract judgment. The determination by a Superintendent that work is "defective" will usually have serious consequences and it is likely, perhaps, that this will colour the Superintendent’s subjective engineering judgment.
The test remains, however, under most engineering contracts, as to whether work meets the relevant quality standards, a subjective assessment by the Superintendent.
6.2.2 Direction to Remedy
Where the Superintendent concludes that work is defective, there is a usual regime which the Superintendent can follow to procure compliance by the Contractor with the quality standards under the contract.
The first step which the Superintendent should follow is to give the Contractor formal notice, in writing, that particular work is defective, and that such work is to be remedied.
For example, in AS2124-1992, Clause 30.1 provides that the Superintendent may give the Contractor a notice to rectify defective work, at the contractor’s expense.
The effect of that notice is to require the contractor to rectify those works within a reasonable time. Failing this, the Superintendent may choose to give a further notice threatening to take those works out of the contractor’s hands and rectified, at the contractor’s expense, by others.
The notice requiring that rectification should be clear and should expressly refer to the clause pursuant to which the notice is being made.
In particular, the Superintendent should be careful to ensure that the direction is clear that the works are required because the contractor has failed to comply with the contract. There is a common dispute where the Superintendent gives such a direction. The contractor will usually assert that the work is either not defective, or that he will carry out the necessary rectification at a more convenient time, that necessary rectification being minor and more conveniently performed as a final clean up.
Further, in some cases, the notice if not clearly given might be construed (usually wrongly) as a direction to perform additional works as a variation.
To complicate matters further, from time to time, the contractor might conclude that the works may require rectification, but that the performance of that rectification would be outside the terms of the contractor upon which he tendered. Again, in that circumstance, even if the Superintendent clearly required the works to be rectified, those works would be performed as a variation.
6.3 QUALITY ASSURANCE PROGRAMS
6.3.1 Nature of Programs
In recent years, major construction contract works have tended to be performed pursuant to, amongst other things, Quality Assurance Programs.