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16 August 2019

Introduction to AS 4902

AS 4902, more formally known as AS 4902-2000 General Conditions of Contract for Design and Construct, is one of the most widely used forms of head contract for design and construct projects in Australia. 


It closely follows the risk profile, drafting and format of the commonly used AS 4000 which is the construct only contract from the same suite. (You can read more about AS 4000 here.)

There are various considerations that may impact which is the best type of construction contract to use in different circumstances.  You can read more about the different types of construction contract, and which may be best suited to your particular needs, here.

Where to get it

AS 4902 is published by Standards Australia Limited, which is part of SAI Global.  It is protected by copyright and you must pay a licence fee to use it.

You can purchase a copy of the AS 4902 here

When buying AS 4902, be sure to buy the right version.  You will notice that different types of licence are available (reference version, multiple use versions, editable versions and so on).  Licence fees vary, and you will need to choose the version that best suits your circumstances.

How to assemble it

As the formal title suggests, AS 4902 contains the general conditions of contract.  You will need to compile the other contract documents and complete the Annexure Part A.

One thing you will need is a document to formalise your entry into a contract that contains the AS 4902 general conditions.  (If you buy AS 4902, you will notice that there is nowhere to sign.)

This is normally done in one of two ways:

  • a ‘formal instrument of agreement’, or
  • a letter of acceptance.

Both documents serve much the same purpose, although most principals prefer a formal instrument of agreement to ensure there is no doubt about which documents are included in the contract.

You can purchase the Australian Standard Formal Instrument of Agreement (AS 4950), which is designed to be used with AS 4902, here.

The basic features of AS 4902

Some of the basic features of AS 4902 are as follows:

  1. Lump sum price. The contractor is required to execute the works for a fixed price and within a fixed timeframe.
  2. Fixed timeframe. The contractor is required to ensure the works are completed by an agreed ‘date for practical completion’, or else liquidated damages will apply.
  3. Practical completion. The contract acknowledges that construction projects can often be used and occupied before all works are completed and all minor works are completed.  This is embodied in the concept of ‘practical completion’.
  4. Variations. The contract prescribes a process for dealing with variations.  Relevantly, the contractor may not vary the works unless directed in writing.
  5. Extensions of time. The contractor may claim extensions of time to the date for practical completion if it is delayed by a ‘qualifying cause of delay’, such as an act or omission by the Principal.  The contractor can also claim delay costs in some circumstances.
  6. Provisional sums. Where the design of part of the works is not sufficiently developed to enable the contractor to provide a fixed price, the parties can agree on a ‘provisional sum’ instead.  The price of these items is adjusted once the final cost is known.
  7. Separable portions. The works can be divided into separable portions (or stages), with each of them potentially having a different access date, date for practical completion and liquidated damages rate.

Distinguishing features of AS 4902

There are a number features that set AS 4902 apart from other standard form contracts.  They include:

  1. No time bars (for the most part). Clause 41.2 provides that a party’s failure to comply with a notice or claim requirement will entitle the other party to claim damages for a breach of contract, but will not bar or invalidate the claim.  Note that there are exceptions (for example, in relation to a latent condition), and a failure by the contractor to notify a claim may nonetheless result in the contractor losing its entitlement.  You can read more about time bars here.
  2. Apportionment of concurrent delays. Where a delay is caused by a qualifying cause of delay and a non-qualifying cause of delay, the contract allows the superintendent to apportion the resulting delay according to the respective contributing causes.  This is different to AS 4300 and other forms of contract, where the existence of a concurrent non-qualifying cause of delay will disentitle the contractor from claiming an extension of time.
  3. Relief for latent conditions. The effect of a latent condition is a deemed variation.  The contractor can claim the costs associated with a latent condition, except those incurred more than 28 days before it notified the superintendent of the issue.
  4. Dispute resolution. Arbitration is the default method for resolving disputes (as opposed mediation, expert determination, resolution by a dispute board or other types of dispute resolution process). You can read about the difference between arbitration and mediation here.
  5. Deemed approval of EOTs. If the superintendent does not respond to the contractor’s request for an extension of time within 28 days of receiving it, the request is deemed to have been approved and an extension of time will be granted for the full amount of time claimed.

Common amendments

Many principals will not agree to sign AS 4902 in its unamended form.  Instead, they will often seek to incorporate amendments or special conditions.  This is principally for four reasons.

First, AS 4902 is almost 20 years old.  Since then, various pieces of legislation have been passed that can affect the parties’ rights and obligations under the contract.  Examples include legislation concerning GST, security of payment, proportionate liability, personal property security and work health and safety.

Second, and as mentioned earlier, many principals consider the risk profile of AS 4902 to be too heavily weighted in favour of the contractor.  For example, principals will often incorporate time bars, remove any deemed approval provisions, and introduce clauses that will reduce the circumstances in which adjustments to the contract sum or date for practical completion can be claimed.

Third, principals will sometimes seek to use AS 4902 as the foundation for an ECI contract. (You can read more about ECI contracts here.)  AS 4902 can be a good document to use for this purpose, but would require modification because it is not written as an ECI agreement. 

Finally, principals will sometimes seek to clarify how the design approval process operates.  For example, when documents are required to be submitted, how the design review process will work and how a deadlock between the contractor and the superintendent is to be resolved.

About the Author

Bridgit Masson | Associate

Bridgit is a commercial lawyer whose practice is focused on transactional matters in the construction and technology space.


bridgit.masson@turtons.com | (02) 9229 2903

About Turtons

Turtons is a commercial law firm in Sydney with specialist expertise in privately owned construction and technology businesses.

Bridgit Masson | Associate

Author

Bridgit Masson | Associate

bridgit.masson@turtons.com

Bridgit is a commercial lawyer whose practice is focused on transactional matters in the construction and technology space.


bridgit.masson@turtons.com | (02) 9229 2903

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