Construction sector contracts review
Amendments have been made to New Zealand Standard 3910
The Construction Sector Accord (the Accord) has undertaken a review of how construction contracts are used by procuring agencies across the state sector. The review considered a range of government entities, including central government, local government, and state-owned enterprises.
The two most used contract templates in the construction sector are New Zealand Standard 3910:2013 – Conditions of Contract for building and civil engineering construction (NZS 3910) for physical works and ACENZ Conditions of Contract for Consultancy Services (CCCS).
Key summary points
- The review is an important piece of work that the Accord has undertaken and provided an opportunity for Agencies to share and understand how special conditions and risk allocation was approached across a range of agencies.
- The review found that Agencies are modifying these standard contracts through 'special conditions' that either change existing clauses in the contracts or add new clauses
- The number of special conditions Crown agencies and types of special conditions for construction contracts varied significantly between agencies.
- The Accord has provided recommendations for each agency to consider, and a number of agencies have already made changes or committed to implement changes in the future.
- It is accepted that agencies may need to modify the standard conditions of contracts to deal with the specific operational or logistical requirements of their organisations and the nature of the projects they are delivering but these amendments should be minimal.
- Where there is a genuine need to modify standard conditions, and this applies across all Crown agencies, there should be a commonality in approach and Accord Agencies have committed to working to update, agree and use All of Government special conditions for construction contracts.
- Accord Agencies have identified improving the standardisation and consistency of construction contracts as their main priority for 2023.
- There is obviously still work to be done across the whole sector to improve risk allocation and achieve more consistency in construction contracts, but the Accord acknowledges the leadership from Accord Agencies and their commitment in this area.
Accord initiatives addressing the recommendations
- A review of the All of Government (AOG) conditions that have been issued for CCCS contracts. An updated version of these conditions is expected to be released in mid-2023
- Input to the ongoing NZS 3910 review, due to be released in the second half of 2023
- Crown special conditions to be developed for the new version of NZS 3910. Expected to be released in the first half of 2024
- The Accord is working directly with agencies to review their special conditions and encourage a standardised approach.
Webinar in February 2023
We will be hosting a live webinar in February 2023 on this report providing a panel and questions and answers opportunities.