Construction Law Update: Amendments to the Public Works Contracts

22 May 2015

In April, the Office of Government Procurement announced the first changes to be made to the Public Works Contracts arising out of the Review of the Performance of the Public Works Contracts which was commenced in December 2013.  The review is ongoing and has identified short, medium and long term changes required.   The first four interim measures to be introduced are:

  1. The Bill of quantities is to be the primary reference document for pricing purposes
  2. Direct tendering of specialist works packages
  3. The introduction of MEAT criteria
  4. New Dispute Resolution procedures

To understand these changes, it is worth remembering how the widely unpopular Public Works Contracts came to be.  They arose out of the Construction Procurement Reform Initiative launched in 2006, the key driver of which was risk management.  Up to that point the State had retained risk in construction projects and there was little incentive on the contractor or the design team to manage that risk.  As a result, cost overruns were the norm.  Fixed price lump sum contracts were introduced as the solution to these cost overruns.  The message was that the State was willing to pay for cost certainty.

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