GC21 Workshop 11 December 2017 Agenda GC2 C21 Work rkshop - - PowerPoint PPT Presentation

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GC21 Workshop 11 December 2017 Agenda GC2 C21 Work rkshop - - PowerPoint PPT Presentation

GC21 Workshop 11 December 2017 Agenda GC2 C21 Work rkshop December r 2017 Introduction (HI Delivery & HI Legal) Rundown of the HIs GC21 contract suite Key elements of GC21 and HIs Special Conditions Recent


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11 December 2017

GC21 Workshop

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Agenda – GC2 C21 Work rkshop December r 2017

  • Introduction (HI Delivery & HI Legal)
  • Rundown of the HI’s GC21 contract suite
  • Key elements of GC21 and HI’s Special Conditions
  • Recent GC21 updates and changes
  • Key learnings, messaging and tips
  • Questions & answers
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In Intr troductio ion: : H HI I Le Legal

  • What can HI Legal do for you?

1. Steven Kouris – General Counsel: steven.kouris@health.nsw.gov.au 2. Weiping Lu – Legal Counsel: weiping.lu@health.nsw.gov.au

  • When does HI Legal get involved with your Project?

– Procurement stages – Contract finalisation and execution – Ongoing contract issues and queries – Disputes We are here to help & facilitate you achieving Project deliverables &

  • utcomes
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GC21 contracts ts – ju just t anoth ther standard government t contr tract? t?

  • HI’s GC21 contract suite

– Preliminaries – General Conditions – HI Special Conditions

  • With or without Full Payment Trust Account model

– GC21 Construction Management (incorporating HI Special Conditions)

  • With or without fit-out mechanism
  • Do I need to attach the Special Conditions to the GC21 CM contract? No

HI’s GC21 is significantly developed and tailored for HI’s operations – apart from populating, don’t change without consulting with senior PDs and Delivery executive GC21 CM contract incorporates the HI Special Conditions (You do not need to attach the Special Conditions to the CM)

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GC2 C21 contr tracts – where is is it? it?

  • Where can you find GC21 contracts? The Portal

Obtain your GC21 contract templates from the Portal

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GC2 C21 contr tracts – CA CAPM

  • Contract Administration & Procedures Manual
  • Did you know …. ? A GC21 Contract

Administration and Procedures Manual (CAPM) is available on the Portal.

  • Includes flowcharts, notes & template

notices.

  • The CAPM can be used for the Project

Team’s information – however it should always be subject to:

  • Being tailored to suit the circumstances;

and

  • Obtaining advice (as necessary) from

your Project Director, Director / Executive Director, HI Legal etc.

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Key GC2 C21 elem lements – what makes up th the Co Contract?

  • Clause 7.1 The Contract

The Contract is made up solely of the Contract Documents which supersede all understandings, representations and communications made between the parties before the Date of Contract in relation to the subject matter of the Contract. The Contract Documents are… – these GC21 General Conditions of Contract; – the Contract Information; – the annexed Schedules; – the Principal’s Documents as at the Date of Contract; and – the other Contract Documents listed in Contract Information item 26.

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Key GC2 C21 elem lements – what makes up th the Co Contract?

  • Clause 7.1 The Contract (continued)

– Contract Information – Why it is important to get this right? Tips for completing the Contract Information: – Are you being clear enough in your responses so that there is no ambiguity? – Are you changing a default position? Have you consulted with anyone? – Have you read the internal hidden notes in the Contract (shown by using button)? – “Principal’s Document Register” / Allocation of development consent conditions

Always provide enough detail in referencing your Contract Documents e.g. versions, dates, author etc.

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Key GC2 C21 elem lements – LOA (a (and LOI) I)

  • The Letter of Award (“LOA”) is a key contract document in awarding and

forming the Contract. – The Contract is formed by and when the LOA is issued. The Date of Contract is dependent on Contract Information item 12 and defaulted to the date of the Letter of Award. – The LOA has flexibility in confirming additional Contract Documents. – If a parent guarantee deed is required, a version of the LOA is available on the Portal. i.e. where a Company Performance Guarantee deed is required for guaranteeing the Contractor’s performance by the parent company.

  • HI has a Letter of Intent (“LOI”) – used for instructing on Initial Works ahead of

award of the Contract (i.e. in the event of awaiting planning approval – remember to consult and speak to your PD and HI Legal).

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Key GC2 C21 elem lements – LOA

  • Contractor submits its Contract Program

within 14 days after Date of Contract (unless HI instructs that the tender program will be the Contract Program).

  • Contractor (before starting work) effects

insurance under the Contract and gives proof

  • f all insurances policies required under the

Contract.

  • Contractor gives its security (completion undertaking and post-completion

undertaking) within 14 days after the Date of Contract. i. Must be in the form specified in Schedule 2. ii. The amount of the security must be in accordance with Contract Information Item 33 (security percentages are fixed and not to be changed unless approved from the Executive Director Delivery).

So you just issued your LOA …

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Key GC2 C21 elem lements – Prin rincip ipal l Arr rranged In Insurances

  • Unique to Government - Principal arranges [Contract] Works and Public / Product

liability cover

  • Through NSW Self Insurance Corporation / icare
  • Agreed terms – attached at Schedule 10
  • Covers Principal and contractors
  • Unless Principal otherwise instructs, Contractor obliged to make and manage all

insurance claims – what if the Contractor is responsible? Principal may need to step in and closely engage with icare – HI legal has a good relationship with icare, and can manage this

  • The Contractor must meet the costs of all excesses or deductibles
  • Note Public Liability now has environmental cover
  • Procurement triggers PAI (Project) insurance cover – so please liaise with them
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Key GC2 C21 elem lements – th the clau lause 1.3 .3 ins instructio ion

The Principal may give instructions to the Contractor concerning the Works and anything connected with the Works, and the Contractor must comply at its own cost unless the Contract expressly provides otherwise This is one of the strongest mechanisms in GC21 allowing the Principal to proactively manage the Contractor’s performance; however, this cannot cut across other parts of the Contract dealing with specific issues, such as EOTs / delay costs and site conditions

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Key GC2 C21 elem lements – prin rincip ipal l contr tractor

  • Principal Contractor “PC”

– Clause 16 / Contract Information Item 17 – Unless otherwise stated, the Contractor is appointed and engaged as PC for the construction project.

  • construction project means project involving construction work with cost of

$250,000 or more. – The Contractor is authorised to have:

  • management and control of the workplace;
  • discharge the duties of the PC (under the WHS regulations).

HI cannot and must not be the principal contractor

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Key GC2 C21 elem lements – prin rincip ipal l contr tractor

  • Principal Contractor “PC” (continued)

– A construction project can only have one PC at any specific time. [However, there may be cases where the project has early and main works components, or is carried out in stages, with the relevant contractor being the PC.]

  • Special Condition 8 (the Separate Contractor)

– The Contractor’s engagement as the PC extends to Separate Contractors. – Separate Contractor undertaking Separate Contractor Work must execute the Separate Contractor Deed Poll at Schedule 1 of the Special Conditions (to cover the risk of the Separate Contractor not being subject to the PC’s control).

  • Special Condition 15 (Occupier & Management or Control)

– HI is a specialist procurement agency, and does not occupy, manage, or control the Site in any capacity. Fundamental and needs to keep being reinforced, esp to regulators. – From the Date of Contract - Only the Contractor occupies and has management or control over the Site

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GC21 updates – what you need to know

  • Site Conditions

Contract Information Item 36 – What to include?

  • e.g. geotechnical / hazardous

material reports – Why is this important? Address Adverse Site Conditions risk – being conditions differing materially from those that should reasonably have been expected at close of tenders Contract Information Item 37 – ‘Yes’: the Contractor bears the full risk in dealing with adverse Site Conditions – “‘No’ and further wording”: only

  • n approval from Director Delivery /

Executive Director Delivery.

However the Contractor bears this risk to the extent identified or reasonably inferable from the Site Information documents, or expected at close of tender

Key GC2 C21 elem lements – th the Sit Site

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Key GC2 C21 elem lements – th the Sit Site

  • Site Access (clause 34)

– The Principal must give Contractor sufficient access to the Site to allow the Contractor to comply with Contract requirements and in accordance with Contract Information item 13. e.g. Site Access isn’t given and the Contractor makes a claim .... – Item 49A1 – NIL delay costs for initial Site access. – EOT (under clause 50) can be granted.

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Key GC2 C21 elem lements – EOTs

  • Extensions of time “EOT” clause 50:

– Extensions of time to Contractual Completion Date (for delay in achieving Completion by a cause “beyond the Contractor’s control” & if delaying a critical path activity) – only for delays occurring on days on which the Contractor usually carries out work – Note impact of Contractor concurrency, as a disentitling event. The Contractor is also required to provide 1. Initial notice – within 7 days after start of delay, setting out cause, relevant facts and expected effect on Contractual Completion Date. [Note key impact of this notice – if issued more than 7 days after the start of the delay, EOT entitlement arises 7 days before the date of issue – good leverage tool for Principal.] 2. Claim (i.e. formal notice) – within 28 days after start of delay, setting out extension sought and other relevant information, updated every subsequent 28 days while delay continues. Clause 50.8 The Principal may, in its absolute discretion extend any Contractual Completion Date at any time and for any reason. Clause 50.2 The Contractor must take all reasonable steps to avoid delay and its effects. Contractor cannot sit back and wait for the Principal to do something.

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Key GC2 C21 elem lements – Sc Schedule led Progress

Key time management tool (clause 22) What is it? The rate of progress consistent with carrying out the work required by the Contract expeditiously and without undue delay, so that Works and all Milestones will be completed by their respective Contractual Completion Dates.

  • The Contract Program must reflect Scheduled Progress.
  • The Contractor must carry out all work in connection with the Contract to achieve

Scheduled Progress.

  • Whenever requested, the Contractor must demonstrate to the Principal that it is

achieving Scheduled Progress.

  • If the Contractor does not demonstrate this, the Principal may instruct the Contractor to

take all reasonable steps to achieve Scheduled Progress at its own cost. This is not an Acceleration Notice.

  • Principal should use this provision proactively.
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Key GC2 C21 elem lements – Dela lay Co Costs

  • The Contractor’s entitlement to delay costs is set out at clause 51.1 – only for delay
  • r disruption caused by e.g. adverse Site Conditions that differ materially from what

the Contractor should have reasonably expected at close of tender or Variations (other than for the Contractor’s convenience)

  • Delay costs are calculated at the number of

days by which achieving Completion is extended, and only for days on which the Contractor usually carries out work

  • Given the default rate for delay for sufficient

Contractor initial site access is NIL (Contract Information item 49A1) – delay costs will be calculated at the rate in Contract Information item 49A2. “reasonable additional costs incurred by the Contractor as a direct result of the delay up to a maximum of: …”

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Key GC2 C21 elem lements – li liquid idated damages

  • The Contractor will be liable to pay the Principal liquidated damages at the rate stated

in Contract Information item 49B, for every day after the Contractual Completion Date, up to and including the Actual Completion Date

  • LDs must genuinely estimate the Principal’s loss for late Completion, and be supported

by credible and bona-fide material and calculations, such as impact on LHDs (as HI procures projects on behalf of LHDs)

  • Note Contractors usually default to claiming EOTs when faced with LDs exposure
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Key GC2 C21 elem lements – Vari riatio ions

  • Variation - any change to the Works
  • Is a variation warranted? Is the scope of the proposed variation already part of the

scope of work? See for instance clause 8.2 - all work and items necessary to carry

  • ut and complete the Works properly, and all work and items reasonably inferred

from the Contract Documents – these are already part of scope of the Works. Also note clause 39.4 - design or design development does not cause a Variation and Special Condition 5 - [Alternative 1: Design development (or design finalisation) & construct] – where the Contractor assumes risk for Contract Documents and has no entitlement to a Variation

  • Agreement on variation price and time should be the objective. If no agreement, and

variation instructed (to accommodate project timeframes), Contractor will have the right claim not only variation cost, but an EOT and delay costs [No delay costs for convenience variations]

  • Note other circumstances where a Variation may arise – main contractor making good

early works defects (Special Condition 9.4) or dealing with adverse Site Conditions (Special Condition 20) – which have limited compensation rights – generally additional direct costs, EOTs but no delay costs

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Key GC2 C21 elem lements – payment clai laims

  • While HI encourages Contractors to issue draft payment claims for review and

agreement before final issue [by the 25th day of the relevant month, and for final Payment Claims, at least one calendar month before the final Payment Claim is submitted], HI needs to proactively manage payment risks.

  • The key payment risk arises from the Building and Construction Industry Security of

Payment Act, which states that a respondent [Principal] may reply to the payment claim by payment schedule within 10 business days of the claim being served, indicate what amount the Principal proposes paying and if less than the amount claimed, the reasons why.

  • If the payment schedule is not provided by this time, the Principal becomes liable to

pay the amount claimed in its entirety by the due date (being 15 business days from the date the claim is made)

  • HI must issue payment schedules even if the claim is agreed. If there is any

disagreement with the amount claimed, or form of payment claim (eg not made at end

  • f month, and no supporting statement as to subcontractor payments), the payment

schedule must clearly articulate the reasons, including contractual provisions.

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Key GC2 C21 elem lements – payment clai laims

  • Note payment claims do not presently need to state they are made under the Act;

however, this is expected to shortly change and revert to what was previously the case – that there be such a statement.

  • GC21 requires the Contractor’s Final Payment Claim to be submitted within 13 weeks

after Completion of the whole of the Works has been achieved.

  • The Final Payment Claim must include any Claim not previously included in a Payment

Claim.

  • Any Claim not submitted before or with the Final Payment Claim is barred.
  • However, while the Contract may say this, this does not mean the Contractor is barred

from proceeding under the Security of Payment Act.

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Key GC2 C21 elem lements – earl rly use se

  • Before the Contractor achieves Completion, the Principal, or anyone authorised by the

Principal, may use or occupy all or any part of the Works that are sufficiently complete

  • Early use is not Completion
  • At least 21 days’ notice must be given
  • Contractor must assist and cooperate with those using or occupying the Works.
  • Sometimes pursued to facilitate LHDs commencing operating a new or redeveloped

facility

  • While Contractor’s obligations remain unchanged, the entity having early use also

assumes risk of early occupation. [Note – need for appropriate interface between Contractor and this entity, especially as C is still the PC.]

  • We have developed early use template notices, including where less than 21 days’

notice needs to be given, which can also manage any required interface

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Key GC2 C21 elem lements – Co Comple letio ion

  • Completion (Special Condition 18 / clause 65 in GC21 Construction

Management) – Completion means defect-free and applies to any Milestone as well as whole of the Works. Unlike Practical Completion that other industry standard form contracts adopt – But what about defects liability period? No such period. Completion means defect-free.

  • Clause 67 Defects after Completion “At any time after Completion

Principal may, in its absolute discretion, instruct others to rectify defects”, subject to statutory limitation period, meaning longer than a traditional DLP

  • Defect Notice
  • If the Contractor fails to make good, the Defects can be made good by
  • thers (debt due from Contractor)
  • Note defects arising from early works referenced in the Main Works

Contract – Main Works Contractor (given on site) responsible for rectifying unless Principal otherwise instructs

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GC21 updates – what you need to know

  • Completion validation period

Special Condition 18 / Clause 65 GC21 CM

Actual Completion Date – following this validation period, if parties acting reasonably agree Completion has been achieved Commences after the later of: i. expiry of Contractor’s notice period; or ii. Contractor achieving Substantial Completion

  • Special Condition 18.7 and 18.8
  • Clause 65.6 and 65.7 GC21 CM

Select one Alternative (1, 2 or 3) at Special Condition 18.8 / clause 65.7 GC21 CM for your Completion Validation Period Contractor gives the Contractor’s Notice at least 14 days’ notice when it anticipates demonstrating Substantial Completion of the Works or Milestone. Substantial Completion includes Contractor demonstrating:

  • Special Condition 18.4 (eg only

minor defects or omissions)

  • Clause 65.3 GC21 CM.

Completion Validation Period

Key GC2 C21 elem lements – Co Comple letio ion

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Key GC21 ele lements ts – Sec ecurity y ... ... i.e i.e. bank k gu guarantees s (B (BGs) s)

  • HI requests from its Contractors, 2 securities (unconditional undertakings) for the

Contract: – Completion Undertaking – Post-Completion Undertaking

  • Clause 33.3 – release of the security – automatic unless Principal takes positive

steps to stop “Unless the Principal has made or intends to make a demand against an Undertaking, the Principal must return the Undertakings ….” “…no outstanding Defects or unresolved Issues” The Undertaking serves to protect the HI’s interests and position under the Contract

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GC21 updates – what you need to know

  • GC21 is updated periodically, as part of the continuing project experience
  • There will be cases where GC21 tender versions do not include the

updates

  • Ideally we want all updates captured, say by tender addenda; however,

there may be times when this is not possible.

  • We suggest any such circumstances discussed with the senior project

directors so they escalate to the Delivery executives for consideration

  • HI legal will also consider and advise on this issue as part of legal

contractual reviews

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GC21 updates – what you need to know

  • Site Conditions (continued)

Special Condition 20 / clause 37A in GC21 Construction Management – When does this come into play? Refer to Contract Information Item 37. – Contractor’s entitlements being only:

  • Reasonable direct costs

(additional works)

  • Variation if instructed by

the Principal

  • Extension of time
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GC21 updates – what you need to know

  • Site Conditions (continued)

Provision Sums (Adverse Site Conditions) – Special Condition 20(d) / clause 37A (CM based GC21 contracts) – Preliminaries 3.5 Provisional Sum (adverse site conditions) – Contractor’s entitlement to compensation through Provisional Sum by reference to:

  • Total quantity allowed and

corresponding rate specified in the Contract.

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GC21 updates – what you need to know

  • Trigger Action Response Plan (TARP)

Preliminaries section 5.20 – Addresses asbestos risks and control measures through a traffic light approach

  • Asbestos Management Plan
  • Asbestos Removal Licence

– Non-compliance can result in the Principal withholding payment to Contractor. – Contractor is to provide updates of TARP compliance through monthly project reporting.

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Key lea learnin ings – takeaways

HI Legal: We are here to help manage Project risks and facilitate you achieving project outcomes. Legal sign off provides an extra layer

  • f comfort to the executive

Obtain your GC21 contract templates from the Portal – as they are updated regularly for our Projects – this includes updating GC21 tender versions that do not include updates HI cannot and must not be the principal contractor (this is significant to the operation of HI as a procuring and service delivery agency) HI’s GC21 contract suite is significantly developed and tailored for HI’s operation and business – apart from populating, don’t change unilaterally without consulting snior PDs and Delivery executive GC21 CM contract already incorporates HI Special Conditions – there is no need to attach the Special Conditions.

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Key lea learnin ings – takeaways

HI requires Completion to be defect-free – don’t get confused with DLP or Post-Completion Undertaking period. Only the Contractor has management or control over the Site – HI’s does have any control over the site in any capacity. The Contractor’s unconditional undertaking serves to protect HI’s interests and position in the Contract – do not release unless appropriate and in accordance with the Contract. Always provide enough detail in referencing your Contract Documents e.g. versions, dates, author etc. – avoid any ambiguity and make reference to document registers where appropriate.

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Questio ions?