30.01.2014

New NZS Construction Contracts

For ten years NZS 3910:2003 was the form of construction contract most commonly used in New Zealand.  However, following industry feedback, NZS 3910:2003 has now been superseded by three new building and civil engineering contracts:

  • NZS 3910:2013 – Construction (Construction contract)
  • NZS 3916:2013 – Design and Construct (D&C contract)
  • NZS 3917:2013 – Fixed Term (Fixed Term contract)

The last in this trilogy became available on 28 January 2014, while the others were published in October 2013.

The splitting of NZS 3910:2003 into three separate standards provides more tailored general conditions for the different types of contracts and procurement arrangements that feature in the New Zealand construction sector.  Their publication follows feedback from the industry and lessons learned from NZS 3910:2003.

The new standards are easier to follow, contain new guidelines (that no longer have contractual status), have a more comprehensive tick-box type table for the Special Conditions, and include additional standard form documents (to save parties developing their own).   They also introduce some new terminology.

Among the substantive changes, the payment system has been simplified and contains different time periods, the method of calculating the price in cost reimbursement contracts has been set out more clearly and there is greater certainty about responsibility for arranging insurance and paying the deductibles.  The conditions are aligned with the Construction Contracts Act 2002 (as amended to date).

Standards New Zealand says the new contracts “reflect a fair risk allocation between the parties”.  While some parties will want to re-allocate risk in different ways for certain projects, overall, the need for Special Conditions should be significantly reduced.

These contracts are likely to become the default choice for most construction projects of any significance in New Zealand.  And their publication is timely given the anticipated spike in construction activity over the next decade.  Construction and engineering firms, and particularly those responsible for contract negotiations, should familiarise themselves with the changes.

Please click on pdf for a more detailed discussion of the key features of each new standard:[1]

For more information, or to discuss any aspect of construction law, please contact:

Nick Gilliesnick.gillies@heskethhenry.co.nz or +64 9 375 8767

Christina Bryantchristina.bryant@heskethhenry.co.nz or +64 9 375 8789

or other members of the Hesketh Henry Construction Law Team

 


[1] Unless otherwise stated, capitalised terms are defined terms in the applicable standard.
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