As you may be aware, Standards New Zealand Te Mana Tautikanga o Aotearoa (Standards NZ) is currently in the process of updating the NZS 3910: 2013 Conditions of contract for building and civil engineering (the Standard), one of New Zealand’s more commonly used construction contracts. At the start of this month, Standards NZ released an update on how the revision is progressing.
It has been almost ten years since the Standard was published, and as various issues have been identified since the release it came as no surprise when last year Standards NZ announced its intention to review and update the Standard. In this article, we summarise what has been done so far and what we can expect later this year.
The update process
While the revision is expected to take some time given the scope of the project, several key steps have been taken by Standards NZ. Importantly, Standards NZ has produced a scoping report identifying and categorising issues with the current Standard and further setting out the steps that will be taken to address these.
Under the scoping report, issues have been categorised as non-contentious (such as alterations necessary to keep pace with legislative changes since 2013 and the inclusion of a pandemic clause in the wake of Covid-19) or contentious.
Some of the contentious issues identified include:
- the role of the Engineer;
- extension of time provisions;
- retentions;
- concurrent delay; and
- disputes.
As the contentious issues relate to entitlements and/or risk allocations under the Standard, these will be subject to a range of opinions from various stakeholders on what the best course of action will be moving forward.
Currently, the revision is at the development stage, and Standards NZ has appointed and approved a committee comprised of representatives from various stakeholder organisations. This Committee is tasked with preparing revisions of the Standard and undertaking the public consultation, among other things. The Committee has held five meetings to date and considered and sought direction in relation to the role of the Engineer and extensions of time.
Progress to date
In its latest update, the Committee revealed that it has decided not to proceed with an interim standard, which was slated to be released in August this year. The interim standard was intended to bridge the gap between beginning the revision and the eventual publication of a revised standard. The Committee decided an interim standard was not value for money, given that it would only deal with non-contentious issues, namely legislative changes. However, the Committee endorsed the publication of a guidance document that will cover a number of topics and include an optional pandemic clause and liability cap clause. This is due to be released in September 2022.
While the Committee has made progress in identifying key areas to be addressed in the revision, perhaps the most notable from the Committee’s August update is the decision to split the Engineer to Contract role into two roles:
- The Contract Administrator, who will provide directions to the Contractor on behalf of the Principal; and
- The Engineer to Contract, who will, acting fairly and impartially, issue determinations under the contract.
While these roles look similar to the existing provisions, it is expected that the drafting will require the roles to be performed by different individuals for large contracts, but may be undertaken by the same individual for smaller contracts. Additionally, there will be a new role introduced, namely the Principal’s Representative. The Committee has not yet given guidance on the function of this role.
The Committee is next scheduled to meet in mid August, where it is expected that the guidance document will be discussed prior to its proposed release in September 2022.
Conclusion
Lane Neave has a specialist Building and Construction team who are familiar with the Standard. We look forward to continuing to see progress on the 3910 update and providing our thoughts when it is released next year.
In the meantime, should you have any questions on how this may affect you or are seeking construction contracting advice, please do not hesitate to get in touch with a member of our team.
