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General issues

Health service / agency project mananger (liaison officer)

When a health service or agency is the principal, they should appoint an agency project manager who will act as a liaison officer. This person will be the principal point of contact for the contractor / builder and superintendent and assist in programming, scheduling, dealing with issues of maintaining health service delivery where works are occurring including access issues, commissioning, decanting, visits, openings and furniture and equipment selection.

For large and / or complex projects, particularly where facilities will need to remain functioning and occupied by the principal during the construction period, the liaison officer may need to be a full time appointment.

Construction insurance

It is essential that the relevant parties are covered by insurance for building aspects during the construction process, including existing buildings, the works and public liability.

Normally, the Department of Health and Human Services arranges principal controlled insurance for the building works. The standard form of contract AS 2124 - 1992 provides the option for the principal to take out such insurance. The insurance is taken out with the Victorian managed insurance authority.

Note that departmental approval is required prior to any capital project deviating from the normal practice of using principal controlled insurance.

This principal controlled insurance covers contract works, and public liability, including all equipment included in the contract. This extends to components prepared or assembled off site. However, the coverage does not include areas not designated in the principal controlled insurance policy document, such as the contractors' plant and vehicles, asbestos removal, major demolition, the contractor's and sub-contractor's personnel, tools etc. The builder / contractor is to refer to the principal controlled insurance policy for details, including excesses and claims.

The principal or the superintendent should clearly advise the contractor that the excess under the principal controlled insurance arrangements is to the account of the contractor. Refer to the construction insurance guideline for further details.

Works programming

The contractor is responsible for the programming of the works to achieve completion within the contract period. The construction program sequences contract activities and trades, showing durations and dependencies and the expected dates for achievement of milestones such as structural lock-up, services commissioning and handover.

The sequencing, dependencies and durations collectively define the critical path, which is the shortest period in which the contract works can be completed. The contractor must keep the program up to date as delays to or acceleration of activities can lead to changes in the critical path.

The superintendent should regularly report to the project control group (PCG) on the critical path, achievement of, or changes to, the works program, to enable the agency to coordinate their own activities with the building works.

Extensions of time

For a variety of reasons, a contractor may be unable to complete the works by the date stipulated in the contract. The delays may be of the contractor's making or attributable to circumstances beyond the contractor's control. When the latter occurs, the contractor is entitled to an extension of time to the contract period, as justified against the construction program.

There are two types of extensions of time, those without cost implication, and those with cost implications called prolongation.

Generally, extensions of time would not lead to an increased cost. Where the delay is due to the actions of the principal (client) which therefore affects the programmed critical activities, then the contractor has an entitlement to reasonable costs for delay.

Causes of delay may include the following:

Without cost implications to the contract

  • industrial disputes e.g. statewide or national
  • inclement weather
  • delays in receiving permits and approvals from authorities or utility companies.

Potential for cost implications to the contract

  • delays by the superintendent in giving instructions or responses to the contractor
  • major variations to construction, planning or design approved by the principal
  • instructions to defer or delay a portion or the whole of the work due to operation requirements of the health service / agency.

Note that:

  • Unexpected site conditions (in certain circumstances, costs may be applicable) may fall into either category
  • It is not always easy to determine if a particular delay will warrant an extension to the time of the contract. The superintendent may request that the Contractor justify claims for extension of time through the presentation of a recent (no more than 14 days old) critical path program/diagram for the contract works.

Issues requiring special attention

Consultants are to ensure that the contract documentation is clear, and draws attention of contractors to these important phases of procurement. Key issues of concern include:

Work in an operating facility

Awareness of the impact on health and related services being delivered; by construction activities involving essential services, access, infection and noise control etc. is vital. Measures to mitigate risks or reduce negative effects need to be set out by the principal and superintendent for projects where construction work is being undertaken in an operating facility.

Commissioning period

The Contract administrator should be aware of the necessity of allowing for two commissioning periods. 

  • Period 1 - for the Contractor and its sub-contractors to ensure operability of buildings and services to comply with the contract's ‘Technical Performance Requirements'.
  • Period 2 - for the contractor to re-commission following handover to and occupation by users of the facility to ensure proper performance in accordance with their user requirements, following occupancy.

Certificate of occupancy

To obtain this certificate the maintenance manual requirements must be taken into account, which includes the maintenance of essential services, plus reporting and recording requirements. Under no circumstances is a facility to be handed over without an operation manual being provided for health service / agency use as well as all emergency back-up arrangements.

Environmental sustainability

Various environmental issues must be controlled and monitored during construction, such as use/waste of water, recycling of materials; power and other services, dust and noise generation and stormwater run-off from the site.