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Standard contract forms

Standard lump sum contracts

The standard form of construction contract for Victorian government departments is Australian Standard Lump Sum AS 2124-1992 General Condition of Contract (AS 2124) with government approved special conditions as set out in Ministerial Direction No. 2 Contractual Provisions for Public Construction (MD2). These guidelines are based on tendering for projects using this standard contract. Consultants are expected to assess alternative procurement options however, approval of the department is required if another form of contract or amended special conditions is to be used.

Conditions of tender

The standard conditions of tender for Victorian public sector projects shall be used when seeking contractors for capital works projects.

Reference to the conditions of tender need to be included when advertising tenders. This will apply for expression of interest or inviting tenderers to make detailed submissions for the project. The advertisement should state that these documents will be made available to those firms proposing to make submissions, upon request.

Special conditions of contract

The guide to contractual provisions for public construction issued in accordance with Ministerial Direction No 2 lists the standard forms of contract which may be employed by government departments and agencies to obtain construction works and services. The Department of Health and Human Services project manager can provide access to this guide if required.

The department participates in whole of government construction activities, including the development of model special condition clauses to be used in all government and agency contracts.

These model clauses will be made available by the departmental project manager for consultants involved in documentation and tendering activities.

Construction management

Construction management is a method for the delivery of construction work, which is more flexible than traditional contracts in a range of areas and may be applicable where:

  • it is necessary to exercise control over work methods and timing eg. in occupied or functioning buildings
  • it is difficult to fully quantify the required work or there may be no accurate documentation of existing services and infrastructure
  • it is necessary to expedite a project by letting progressive or staged packages of work.

The construction manager (CM) may operate as an agent of the principal or as a head contractor. The main difference between these is in the former, the CM is arranges separate contracts where the agency or department enter into the contracts with the sub-contractors directly whereas in the latter case the CM has contracts with sub-contractors and the CM acts as the principal to these contracts with the sub-contractors.

The CM is usually paid a fee based on a tendered percentage of the value of the separate contracts. This percentage may vary depending on the services provided directly by the construction manager such as hoisting, security, hoardings, set-out, permits and approvals, industrial relations, tendering, early works, demolition.

Suitable construction managers are typically drawn from larger contracting firms.

Engagement of a construction manager and the letting of sub-contracts and materials supply contracts must be in accordance with the ministerial directions, guides and practice notes. The contract with the construction manager must specify that the construction manager will be appointed as the principal contractor as defined in the occupation health and safety (OHS) regulations, and will be primarily responsible for OHS in the construction workplace, including for sub-contractors.