What is an AS 4300 Contract?
AS 4300 is a widely used standard form contract typical in commercial construction. Usually, it is intended to be used for the following types of contract:
- design and construct,
- design development and construction, and
- design, novate and construct
AS 4300 is usually a lump-sum contract. However, there is also a modified version that uses an early contractor involvement (‘ECI’) arrangement.
AS 4300 contract is protected by copyright so you must pay a licence fee to use it. There are also different versions and various types of licenses available.
Key Elements of AS 4300
AS 4300 contracts are complex, but the key components of the contract include:
|Lump sum price||The contractor is obliged to carry out the project for a fixed price.|
|Fixed timeframe||The contractor ensures the works will be completed by an agreed date (known as the ‘date for practical completion’). Liquidated damages may apply in the event of a delay.|
|Practical completion||The point at which the construction project can be used and occupied before all works (such as minors works) are actually completed.|
|Design obligations||The contract requires the principal to provide the contractor with a design brief. The principal may also be required to provide a ‘Preliminary Design’ where the principal chooses a ‘design, development and construct’, or ‘design, novate and construct’ contract.|
|Variations||The contract provides a process for addressing variations between the design and the actual construction.|
|Extensions of time||The contractor is able to claim extensions of time to the date for practical completion if it is delayed by an event listed at clause 35.5 (which includes delay caused by the principal).|
|Latent Conditions||The contractor may claim an extension of time and additional costs if it encounters a latent condition. A latent condition is a physical condition on or near the site that could not reasonably have been anticipated by a competent contractor at the time of tendering.|
|Provisional sums||Where the design of part of the works is not sufficiently developed, a provisional sum may be provided. A provisional sum is an allowance for a specific element of the works that is not yet defined in enough detail to accurately price.|
|Separate portions||The works can be divided into separable portions, so each portion potentially has a different access date, date for practical completion and liquidated damages rate.|
Benefits of AS 4300
With an AS 4300 contract, the project is streamlined and cost-effective, as the contractor is responsible for both the design and construction of the project. For example, since the contractor produces the design, there should be minimal variations in the completed construction.
Further, the contractor is accountable for both the design and construction means, so cannot point fingers in the event of any defects as they will be solely responsible.
Disadvantages of AS 4300
Unlike other construction contracts, the principal has less control over the final design under an AS 4300. This is because the principal has no team of consultants of their own. As a result, the principle is heavily reliant on the contractor.
Further, under an AS 4300 contract which adopts a lump-sum type arrangement, the contract sum may be more costly than its alternatives to reflect increased contractor risk. If the parties enter the contract after the design is completed, disputes may arise about whether a change is a normal ‘design development’, or a variation (which can change the costs).
To Sum Up
AS 4300 remains a widely used form of construct in commercial construction. It can be either a lump-sum type or ECI arrangement.
In deciding which whether AS 4300 is right for your project, it is important to weigh up several considerations, including convenience, cost, and control over the final design.
If you need any assistance relating to your construction contracts, our construction lawyers are here to help.