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THE NEW NZS 3917:2013: THE THIRD IN THE TRILOGY
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Standards NZ has just released the new NZS 3917, the third Standard to emerge from the ‘limited technical review’ of the old NZS 3910:2003.

Significant differences in approach and terminology 

NZS 3917 is intended to be used when the contract is for the provision of work or services over a fixed term, as distinct from a fixed scope of work. As a consequence, there are a number of significant differences from 3910 in terms of approach and terminology.

The new document is able to be used for all fixed term contracts—not just maintenance contracts, which were the focus of the old Appendix C in 3910:2003. For this reason, it incorporates some, but not all, of the old Appendix C, and references to contracts in public places and road contracts (including Appendix B) have been removed. 

The basic approach of the document is as follows:

  • The Contract Works Period (for the whole of the Contract Works or for any Separable Portion) commences on the Date of Commencement stated in the Special Conditions and ends on the Date of Expiry stated in the Special Conditions. 
  • Clearly, because this is a fixed term contract, extensions of time do not arise (other than in the sense of extensions of the term by the agreement of the parties).
  • The Contractor must be given occupancy of the Site on the Date of Commencement, when the Contractor must commence work. If the Principal does not give occupancy on the Date of Commencement, the Engineer must suspend the commencement of work.
  • The Contractor’s occupancy means only the non-exclusive occupancy, with the Principal and other Persons having the right to use the Site and the Contract Works pursuant to their normal rights of access or passage. It follows that there is no such thing as early occupancy for the Principal, as there is in 3910.
  • On the Date of Expiry, the Engineer issues a Certificate on Expiry and the Contractor ceases work and leaves the Site. If any of the Contractor’s obligations remain outstanding, the Engineer has the option of having those obligations completed by another contractor or of allowing the Contractor to complete them: see below.

Certificate on Expiry 


Within 5 Working Days following the Date of Expiry, the Engineer must issue a Certificate on Expiry. The certificate may list any obligations of the Contractor which remained unperformed or not properly performed as at that date.

In respect of any one or more of such outstanding obligations, the Engineer may elect either:

  • to have others undertake the outstanding work (e.g. the new contractor taking over the work), at the Contractor’s Cost
  • to allow the Contractor to return to the Site for the purpose of completing the outstanding obligations, failing which the Engineer can have another contractor do so at the Contractor’s Cost .

A form of Certificate on Expiry (which replaces the Practical Completion Certificate under 3910) is provided in Schedule 15.

Remedying of defects


The Contractor is required to remedy any defects notified by the Engineer during the Contract Works Period, within five Working Days of receiving the Engineer’s notice or within such other reasonable time as agreed. If the Contractor fails to do so, the Engineer may have others undertake the work at the Contractor’s Cost.

The Engineer issues the Final Completion Certificate once any outstanding obligations the Contractor was required by the Certificate on Expiry to complete have been completed.

Retentions


Retentions remain an option, if specified in the Special Conditions, although the guidelines note that they will not always be appropriate in a fixed term contract. Any retentions must be released as to one half following the Date of Expiry (less the Engineer’s assessment of the Cost of any outstanding obligations which the Engineer has required the Contractor to complete), and the remainder as part of the Final Payment Schedule. Alternatively some other formula may be specified.

The Contractor may provide a bond in lieu of retentions, unless otherwise provided in the Special Conditions.

Contractor’s Bond


The Contractor’s Bond is released on the issue of the Final Completion Certificate. The bond under 3910 is released on Practical Completion but, unless there are retentions, under 3917 the Principal would have no security for outstanding work if the bond were released on the Date of Expiry, so the date of the Final Completion Certificate is the logical date for release of the bond.

Care of the works and Site


The Contractor is responsible for the care of any part of the works and Site from commencement of work on that part until that work is completed. The Contractor’s responsibility ceases on the Date of Expiry, except in the case of any of the Contract Works which the Engineer requires to be completed following that date.

Because early occupancy or use of the Site or Contract Works does not arise under 3917, paragraph (d) of the excepted risks under 5.6.6 has been deleted.

Programme


Understandably, the programme provisions are different from 3910. Under 3917 the Contractor must provide a programme within 10 Working Days following the Date of Acceptance of Tender, and at intervals thereafter as stated in the Special Conditions. The programmes must be provided in detail for the period stated in the Special Conditions following the relevant programme revision date, and at an overview level for the remainder of the Contract Works Period.

Time-related overheads and profit


Because time extensions do not arise under 3917, the Contractor’s ability under 3910 to recover time-related overheads and profit as part the valuation of a Variation entitling the Contractor to an extension of time has been omitted from 3917. However, the ability to recover time-related Cost where part of the Contract Works has been delayed has been retained.

Insurance


Clause 8.8 in 3910 relates to where the construction insurance is arranged by the Principal, and it incorporates provision for the insurance of any other structures in the vicinity. Under 3917, clause 8.8 has been split into two clauses, 8.8 and 8.9, which (unless otherwise provided in the Special Conditions) require the Principal to effect both the construction insurance and insurance of the existing structure or property, and any other structures or property in the vicinity. This reflects the fact that typically a contract under 3917 will involve work to be performed on existing assets.

However, the guidelines make it clear that the insurance arrangements will need to be tailored to each individual contract.

Underground and above-ground utilities


Unlike 3910:2013, but consistent with the old Appendix C of 3910:2003, it is the Contractor’s responsibility to search relevant records for utilities on or about the Site. If a utility is not shown on the records, any consequential extra work is a Variation. 

Maintenance records


In addition to the 3910 requirement for as-built drawings and operation and maintenance manuals, there is a requirement for the Contractor to keep maintenance records.

Final payment claim


The Contractor must submit its final claim not later than 1 Month after the issue of the Final Completion Certificate. 


Where the duration of the Contract Works exceeds 12 Months and there are Separable Portions, separate final claims are required. They must be submitted by the Contractor within 1 Month after the issue of the Certificate of Expiry for each Separable Portion.

Performance payments


Where provided in the Special Conditions, performance payments may be made by the Principal (or the Contractor) in respect of actual performance against performance indicators specified in the Contract. Bonuses for early completion of the Contract Works of course do not arise.

Liquidated damages


Where provided in the Special Conditions, liquidated damages may be payable by the Contractor for any failure to meet any obligations specified in the Contract. Liquidated damages for delay in completion of the Contract Works do not arise.


If you have any questions about any of these changes or would like to discuss the impact they may have on your business, contact our national construction team: 

Paul Buetow, Construction Partner
Stuart Robertson, Construction Partner
Chris Booth, Construction Partner

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