TABLE OF CONTENTS

1.0 PROCUREMENT SELECTION 3

SECTION 1.1 PROCUREMENT SELECTION 3
1.1A LUMP-SUM PROCUREMENT ROUTE 3
1.1B DESIGN, NOVATED, AND CONSTRUCT PROCUREMENT ROUTE 3
1.1C CONSTRUCTION MANAGEMENT PROCUREMENT ROUTE 3

SECTION 1.2 PROCUREMENT SELECTION SUMMARY 4

2.0 ADMINISTRATION OF CONTRACT 5

SECTION 2.1 POTENTIAL PROJECT IMPACTS 5
2.1A CONTRACT ADMINISTRATOR’S ROLE VS. ABIC
2.1B . PROGRESS AND PROGRAMMING OF THE WORKS VS. ABIC 5
2.1C CONTROL OF EMPLOYEES AND SUBCONTRACTORS VS. ABIC 6

SECTION 2.2 PROJECT ADMINISTRATION 6

2.1A SETTING OUT THE WORKS
2.1B . UNFIXED PLANT AND MATERIALS CLAIM 6
2.1C FINAL PAYMENT CLAIM AND CERTIFICATE 6

3.0 INSURANCE AND SECURITY 7

SECTION 3.1 INSURANCE 7
3.1A POLICY COVERAGE 7
3.1A LETTER TO THE CONTRACTOR 8

SECTION 3.2 SECURITY 9

3.2A CASH RETENTION AND UNCONDITIONAL GUARANTEES 9
3.2B SECURITY CALCULATIONS 9

4.0 INTERIM PAYMENT 10

SECTION 4.1 TYPICAL PROGRESS CLAIM ASSESSMENT AND PAYMENT 10

SECTION 4.2 PROGRESS CLAIM ASSESSMENT 10

SECTION 4.3 PROGRESS CERTIFICATE 11

5.0 REFERENCES 12

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1.0 PROCUREMENT SELECTION

1.1 PROCUREMENT SELECTION

1.1A LUMP-SUM PROCUREMENT ROUTE
A LUMP- SUM CONTRACT IS A FORM OF AGREEMENT BETWEEN THE CLIENT AND THE CONTRACTOR WHEREBY AN AGREEMENT IS
MADE FOR THE CLIENT TO PAY A FIXED AMOUNT TO THE CONTRACTOR FOR ALL WORKS UNDER THE CONTRACT . THE LUMP-SUM
AMOUNT WILL VARY ONLY IF THERE ARE VARIATIONS MADE TO THE SCOPE OF THE WORKS UNDER THE CONTRACT . LUMP-SUM
CONTRACTS CAN BE ADVANTAGEOUS FOR THE CLIENT IN THE FOLLOWING WAYS:
• THERE IS A GUARANTEED FINAL SUM IN PLACE FOR THE CLIENT CREATING SURETY AND CONFIDENCE IN COST.
• LUMP-SUM CONTRACT BIDS MAY BE SIMPLER TO COMPARE DURING TENDER STAGE AS WELL AS MORE COMPETITIVE.
• THE RESPONSIBILITY FOR TIME AND COST MANAGEMENT LIES WITH THE CONTRACTOR THEREBY TRANSFERRING RISK FROM THE
CLIENT.
• THE CONTRACTOR IS RESPONSIBLE FOR MANAGING ALL SUB-CONTRACTORS THEREBY TRANSFERRING RISK.
• FUTURE CLAIMS BY CONTRACTOR ARE LIMITED BY THE FIXED NATURE OF THE CONTRACT.
LUMP SUM CONTRACTS MAY BE DISADVANTAGEOUS FOR THE CLIENT IN THE FOLLOWING WAYS:
• THERE IS A HEAVY RELIANCE ON THE SKILLS AND KNOWLEDGE OF THE PRIMARY CONTRACTOR.
• ALL DOCUMENTATION MUST BE HIGHLY DEVELOPED BEFORE CONSTRUCTION. ANY ISSUES IN THE DOCUMENTS MAY LEAD TO
ADDITIONAL COSTS AS THE SCOPE OF THE PROJECT MAY HAVE TO BE ALTERED DUE TO ERRORS IN DOCUMENTATION

1.1B DESIGN, NOVATED, AND CONSTRUCT PROCUREMENT ROUTE

DESIGN, NOVATED AND CONSTRUCT CONTRACTS (DN&C) ARE A FORM OF CONTRACT WHERE THE CLIENT - BY NOVATION -
TRANSFERS THE RIGHTS AND OBLIGATIONS FROM THE INITIAL DESIGN TEAM TO THE CONTRACTOR WHO IS THEN RESPONSIBLE FOR ALL
DESIGN AND BUILD ELEMENTS OF THE WORKS UNDER THE CONTRACT.
DN&C CONTRACTS CAN BE ADVANTAGEOUS TO THE CLIENT IN THE FOLLOWING WAYS:
• THE RESPONSIBILITY FOR TIME AND COST MANAGEMENT LIES WITH THE CONTRACTOR THEREBY TRANSFERRING RISK FROM THE
CLIENT.
• THE CONTRACTOR IS LIKELY TO UNDERSTAND THE BUILDABILITY OF THE DESIGN AS THEY PREPARE DETAILED DESIGNS.
• THE CONTRACTOR IS RESPONSIBLE FOR MANAGING ALL SUB-CONTRACTORS THEREBY TRANSFERRING RISK.
DESIGN, NOVATED, AND CONSTRUCT CONTRACTS MAY BE DISADVANTAGEOUS FOR THE CLIENT IN THE FOLLOWING WAYS:
• DESIGN REQUIREMENTS MUST BE VERY CLEAR BEFORE NOVATION TO AVOID FUTURE DISPUTES AND ADDITIONAL COSTS
• THERE IS A HEAVY RELIANCE ON THE SKILLS AND KNOWLEDGE OF THE PRIMARY CONTRACTOR.
• INSURANCES AND CONTRACTS MAY BE MORE COMPLEX THAN OTHER CONTRACT TYPES

1.1C CONSTRUCTION MANAGEMENT PROCUREMENT ROUTE

THE CONSTRUCTION MANAGEMENT PROCUREMENT ROUTE ENTAILS THE APPOINTMENT OF AN EXTERNAL ORGANISATION WHO ACTS
AS AN AGENT FOR THE CLIENT AND IS RESPONSIBLE FOR THE MANAGEMENT AND COORDINATION OF THE CONSTRUCTION OF THE
PROJECT. THE CONSTRUCTION MANAGER WILL BE RESPONSIBLE FOR ENLISTING SUBCONTRACTORS TO ENTER INTO A CONTRACT
WITH THE CLIENT.
CONSTRUCTION MANAGEMENT CONTRACTS CAN BE ADVANTAGEOUS TO THE CLIENT IN THE FOLLOWING WAYS:
• THE PROJECT HAS BETTER SCOPE FOR INNOVATION AND NEW TECHNOLOGIES
• THE PROJECT CAN BE FAST-TRACKED IF THE CONSTRUCTION MANAGER IS APPOINTED EARLY IN THE DESIGN PROCESS AS
EARLIER STAGE WORKS CAN BE TENDERED OUT AND UNDERTAKEN BEFORE DOCUMENTATION IS COMPLETED FOR LATER
STAGE WORKS.
• THE CLIENT HAS GREATER CONTROL OVER THE FINAL PRODUCT OF THE PROJECT.
CONSTRUCTION MANAGEMENT CONTRACTS MAY BE DISADVANTAGEOUS FOR THE CLIENT IN THE FOLLOWING WAYS:
• THE FINAL COSTS ARE UNKNOWN AT TENDER STAGE OF THE PROJECT
• COST RISKS ARE BORNE SOLELY BY THE CLIENT.
• MORE TIME AND MANAGEMENT IS NEEDED BY THE CLIENT.
• CONTRACTS FALL UNDER THE RESPONSIBILITY OF THE CLIENT LEAVING GREATER ROOM FOR ERROR AND HIGHER LEVEL
OF RISK BORNE.

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1.2 PROCUREMENT SELECTION SUMMARY
For this project, the client has stated the importance of a timely delivery and price certainty. The client
expects to tender the project without full completion of design documents. The quality expected by the
client is standard and the client wishes to minimise development risks by transferring risk to the
contractor. The client does not expect variations throughout the construction stage.
For this brief a Design, Novate and Construct procurement route is the most suitable. The project should
be novated to a design and build contract company when preliminary designs are complete so the
contractor can begin finalising design for construction of the early stages of the project. The contractor
should have extensive knowledge on the buildability of the design documentation as well as
relationships with standard trades to begin works as soon as possible and provide a reasonable degree
of price certainty for the client.

FIGURE 1. MANAGEMENT LINK MAP

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2.0 ADMINISTRATION OF CONTRACT
2.1 POTENTIAL PROJECT IMPACTS
2.1A CONTRACT ADMINISTRATOR’S ROLE AS4000 VS. ABIC
AS4000 ALLOWS THE PRINCIPAL (CLIENT) TO APPOINT ANY PERSON AS THE SUPERINTENDENT (CONTRACT
ADMINISTRATOR). THE SUPERINTENDENT MAY GIVE DIRECTION TO THE CONTRACTOR ORALLY BUT “SHALL AS SOON
AS PRACTICABLE CONFIRM IT IN WRITING” (AS4000, 1997, CLAUSE 20). AS4000 ALSO ALLOWS THE
SUPERINTENDENT TO APPOINT A SUPERINTENDENT’S REPRESENTATIVE WITH WRITTEN NOTICE INCLUDING DETAILS TO
THE CONTRACTOR. THE CONTRACTOR ALSO HAS A RIGHT TO OPPOSE THE APPOINTMENT OF REPRESENTATIVE WITH
REASONABLE GROUNDS (AS4000, 1997, CLAUSE 20). THE FLEXIBILITY OF WHO MAY ADMINISTER THE CONTRACT
DIFFERS GREATLY FROM AUSTRALIAN BUILDING INDUSTRY CONTRACTS (ABIC), WHERE ONLY A SINGLE ARCHITECT
NAMED IN THE CONTRACT MAY ADMINISTER THE CONTRACT. ANY DIRECTIONS GIVEN BY THE ARCHITECT MUST BE IN
WRITING. IF THE ARCHITECT IS UNABLE TO CONTINUE IN THE ROLE OF CONTRACT ADMINISTRATOR THE CLIENT MUST
IMMEDIATELY NOMINATE ANOTHER ARCHITECT AND GIVE DETAILS TO THE CONTRACTOR IN WRITING. THE
CONTRACTOR MAY ALSO OPPOSE THE APPOINTMENT OF THIS NEW ARCHITECT WITH REASONABLE GROUNDS. THE
NEWLY APPOINTED ARCHITECT IS BOUND BY THE WRITTEN DECISIONS OF ANY PREVIOUS ARCHITECT (ABIC, 2008,
CLAUSE A6).

ABIC CONTRACTS ARE LIMITED TO USE ONLY WHERE AN ARCHITECT WILL BE ADMINSTERING THE CONTRACT. THIS IS
MOST PRACTICAL ON SMALL CONSTRUCTION WORKS. THERE MAY BE DELAYS IN WORKS WHERE THE ARCHITECT IS
SUDDENLY UNAVAILABLE OR UNABLE TO FULFIL THE ROLE AND ALSO WHERE VARIATIONS MUST BE MADE TO THE
WORKS AS DIRECTIONS CANNOT BE GIVEN VERBALLY BY THE ARCHITECT.

2.1B . PROGRESS AND PROGRAMMING OF THE WORKS AS4000 VS. ABIC

REGARDING PROGRAMMING OF THE WORKS, AS4000 SPECIFIES THAT THE TIMEFRAME IN WHICH THE CONTRACTOR
REQUESTS INFORMATION, MATERIALS, DOCUMENTS OR INSTRUCTIONS FROM THE SUPERINTENDENT OR PRINCIPAL
MUST ONLY BE REASONABLE. THE PRINCIPAL OR SUPERINTENDENT MAY DIRECT THE ORDER AND TIMEFRAMES OF
STAGES OF WORKS (AND PAY ADDITIONAL COSTS INCURRED BY FOLLOWING AN UNUSUAL SEQUENCE OR
EXPEDIATED PROGRAM) BUT MAY ALSO REQUEST THAT THE PROGRAM OF WORKS IS SUPPLIED BY THE CONTRACTOR
(AGAIN THE TIMEFRAME SPECIFIED IS REASONABLE). AS4000 DICTATES THAT THE PROGRAM WILL FORM PART OF THE
CONTRACT (AS4000, 1997, CLAUSE 32). REGARDING PROCESS, ANY NOTICE OF DELAY MUST ONLY BE PROVIDED
PROMPTLY (AS4000, 1997, CLAUSE 34.2). THE VAGUE NATURE OF TIMELINES SPECIFIED IN AS4000 COULD
POTENTIALLY RESULT IN DISPUTES BETWEEN THE SUPERINTENDENT OR PRINCIPAL AND THE CONTRACTOR IF THERE ARE
DISCREPANCIES IN WHAT IS CONSIDERED REASONABLE TIME. THERE IS ALSO THE NEED FOR CAREFUL CONSIDERATION
IN DIRECTING THE SEQUENCE AND TIMEFRAMES OF WORKS TO THE CONTRACTOR AS THIS SPECIFICATION COULD
RESULT IN HUGE COSTS HOWEVER THERE IS GREATER FLEXIBILITY FOR THE SUPERINTENDENT OR PRINCIPAL TO
CONTROL PROGRAMMING.

IN COMPARISON TO AS4000, ABIC SPECIFICATIONS ARE MUCH MORE SPECIFIC IN NATURE REGARDING
TIMEFRAMES. THE CONTRACTOR MUST PROVIDE THE ARCHITECT WITH A PROGRAM WITHIN 10 DAYS OF BEING GIVEN
POSSESSION OF THE SITE AND THIS PROGRAM DOES NOT FORM PART OF THE CONTRACT (ABIC, 2008, CLAUSE G5).
ABIC DOES NOT ALLOW FOR THE ARCHITECT AS CONTRACT ADMINISTRATOR TO DIRECT THE ORDER AND
TIMEFRAMES OF WORKS TO BE COMPLETED BUT MAY INSTRUCT AN AMENDMENT TO THE PROGRAM WHICH THE
CONTRACTOR MAY ONLY REFUSE IF THE CONTRACTOR CANNOT REASONABLY COMPLY WITH THE AMENDMENT AND
RESPONDS AS SUCH URGENTLY (ABIC, 2008, CLAUSE G9). IF THE DATE OF COMPLETION IS TO BE ADJUSTED BY 5
WORKING DAYS OR MORE (OR OTHER AGREED TIMEFRAME) THE CONTRACTOR MUST PROVIDE AN UPDATED
PROGRAM BUT THERE IS NO TIMEFRAME SPECIFIED REGARDING WHEN THE CONTRACTOR MUST PROVIDE IT (ABIC,
2008, CLAUSE G6).

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2.1C CONTROL OF EMPLOYEES AND SUBCONTRACTORS AS4000 VS. ABIC
AS4000 ALLOWS THE SUPERINTENDENT TO DIRECT REMOVAL FROM THE SITE OR ANY ACTIVITY UNDER THE WORKS
UNDER THE CONTRACT (WUC) BY THE CONTRACTOR IF THE SUPERINTENDENT BELIEVES THAT SUBCONTRACTOR IS
INCOMPETENT, NEGLIGENT OR GUILTY OF MISCONDUCT (AS4000, 1997, CLAUSE 23). ABIC DOES NOT CONTAIN
ANY DIRECTION WHEREBY THE CONTRACT ADMINISTRATOR HAS CONTROL OVER SUBCONTRACTORS ON-SITE.
MANAGING THE BEHAVIOUR AND PERFORMANCE OF SUBCONTRACTORS FALLS UNDER THE RESPONSIBILITY OF THE
CONTRACTOR AND “THE CONTRACTOR MUST TAKE RESPONSIBILITY FOR ANY ACTS AND OMISSIONS OF ITS SUPPLIERS
AND SUBCONTRACTORS IN RELATIONS TO THE WORKS” (ABIC, 2008, CLAUSE G4.2).

2.2 PROJECT ADMINISTRATION

2.1A SETTING OUT THE WORKS
IN ACCORDANCE WITH AS4000, AS THE SUPERINTENDENT’S REPRESENTATIVE I WILL PROVIDE THE CONTRACTOR WITH
THE DATA, SURVEY MARKS AND OTHER INFORMATION WHICH IS NECESSARY FOR THE CONTRACTOR TO SET OUT THE
WORKS (AS4000, 1997, CLAUSE 26.1) IF ANY ERROR IS FOUND IN THE POSITION, LEVEL DIMENSIONS OR
ALIGNMENT DUE TO INCORRECT MATERIALS GIVEN TO THE CONTRACTOR, OR ANY DISTURBANCE IS MADE TO THE
MARKS BY MYSELF THEN THE COST MUST BE ASSESSED BY THE SUPERINTENDENT AND ADDED TO THE CONTRACT SUM
(AS4000, 1997, CLAUSE 26.1;26.2).
2.1B . UNFIXED PLANT AND MATERIALS CLAIM
IN ACCORDANCE WITH AS4000 I WILL ENSURE THAT THE PRINCIPAL IS NOT CHARGED FOR ANY UNFIXED PLANT AND
MATERIALS UNLESS I AM SATISFIED THAT THESE ITEMS ARE LISTED IN ITEM 29 OF THE CONTRACT AND AM SATISFIED THAT
THE PLANT AND MATERIALS ARE IN ACCORDANCE WITH AS4000 CLAUSE 373.B.
2.1C FINAL PAYMENT CLAIM AND CERTIFICATE
IN ACCORDANCE WITH AS4000 I SHALL ENSURE THAT THE CONTRACTOR IS MADE AWARE OF DEFECTS WITHIN THE
DEFECTS LIABILITY PERIOD IF NECESSARY AND, WITHIN 42 DAYS OF THE END OF THAT PERIOD, WILL ISSUE A FINAL
CERTIFICATE SHOWING THE FINAL MONEY DUE AND PAYABLE ON ALL ACCOUNTS IN CONNECTION WITH THE
CONTRACT BETWEEN THE CONTRACTOR AND THE PRINCIPAL IN ACCORDANCE WITH CLAUSE 37.4A; 37.4B;
37.4CAND 37.4D.

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3.0 INSURANCE AND SECURITY

3.1 INSURANCE POLICY COVERAGE

3.1A CONTRACT WORKS, PUBLIC LIABILITY AND WORKCOVER COVERAGE
• CONTRACT WORKS INSURANCE INCLUDES COVERAGE FOR THE FULL COST OF REPLACEMENT AND
REINSTATEMENT OF ALL WORK UNDER THE CONTRACT (WHOLE OR PART) INCLUDING FIXED AND UNFIXED PLANT
AND MATERIALS, COSTS OF DELAYS IN FINISHING THE WORKS, REPAIR COSTS RESULTING FROM FAULTS IN
MATERIALS, DESIGN AND WORKMANSHIP AND LOSS OR DAMAGE RESULTING FROM RISKS OUTSIDE OF THE
CONTRACTORS CONTROL INCLUDING WAR, NATURAL DISASTERS, NUCLEAR DISASTERS ETC (AS4000, 1997,
CLAUSE 16). THE SUM OF CONTRACT WORKS INSURANCE MUST COVER THE TOTAL OF ALL SUMS LISTED UNDER
AS4000, 1997, CLAUSE 16 INCLUDING THE CONTRACT SUM PLUS DEMOLITION AND REMOVAL COSTS,
CONSULTANTS’ FEES, MATERIALS OR OTHER SUPPLIED BY THE PRINCIPAL, PLUS AN ADDITIONAL PERCENTAGE OF
THE TOTAL SUM.
• PUBLIC LIABILITY INSURANCE COVERS LOSS OR DAMAGE TO PROPERTY OR PERSONS EXCLUDING THAT WHICH IS
COVERED BY CONTRACT WORKS INSURANCE AND WORKCOVER. THIS INSURANCE IS AFFECTED TO PROTECT
THE GENERAL PUBLIC FROM ANY LOSS ON OR ADJACENT TO THE SITE WHICH IS CAUSED BY WORKS PERTAINING
TO THE SITE (AS4000, 1997, CLAUSE 17). THE TOTAL AMOUNT OF PUBLIC LIABILITY INSURANCE MAY EITHER BE
SPECIFIED IN THE CONTRACT OR IF UNSPECIFIED IS TO BE NO LESS THAN $10,000,000 (GOLDFAYL, 2004).
• WORKCOVER IS A VICTORIAN GOVERNMENT STATUTORY AUTHORITY - NEGATING THE REQUIREMENT FOR OTHER
INSURANCE OF EMPLOYEES - WHICH COVERS THE COMPENSATION OF ALL LOSS OF LIFE AS WELL AS ILLNESS AND
INJURIES FOR WORKERS EMPLOYED BY THE CONTRACTOR IF THAT LOSS IS SUSTAINED DUE TO INCIDENTS IN THE
WORKPLACE (GOLDFAYL, 2004). WORKCOVER IS A GOVERNMENT LEVY MANDATORY FOR ALL EMPLOYERS
INCLUDING THOSE OUTSIDE OF THE CONSTRUCTION SECTOR. WORKCOVER IS NOT INSURANCE AND DOES NOT
REQUIRE A MAXIMUM POLICY AMOUNT. WORKCOVER MUST BE VALID FOR THE WHOLE DURATION OF THE
WORKS.

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SECTION 3.1B LETTER TO THE CONTRACTOR

21/08/2020
GB
Alexandra Simpson of Simpsons Construction Pty Ltd
SERVICES 105 Yates Avenue
Parkville, VIC, 3052

Contact Dear Alexandra,

Level 22, 366 Exhibition St, Regarding the Insurance policies submitted to Blue Sky
Melbourne, VIC, 3000 Group by Simpsons Construction on the 15th of August
• 2020, it appears that the Contract Works and Public
0400333445 Liability Insurance policies are both expired as well as
• insufficient for the requirements of the Future Lives
GBancroft@GBServices.com.au project at St Kilda Road, Melbourne.
•
www.GBServices.com.au
In adherence with AS4000 Section 17 please provide
evidence of valid Contract Works Insurance to the
value of no less than the Contract Sum of $54,000,000
excluding GST which includes consultants’ fees and
demolition fees. Evidence of this insurance is to be
provided before works take place on September 25,
2020.

As per annexure item 21a of the Contract please also

provide evidence of Public Liability insurance to no less
than the value of $20,000,000.

As the project is expected to be completed in 26

months from site commencement on the 25th of
September, 2020 no change is necessary to the
evidence of validity of Workcover and the Principle
accepts that the Workcover they have evidenced is
sufficient for this project.

Sincerely,
Grayson Bancroft
Owner, GB Services

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3.2 SECURITY
3.2A CASH RETENTION AND UNCONDITIONAL GUARANTEES
CASH RETENTION IS A FORM OF SECURITY WHEREBY THE PRINCPAL RETAINS A DESIGNATION PERCENTAGE OF THE
TOTAL OF EACH PROGRESS CLAIM PAID TO THE CONTRACTOR TO A MAXIMUM OF 10% OF THE TOTAL CONTRACT
SUM. THE CASH RETAINED MUST BE DEPOSITED INTO A SEPARATE TRUST ACCOUNT AND PAY THE FULL SUM
(INCLUDING INTEREST EARNED AND MINUS BANK FEES) TO THE CONTRACTOR IN TWO INSTALLMENTS, ONE AFTER THE
DATE OF PRACTICAL COMPLETION AND THE FINAL AFTER THE FINAL CERTIFICATE HAS BEEN ISSUED (GOLDFAYL, 2004).

UNCONDITIONAL GUARANTEES ARE A FORM OF SECURITY PRESENTED IN THE FORM OF A PROMISE ISSUED BY A BANK
OR FINANCIAL INSTITUTION TO PAY FUNDS TO THE PRINCIPAL UNCONDITIONALLY IF REQUESTED BY THE PRINCIPAL.
THE FUNDS SHOULD ONLY BE DRAWN UPON BY THE PRINCIPAL UPON CERTAIN BREACHES OF CONTRACT BY THE
CONTRACTOR AND IN LIMITED CIRCUMSTANCES. THE CONTRACTOR MAY SEEK AN INJUNCTION TO PREVENT THE
PRINCIPAL DRAWING ON THE UNCONDITIONAL GUARANTEE IF THE CONTRACTOR BELIEVES THERE IS FRAUD,
UNCONSCIONABLE CONDUCT OR AN ‘UNDERLYING CONTRACT EXCEPTION ("BANK GUARANTEES AND INSURANCE
BONDS IN CONSTRUCTION CONTRACTS: WHAT’S THE DIFFERENCE? ARE THEY AS GOOD AS CASH? | PIPER ALDERMAN", 2020).
THE SUM OF THE UNCONDITIONAL GUARANTEE IS TO REDUCE 14 DAYS AFTER THE DATE OF PRACTICAL COMPLETION
AND ACCESS TO THE GUARANTEE BY THE PRINCIPAL CEASES 14 DAYS AFTER THE FINAL CERTIFICATE IS ISSUED
(AS4000, 1997, CLAUSE 5.4).

SECURITY IS REQUIRED IN PROJECTS TO CREATE A FORM OF COMPENSATION IF THE CONTRACTOR DOES NOT FULFIL
THEIR CONTRACTUAL OBLIGATIONS. SECURITY MAY BE PROVIDED BY THE PRINCIPAL FOR THE CONTRACTOR TO
CLAIM BUT THIS IS UNCOMMON. DESPITE THEIR DIFFERENCES, BOTH FORMS OF SECURITY ACT AS A “FINANCIAL
PLEDGE THAT IT WILL PERFORM ITS OBLIGATIONS UNDER THAT CONTRACT” (GOLDFAYL, 2004). IF THE CONTRACTOR
GOES INTO DEFAULT THEN THE SECURITY CAN BE CLAIMED BY THE PRINCIPAL WITH BOTH FORMS OF SECURITY
HOWEVER THE UNCONDITIONAL GUARANTEE AMOUNT IS LIKELY TO BE LARGER UNLESS THE MAXIMUM CASH
RETENTION AMOUNT HAS BEEN REACHED.

3.2B SECURITY CALCULATIONS

AS PER THE CONTRACT 10% OF EACH PROGRESS CLAIM WILL BE RETAINED BY THE PRINCIPAL UNTIL 5% OF THE
CONTRACT SUM IS RETAINED ($2,700,000).

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4.0 INTERIM PAYMENT

4.1 PROGRESS CLAIM ASSESSMENT

AFTER RECEIVING THE PROGRESS CLAIM FROM THE CONTRACTOR, I WILL PREPARE A PROGRESS CLAIM ASSESSMENT
AS SHOWN IN SECTION 4.2 AND ISSUE A PROGRESS CERTIFICATE SHOWING MONEYS DUE TO THE CONTRACTOR BY
THE PRINCIPAL SHOWN BELOW IN SECTION 4.3. THE PROGRESS CERTIFICATE MUST BE GIVEN BY ME WITHIN 14 DAYS
OF RECEIVING THE PROGRESS CLAIM (AS4000, 1997, CLAUSE 37).

4.2 PROGRESS CLAIM ASSESSMENT

Total
Agreed
Contract Contractor's Previously Total This
Trades Revised
Sum Claim Agreed Month
Amount
Amount
Preliminaries and
$8,300,000 $4,980,000 $4,980,000 $4,399,000 $581,000
Margins
Groundworks $5,500,000 $5,500,000 $5,500,000 $5,500,000 $0
Concrete Works $15,000,000 $15,000,000 $15,000,000 $15,000,000 $0
Masonry $400,000 $360,000 $360,000 $280,000 $80,000
Carpentry $500,000 $250,000 $250,000 $150,000 $100,000
Metalwork $600,000 $540,000 $540,000 $420,000 $120,000
Glazing $4,500,000 $2,250,000 $2,250,000 $1,800,000 $450,000
Doors $450,000 $45,000 $45,000 $22,500 $22,500
Partitions & Ceilings $2,200,000 $660,000 $660,000 $616,000 $44,000
Finishes $3,000,000 $900,000 $675,000 $400,000 $275,000
Joinery $2,000,000 $300,000 $210,000 $0 $210,000
Painting $700,000 $35,000 $35,000 $35,000 $0
White goods $500,000 $25,000 $25,000 $25,000 $0
Hydraulic Services $2,300,000 $1,150,000 $1,150,000 $1,035,000 $115,000
Electrical Services $2,500,000 $1,250,000 $1,250,000 $1,125,000 $125,000
Mechanical Services $2,800,000 $1,400,000 $1,400,000 $1,260,000 $140,000
Fire Services $1,000,000 $500,000 $500,000 $450,000 $50,000
Lifts $1,000,000 $1,000,000 $100,000 $0 $100,000
External Works $750,000 $37,500 $37,500 $37,500 $0

Total $54,000,000 $36,182,500 $34,967,500 $32,555,000 $2,412,500

Cash Retention. (10% to

limit of 5% total $2,700,000 $0 $0 $2,700,000 $0
contract sum)

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4.3 Progress Certificate

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5.0 REFERENCES
Australian Institute of Architects / Master Builders Australia. (2008). ABIC MW-2008. AIA / MBA.

Bank Guarantees and Insurance Bonds in Construction Contracts: What’s the difference? Are they as good as cash?
| Piper Alderman. (2020). Retrieved 11 September 2020, from https://piperalderman.com.au/insight/bank-
guarantees-and-insurance-bonds-in-construction-contracts-whats-the-difference-are-they-as-good-as-cash/

Goldfayl, G. (2004). Construction contract administration (2nd ed., p. 49). Sydney: UNSW Press.

Standards Australia. (1997). AS 4000-1997, General conditions of contract. Strathfield, NSW.

Uher, T., & Davenport, P. (2009). Fundamentals of building contract management. Sydney: UNSW Press.

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