Standards Australia invites consultation on changes to key construction industry contract AS4000-1997

In response to industry feedback, Standards Australia tasked their review committee to consider updates to AS4000—1997 General Conditions of Contract (AS4000). The outcome of the review has resulted in numerous, yet modest, proposed changes.

Standards Australia has made clear the proposed changes are not intended to affect risk allocation between the parties. Instead, the focus is updating AS4000 to modernise style and structure and to include legislative changes since 1997.

Key changes

Legislative updates

Since 1997, several new legislative requirements relevant to construction projects have been introduced. Among these are the requirements of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and the Personal Properties and Securities Act 2009 (Cth). New GST and PPSA provisions from these Acts have been included in AS4000, together with associated definitions.

The insolvency provisions (clause 39.11) have been significantly amended to align with changes in legislation relating to bankruptcy and insolvency.   Standards Australia has indicated that further changes to account for state specific requirements may be considered when AS4000 is next updated.

Formal Instrument of Agreement

A Formal Instrument of Agreement has been added, which, although in very short form, provides an opportunity for parties to include the contract sum and note the agreed method for calculating it.

Dispute resolution

The dispute resolution clause has been amended to provide greater flexibility for parties to select a mechanism to best suit their needs.

Under the current proposal, parties will have the option to select one of four dispute resolution methods, which contemplate different pathways for escalation, including mediation and expert determination.

In the absence of the parties making a selection, the default mechanism continues to be negotiation, followed by arbitration.

What this means for principals and contractors

Given the risk allocation remains unchanged from the 1997 edition, principals and contractors should continue to seek legal advice once the new AS4000 is in force to ensure any agreement reached best supports their project and protects their interests.

Next steps

Users of AS4000 are invited to comment on the changes or suggest further amendments. The current scope of amendment does not extend to changing the risk allocation. However, Standards Australia has invited all comments and suggestions – with those relating to risk to be considered when AS4000 is next updated.

Our construction lawyers welcome all feedback and are happy to pass on any comments you have to Standards Australia. The opportunity to provide public comment ends on 29 May 2024.

At the close of the public consultation period, Standards Australia will make further revisions, and publish the new AS4000. The expected release date for the new AS4000 is either late this year, or in early 2025.

If you have any questions and concerns as to what these changes mean for you, or wish to know more about the full suite of changes, please contact a member of our construction team.