Form C - Traditional Contracts

Procurement method selection

Form C – Traditional contracts

Traditional contractsAssessment of whether multiple contracts are required

Please view the Index of construction documents to locate all documents referenced throughout this text.

Project details

Project name:

Multiple contracts

With multiple contracts, the agency is exposed to the risks associated with coordinating a number of contractors, including work sequencing, interference of one contractor with another’s work and delays caused by non-performance of any contractor. Changes in market conditions during the course of the work are also the agency’s risk.

Note that the procurement method is not considered a “multiple contract” method if a separate contract is arranged in advance of the main construction contract for:

the purchase of materials or equipment with long lead times, or
the installation of utilities such as power or water, or
preparatory site work, for example to demolish an existing structure or remove known hazardous materials.

Multiple contracts can be managed by:

a project manager (internal or external to the agency, depending upon the agency’s accreditation rating); or
a construction contractor engaged and managed by the agency; or
an expert construction agency.

Where a construction contractor or expert agency is engaged to manage the contracts, the arrangement is called “construction management”.

Tick the relevant boxes if the following statements are true for the project.

1 / In order to achieve the required completion date, construction must commence before the requirements of the agency and other stakeholders are known in full
AND
the responsibility for dealing with those stakeholders CANNOT be allocated to the contractor without introducing an unacceptable risk of delays and associated cost claims.
2 / Technological advances likely to occur after construction commences will significantly affect the project
AND
responsibility for responding to the changes CANNOT be allocated to the contractor without a high risk that the project objectives will not be met or that costs will increase disproportionately.
3 / The scope of the work can only be determined as the work proceeds, for example due to unpredictable subsurface conditions or existing services, or undefined heritage, archaeological, environmental or hazardous materials issues
AND
the uncertainties CANNOT be resolved by letting a separate contract for preliminary site works before the main contract, or by including schedule of rate items or provisional sums in the main contract (without introducing unacceptable risks).
4 / The project brief or scope is likely to change significantly during the course of the work, due to policy or funding changes.
5 / In order to achieve the required completion date, construction must commence before project budget is finalised
AND
this CANNOT be achieved by awarding a small associated contractANDthe project scope can be reduced in order to meet the budget.
6 / Strict cash flow requirements must be met during construction
AND
CANNOT reasonably be incorporated in the terms of the contract, for example by introducing milestones or specifying restrictions on payment amounts.
7 / The work must be staged to coordinate with the site activities of others, the needs of site occupants, delivery of Principal supplied materials, etc.
AND
staging CANNOT reliably be achieved by including milestones or separable portions in the contract.
8 / In order to achieve the required completion date it is necessary to “fast track” the construction work
AND
the functional or performance requirements CANNOT be defined clearly enough for a design and construct contract.

If any one of the above statements is true, then it may be appropriate to deliver the project using multiple contracts, based on work elements or trade-based packages.

Construction management

If the above assessment indicates that a single contract is not appropriate, consider the following statements to assess whether it is necessary to engage a construction manager.

Tick the relevant boxes if the following statements are true for the project.

9 / The contracts involve substantial complex interdependencies.
10 / The work involves trade packages on a single site.
11 / The site is confined and the contractors will need to be managed closely to achieve integration.
12 / The various contractors will need to share facilities such as cranage and amenities.

If any one of statements 9 to 12 is true, then a construction management arrangement must be adopted OR a managing contractor contract reconsidered (see Form B - Preliminary assessment, available on the ProcurePoint website). Note that under a managing contractor contract, the agency does not control the timing and coordination of the work packages.

If none of statements 9 to 12 is true, and the agency has the capability (including suitable procurement and delegation systems and sufficient internal resources with appropriate skills) to enter into, and manage the financial and administrative aspects of, many separate contracts, then record multiple contracts as an output below.

If the agency does not have the systems and resources required to manage multiple contracts, reconsider a managing contractor contract (see Form B - Preliminary assessment, available on the ProcurePoint website). If the agency does not wish to give control of the work/trade packages to a contractor, then construction management by an expert construction agency, which can take on the role and functions of the Principal in the contracts, may be appropriate and provide the required flexibility.

Review of single contract decision

If consideration of statements 1 to 8 indicates that a single contract option is appropriate, before recording that decision, consider the following statements.

Tick the relevant boxes if the following statements are true for the project.

13 / Development consent is likely to be delayed and the completion date is fixed.
14 / For reasons specific to the project, a traditional single contract is not an appropriate option.

If either 13 or 14 is true, then a single contract option should not be selected unless it is a managing contractor contract.

Figure C - Assessment of whether multiple contracts are required (available on the ProcurePoint website) reflects the above considerations.

Output

Record here whether a single main contract or multiple contracts are recommended on the basis of the above assessment.

Single or multiple contract: / Single contract
Multiple contracts
Single contract: / Is a Managing contractor contract required?
Multiple contracts: / Is construction management required?

Use Form D - Traditional contracts – Selection of a contract type (available on the ProcurePoint website) to determine the appropriate type of construction contract unless you have decided that a managing contractor contract is appropriate.

Use Form E - Procurement method recommendation (available on the ProcurePoint website) if a managing contractor contract is recommended.

January 2007 / Department of Finance, Services and Innovation / Page 1