What is AS4902? An Introduction to AS4902-2000 for Project Managers

In the Australian construction industry, adherence to standard contractual frameworks such as those provided by Standards Australia is common practice. One of the most popular forms of construction contracts for design and construction projects is the ‘AS4902’.

This article explains the AS4902 General Conditions of Contract for Design and Construct as it relates to project managers and introduces the process of managing payments within this contract’s framework.

What is AS4902?

AS4902, more formally known as AS4902-2000 General Conditions of Contract for Design and Construct. It is a long A4 Portrait Microsoft Word document with many clauses and conditions like most legal documents.  AS4902 is one of the most popular forms of construction contracts for design and construct projects. A Design and Construct Contract is where the Contractor or construction company has to do some of the design and construction of the asset.  

It was released in 2000, and we found this cool old journal article criticising its release for not changing much! So maybe, it’s actually way older?

As the article above states, AS4902 is published by Standards Australia. Like most Standards Australia products, it is protected by copyright, so you can purchase a copy of the AS4902 here so you don’t get in troubleThe project owner’s lawyer should have done this anyway, so project managers should be safe!

AS4902 is generally considered a contract involving risk for the Contractor and the Project’s Owner due to the design elements and other provisions. However, when amended, the risk can swing in either direction. The parties to AS4902 are

• The Principal (the party commissioning the construction project, i.e. the Project's Owner);
• The Contractor (the party undertaking the construction work, which they call 'WUC' - work under the Contract).

What is Superintendent in AS4902?

AS4902 is administered by a third role, the Superintendent, aiming to foster fair dealing and efficiency in executing construction projects. Overall, the contract is neutral and does not inherently favour either party but the Superintendent does have meaningful power hence the name 'super'! 😎.

How to use AS4902

The flexibility and comprehensive nature of AS4902 make it suitable for various types of project engagements, but it is mainly used in lump sum arrangements to perform:

• Design and construct—the Principal provides the project requirements but not usually a detailed preliminary design and would not require any novating;
• Design development and construct—the Principal provides ‘project requirements’ and always a preliminary design
• Design, novate and construct—the Principal provides project requirements a preliminary design and novates subcontracts (including consultant’s agreement) to the Contractor.

If you don’t know much about design, the state library provides a good overview of the various design phases here.  With project requirements featured in each use case of AS4902, project owners must ensure that their specific requirements are fully and completely incorporated into the project requirements (i.e. know what you want or face many variations and cost overruns).  

Basic Features of AS4902  

1. Fixed Price / Lump sum price. The contractor must execute the work for a fixed price within a fixed timeframe. Changes to the contract price are a variation within a fixed timeframe.  

2. Design obligations. As mentioned above, the contract requires the principal to provide some design through requirements or something more developed.

3. Separable Portions: The project’s construction can be divided into separate stages, which may result in each stage having different access dates and dates for practical completion, etc.

4. Variations. The contract prescribes a process for dealing with variations in the design, which must be directed in writing.

5. Payment. Payment is handled by Clause 37 and allows the contractor to claim payment progressively (i.e.’ progress claim’, but this wording is not used in the Contract) following the schedule. A common amendment is to include a clause relating to the Security of Payment Act.  

6. Fixed timeframe. The contractor must ensure the works are completed by Practical Completion; otherwise, liquidated damages will apply.

7. Extensions of time. The contractor may claim extensions of time to the date for practical completion if it is delayed.

Payment Under AS4902

Payment is handled by Clause 37, ‘Payment’ and is a crucial feature of AS4902, so Mastt has digitised the contract and this clause. Within the AS4902 framework, ‘payment claims’ are governed by specific sub-clauses that outline the submission, assessment, and payment process, ensuring transparency and fairness for both parties.

1. Submission of Payment Claims to the Superintendent

Under AS4902, Clause 37.1 outlines how a contractor must deliver claims ‘progressively’ for payment to the Superintendent. These payment claims must be in writing, detail the value of work carried out (with evidence) and meet several compliance items outlined in clause 37.1 (best read your contract!).  

As is always the case, the submission must follow the format and requirements specified in the contract, including any necessary documentation to support the claim. Contractors should also follow the relevant Security of Payment Act requirements when submitting a payment claim.

2. Assessment of Payment Claim by the Superintendent

The Superintendent, within 10 Business Days after receiving a payment claim, must ‘assess, calculate and certify the Contractor’s entitlement to its monthly progress payment.’ This involves verifying the work completed and ensuring it aligns with the contract requirements.  

The assessment should be conducted on time to keep the project moving and within the days specified to issue the Payment Schedule. This document outlines the amount to be paid in response to the payment claim and the basis for any adjustments or rejections.  

Project Managers can follow the steps outlined here to respond to a Progress Claim under the Security of Payments Act.  

3. Payment

Once the contractor has received a Payment Schedule, an invoice will be issued with both the Payment Claim and Payment Schedule to the superintendent for review and assessment before being passed on to the principal for payment.

Reporting on AS4902

Mastt provides a comprehensive platform designed to enhance Contract Administrators on capital projects using AS4902. Here’s how Mastt can assist:

1. Dashboards and Reporting Automated: Mastt's dashboard offers a centralized view of all project activities, helping project managers track progress and manage tasks effectively.
2. Documentation and Tracking: The platform provides tools for documenting and tracking all project-related information, ensuring that everything is recorded and managed systematically.
3. Contract Management & Administration: Mastt allows Project Managers to digitally administer Standard Form Contracts like AS4000, AS4300, AS4902, AS2124 and Defene Standard Form Contracts to automate Payment, Variation and other clauses.
4. Security of Payments Act: Mastt provides compliance tools to ensure Payment Claims and Payment Certificates are compliant with SOPA.
5. Budget & Forecasting: Mastt helps project managers stay on top of budgets and cash flow forecasting by providing real-time insights and analytics.
6. ‍Risk Management: By offering robust risk management tools, Mastt enables construction managers to identify and mitigate risks early, ensuring projects stay on track.
7. Stakeholder Collaboration: Mastt enhances communication and collaboration between the project owner, contractors, and other stakeholders, ensuring that everyone is aligned and informed.

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Conclusion

Despite being created in 2000, the AS4902 general conditions of contract is still a well-used contract (though, at times, heavily amended) for managing design and construction projects in Australia. Client-side project managers administering an AS4902 contract should pay attention to their specific contract requirements and stay on top of clause 37 for payments to keep the capital project moving forward.

Further reading on AS4902 Contracts and Project Control Groups

Standard Form Construction Contracts are often an agenda item on Project Control Group meetings and within PCG Reports. Learn more about everything PCG related below.

• What is a Project Control Group? Understanding the Role of PCG in Capital Project Management
• The Best PCG Report for PCG Meetings in 2024
• What to Include in a PCG Report (Traditional)
• What to Wear to a PCG Meeting: A Guide for Client Side Project Managers

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Disclaimer: While Mastt is dedicated to offering valuable industry insights, it's important to note that we are not legal experts. Therefore, our content should not be interpreted as legal advice. We encourage readers to exercise discretion and seek personalized guidance from qualified legal professionals.