Australia: A new year legal health check for the construction and infrastructure industry

Last Updated: 13 February 2015
Article by Suzy Cairney

While there is cautious optimism in the construction and infrastructure industry in Australia about the market in 2015, stubbornly low coal and iron ore prices, and the unprecedented uncertainty at State and Federal levels of government are inclining some commentators to think business may continue to be tough this year for the industry.

Add to the equation the pending election result in Queensland, and it seems likely that competition for work in Queensland in particular will be tougher than ever.

The resulting stiff competition for the projects that do come to market means businesses need to be more efficient than ever. Much of the easy cost reduction has already been done, so how do you get that extra efficiency in your contracting practices that will make you stand out from the crowd?

How about a simple New Year legal health check that could give you the competitive edge you need?

Improvements do not have to be drastic or cost much. Just making a few simple changes can lay the foundations for a trouble-free year, allowing you to focus on building your business, rather than dealing with problems.

Here are a few simple suggestions.

Tendering practices

Tendering practices sometimes need a revamp to make sure they are keeping pace with the market. This is more than just a question of getting the price right. It also includes revisiting issues such as:

  • have you got the right people on the right jobs?
  • what projects should you tender for (everything going, or just the ones you are really good at)?
  • have the key risks changed (eg are there legislative changes that need managed or priced)?
  • does your system process addenda to the tender effectively and in time?and
  • have you done enough appropriate due diligence on the counter party (ie will they be able to perform their end of the bargain?).

The thrill of winning work can disappear quickly if you end up with a contract that costs you more than you make out of it.

However, an attempt at cutting tendering costs by merely cutting and pasting from previous tenders may be a false economy. You may be repeating things that have caused you not to win tenders in the past or it could result in your tender not properly responding to the requirements for information set out in the request for tender. Getting the right people on the right job with the right systems and processes can help to avoid this.

Contract terms and conditions

Do you have standard terms and conditions? When did you last review them? Are they still current and effective? Are they being effectively included or incorporated into your contracts? If not, even the best terms and conditions are useless to you.

Businesses should review the content and method of incorporation of their terms and conditions regularly. Those terms must be current and must deal with any changes in law (eg the recent security of payment legislation), case law (eg the Regional Power Corporation case) or industry practice. You should also review your statements of incorporation and/or check that copies of standard terms are being sent out and signed or acknowledged. Where they are not, you should know why.

If you have a standard set of exclusions that you normally submit with tenders, they should be reviewed to determine if they still accurately reflect your risk management policies. They should also be reviewed for each tender to determine how they fit with the tender requirements – particularly in cases where a fully conforming tender is required for a valid tender submission.

Credit risk management

The construction and infrastructure industry has had a few tough years recently, and this has resulted in some entities restructuring or merging and others unfortunately failing. This can leave their contractual partners with substantial unpaid invoices and claims, and/or with an incomplete project that is not generating revenue. Have you conducted proper due diligence on your primary customers, clients, head contractors, sub-contractors and suppliers? If that due diligence was done some time ago, is it time to revisit it?

To cover any substantial exposure, at a minimum you should review your security arrangements, credit agreements and payment terms, and consider whether additional financial safeguards are necessary eg parent company guarantees. If ignored, bad debts usually only become bigger and worse, so businesses need to commence recovery action and consider exercising any security as soon as signs of trouble emerge.

Back-to-back (or better) contracting

Most construction and infrastructure projects involve a contractual chain or network. It is a vital contract risk management tool that your contracts with sub-contractors or suppliers of goods or services are on back-to-back (or better) terms with your contracts with your customer/client/head contractor wherever this is commercially achievable. If there is any mis-match, you may find yourself liable to your customer/client/head contractor and unable to recover any such liability from those below you in the contract chain.

Back to back contractual liability provisions need to be the subject of negotiations from the outset and not left to the last minute, and they should be prepared on a case by case basis. A standard form agreement for sub-contractors and suppliers can be a good starting point for managing such risks, and can be ready to roll out when any tender or request for proposal is sought. However, such standard forms should generally only be a starting point for negotiations and may need to be amended to reflect any specific risks that may be imposed on your company by the head contract if you wish to pass them down the contractual chain. These should be drawn to your subcontractor / supplier's attention early to reduce the risk of a mis-match in risk profiles up and down the contractual chain as far as possible.

Proactive Contract Management

Signing a badly prepared contract can be as bad as not signing a contract at all, and the same applies when it comes to managing contracts. Once the contract signed, it needs to be managed through until final completion, especially if it is a services contract that may include performance standards. Administering a contract properly can make the job go more smoothly, help to preserve your rights and even head off potential problems (usually through early identification).

Is your team set up to administer the contract properly? Are your team members familiar with the contract? Have you got all the relevant notices and forms in place ready to use? Do you have a calendar of dates for this project, ideally mapped across into a central calendar showing critical dates for all of your projects? Is your team appropriately staffed and resourced? Is your IT system still supporting your team efficiently? Can documents such as variation orders or extension of time claims be located when necessary? The best contract in the world is little use if you do not know what rights you have under it, and have the ability to rely on those rights when appropriate.

The above matters are each fairly simple to consider and implement, can help ensure that the new year starts off on the right foot and positions you to have a more successful 2015.

If you would like further assistance with any of the issues mentioned in this article, we would be happy to help.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions