As we come to a close on 2022, our Projects & Construction team reflects on the achievements, significant projects and highlights of the year.
"The last year has seen a continued pipeline of investment in critical infrastructure. There's been a noticeable shift in risk allocation and pricing, with many major projects embracing a more collaborative contracting approach which we expect to see continue in 2023."
Martin Lovell - Practice Team leader
Industry insights
The construction and infrastructure sector has experienced a year of sustained turbulence, grappling with a number of unique economic and environmental challenges and now heading into the new year grappling with the implications of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, with many EBAs up for renegotiation next year.
A combination of rising material costs, global supply chain disruptions, labour shortages and extreme weather events has continued to test the skills, resilience and profitability of contractors working in the sector.
For projects already on foot, we have seen an uptick in contractual claims for time and cost relief, as contractors seek to minimise the impact of having committed to projects on a fixed lump sum basis prior to encountering the pressures referred to above. For projects in the tender phase, we are starting to see more collaborative contracting models being utilised (for instance, Early Contractor Involvement, alliancing and modified Design & Construct models), together with a trend towards a more balanced risk allocation.
Elsewhere, the Commonwealth Government's intention to broaden the scope of the unfair contract terms regime under the Australian Consumer Law has the potential to further upend the sector.
These changes will come into effect in November 2023. They will only apply to new contracts, or existing contracts that are renewed or varied. This transition period is intended to provide business with time to review and amend their standard form contracts to ensure compliance with the updated regime.
In NSW, the government has released three draft Bills for consultation as part of the 2020-25 'Construct NSW' industry reforms. The draft legislation is wide ranging in scope and will impact those operating in the commercial and residential construction sectors.
We expect these Bills will be introduced in Parliament in 2023, and if passed will progressively come into effect from 2024 onwards.
In Victoria, legislation has been passed further extending the timeframe within which certain claims in respect of non-compliant cladding can be made. For claims that would otherwise have become statute-barred between 16 July 2019 and 1 December 2023, they can now be advanced up to 15 years after the date of issue of the occupancy permit or certificate of final inspection. Accordingly, claims that were previously out of time have now been revived by reason of these changes.
In South Australia we saw the State Government move to ease inflationary pressure on local construction businesses with the introduction of "Rise and Fall" clauses in all General Building Contractor contracts awarded by the Department for Infrastructure and Transport. Head contractors are required to include comparable rise and fall clauses in all subcontracts and supply agreements and to pass on rise and fall related payments.
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