Common challenges in the use of NPWC3 contracts
The Insight
Within the Northern Territory government, use of the NPWC3 contract is upheld for major construction works. At one point, this contract type was used Australia-wide however it has largely been replaced with more modern formats. The NT continues to mould the existing contract into the current procurement realm.
This strategy of squeezing a triangle into a circle continuously can give rise to confusion amongst Project Managers and Consultants, particularly those with limited experience.
Contract documents need to be specific, definite, and on topic. The Contractor needs to be able to clearly understand what is being requested, as well as the timeframes, quality and deliverables required. Missing this mark in the contract sets the Contractor – and the project – up for failure.
Confusion is caused when contracts are not drafted properly.
The Impact
When working with NPWC3 contracts, there are a few key points to remember.
1. Contract documents are mutually conclusive.
Anything defined within one document that is not defined in another is equally binding. The contract should be read and understood collectively rather than in part. While it is important to be consistent, it is equally important to avoid repetition.
2. There needs to be an established precedence between documents.
As the documents are to be understood collectively, there needs to be an established hierarchy between them. In the event of a discrepancy or contradiction, there is an established precedence for which document is to be overridden. This helps to avoid conflicts that require time, effort, and money to resolve.
3. The Contractor needs to make themselves aware of site conditions.
The Contractor is obligated to make themselves aware of the site and conditions pertaining to the contract. This does not extend to any latent or hidden conditions which will impact works – these remain the responsibility of the Principal.
4. Some roles need extra clarifications.
It is important to specifically clarify what a role involves, what authority it grants, and who this role falls to. For example, when working on an education project where there is a “School Principal”, it must be made clear that this role is not equal to the project’s “Principal”.
With all contract types, the person who is tasked with drafting the contract must be completely familiar with the works required and the contract clauses to avoid tripping up.