It establishes the framework for:
- Scope
- Price
- Time
- Variations
- Payment
- Extensions of time
- Claims
- Defects
- Risk
- Dispute resolution
- The responsibilities of the parties
NZS 3910 is a commonly used standard form construction contract in New Zealand, particularly for traditional procurement where a contractor builds to a design prepared by consultants.
But having a standard form contract does not remove project risk.
The contract needs to work alongside the design, procurement strategy, project programme and commercial arrangements.
What is NZS 3910?
NZS 3910 is a standard form contract for building and civil engineering construction. It establishes the contractual relationship between the principal and contractor and sets out processes for managing the construction project.
The precise contract terms, amendments and project-specific requirements matter. That is important because two projects can both use NZS 3910 but have very different risk profiles.
What should a client understand?
Before signing a construction contract, the client should understand at least five things.
1. What exactly is the contractor required to build?
The scope needs to be clear.
If drawings, specifications and other contract documents are incomplete or inconsistent, problems can arise once construction begins.
Ambiguity at tender stage can become variations, claims and disputes later.
2. Who carries each risk?
Construction contracts allocate risk. But simply putting a risk into a contract does not make it disappear. For example, consider:
- Ground conditions
- Design changes
- Delays
- Weather
- Material availability
- Consenting
- Existing services
- Client changes
- Unforeseen conditions
The client should understand who carries each risk, how it is priced and what happens if the risk actually occurs.
3. How are variations managed?
Variations are a normal part of construction. The problem is not necessarily that variations occur. The problem is when they are poorly controlled.
A good variation process should make it clear:
- What changed?
- Why did it change?
- Who instructed it?
- What will it cost?
- What programme impact will it have?
- Has the client approved it?
Small changes can accumulate into significant cost.
4. How are extensions of time managed?
Time is money. A delay can affect:
- Finance
- Interest
- Revenue
- Tenant commitments
- Funding
- Sales
- Operational arrangements
- Other contractors
The client therefore needs a clear understanding of the contractual process for assessing extensions of time and associated costs.
5. Who is administering the contract?
The contract administrator has an important role in administering the contractual processes. The client should understand:
- Who is appointed?
- What authority do they have?
- How are instructions issued?
- How are claims assessed?
- How are disputes managed?
- How does the reporting flow back to the client?
This becomes particularly important on complex projects.
A contract is not a substitute for project management
This is a critical point.
A well-drafted contract cannot compensate for poor project management.
The client still needs someone monitoring:
- Scope
- Cost
- Programme
- Design
- Procurement
- Risk
- Contractor performance
- Consultant performance
- Stakeholder expectations
The contract provides the framework. Project management provides the coordination and decision-making around that framework.
What happens when the contract is treated as an afterthought?
Problems can emerge surprisingly quickly.
A design omission becomes a variation.
A variation affects the programme.
The programme affects finance.
The delay affects another contractor.
The contractor submits a claim.
The client asks why nobody identified the problem earlier.
By then, the project team is dealing with the consequences rather than managing the original risk.
What should clients do before signing?
Before entering into a major construction contract, the client should consider an independent review of:
- Contract conditions
- Special conditions
- Scope
- Drawings
- Specifications
- Pricing
- Programme
- Risk allocation
- Procurement strategy
- Contractor qualifications
- Allowances and exclusions
- Design completeness
- Buildability
The objective is not to eliminate every possible risk. It is to understand what the client is actually agreeing to.
Where does a client-side project manager add value?
A client-side project manager can sit across the project rather than looking at the contract in isolation. That means connecting contract, design, cost, programme, construction and client objectives.
That broader view is important because construction problems rarely stay neatly inside one discipline.
When you engage us, our client-side project management experience includes construction procurement, NZS 3910 contracts, contract administration, claims, variations, programme oversight and commercial management.
This article is general information about how construction contracts work. It is not legal advice. Specific contract terms should be reviewed by a suitably qualified adviser.