As we close in on the first anniversary, it’s a good time to reflect on the adoption of NZS 3910:2023.
Use of the new form is increasing. While core obligations between the Principal and Contractor remain largely unchanged, two key updates have sparked the most discussion:
- The split of the Engineer's role into two: Contract Administrator and Independent Certifier.
- The ability to embed special conditions directly into the contract’s soft copy, reducing the need to record the contract terms in two separate documents.
Understanding the role split
The division of the Engineer's role into Contract Administrator and Independent Certifier has sparked considerable discussion.
Let's revisit why the change was made and what the changes are:
- The Engineer’s responsibilities in 3910:2013 included acting both as the Principal's representative and as an independent decision-maker, but the contract did not elaborate on which role the Engineer was playing at any given time. The resulting lack of clarity caused disputes, including when the Engineer behaved as if they were acting on behalf of the Principal when they should have been acting independently.
- The new 3910:2023 makes it clear which of the Contract Administrator (representing the Principal) or the Independent Certifier (making independent decisions) is responsible on each occasion. Even if one person performs both roles, it will be clear what capacity they are acting in for each task.
- The 3910:2023 also removes the Engineer’s ability to delegate certain duties to an Engineer's Representative, appointed by the Engineer. This was previously common practice, and resulted in much of the contract administration being undertaken by a person who was not engaged by either of the parties to the Contract. Now, the Contract Administrator and the Independent Certifier are both engaged by and separately responsible to the Principal, who must appoint competent individuals to these roles.
Some industry participants have expressed concern that this split demands a complete overhaul of project management structures. However, in our view, this isn't the case. The best practices from 2013 translate directly to 2023 – only the titles have changed. The combined responsibilities of the Contract Administrator and Independent Certifier are essentially the same as those of the Engineer under 3910:2013, so in a holistic sense, contract administration should not need to change.
For example, if a project manager previously served as Engineer without a representative, they can now fulfil both new roles. If a senior colleague was previously engaged to act as the Engineer, while the project manager continued as the Engineer's Representative, that structure can also continue with the project manager as Contract Administrator and the senior colleague as the Independent Certifier.
Similarly, others have questioned whether the Independent Certifier will (despite the title) carry a bias, given the Principal is paying their fees. We have not observed this as a significant issue. It is a matter of ensuring the person appointed as Independent Certifier can properly fulfil the role. The establishment of the Society of Construction Contract Practitioners is a positive step in this regard.
Special conditions: familiar territory
One goal of the 3910:2023 update was to reduce the need for special conditions. While document length may have shortened thanks to digital integration, the fundamental need for special conditions persists.
This continuation stems from a simple fact: changes to 3910 needed to be agreed and neither Principals nor Contractors considered it appropriate for the review to result in the surrender of their positions on risk allocation or other rights they held under the 2013 version. Without changes to these core obligations in the standard form, the continued use of special conditions designed to alter those core rights and obligations also remains unchanged.
In our experience, acting predominantly for Principals, many of the special conditions focus on incentivising timely claims for variations and extensions of time; the timely delivery of revised programmes, management plans, and post-practical completion deliverables. Principals and (importantly) their stakeholders - especially in the private sector - demand transparency around project timelines and final costs.
However, there is also a clear trend, among Principals, to exercise more discretion in the special conditions they are seeking and to ensure they remain reasonable for Contractors to accept.
Looking forward: areas for improvement
Two aspects of the new form have emerged as potential areas for refinement:
- The open-ended dispute process could benefit from defined timeframes for challenging Instructions and Decisions. This would mean Instructions and Decisions become binding unless they are challenged within the stated timeframe.
- The contract should expressly allow both the Contract Administrator and the Independent Certifier to engage assistants, although responsibility for an Instruction or Decision must remain with them. The Contract does not prohibit this but also does not encourage it. The Independent Certifier should also be able to bring in outside advisers when needed and delay their Decisions until proper advice is obtained.
So far, so good
In summary, 3910:2023 has been well-received, with growing adoption from Principals, and we expect to increasingly see it in the market. Even though the need for special conditions hasn’t significantly decreased, embedding them directly into the contract streamlines contract administration and reduces the risk of overlooking important modifications.
As for contract administration, the key takeaway is that nothing has fundamentally changed -the right approach under 3910:2013 is still the right approach under 3910:2023. The individuals administering the contract will continue doing what they’ve always done, only with different titles and clearer responsibilities.