New Principles & Guidelines For Good Contracting

Wellington, Thursday 1 August 2024: New principles and guidelines to boost productivity and ensure risk and responsibility is fairly allocated during the planning stage of major construction work has been unveiled by Master Builders.

Lengthy and inconsistent procurement and pre-contract processes have been identified as the most significant issue impacting productivity and the sector’s ability to deliver critical infrastructure such as hospitals and schools effectively, to time and on budget. Master Builders’ Commercial Working Group, alongside the Vertical Construction Leaders Group and Hazelton Law identified there was a need for greater education, support and clarity during processes such as: pre-project planning and tender-preparation, as well as pre-contract services and contract negotiations.

Master Builders Chief Executive Officer, Ankit Sharma said the formula is simple; good contracting, produces good outcomes.

“This initiative is about improving productivity and fostering collaborative relationships between client and contractors from the start,” Sharma said.

The Principles of Good Contracting offer thorough guidance and information sheets for contractors, partners and clients about key areas including Termination for Convenience clauses, Extension of Time Principles and Float, Risk and NZS 3910 Guidance. It also introduces a standard form pre-construction contract template to ensure the equitable distribution of risk and responsibility on long-lead procurement opportunities.

“This is especially important when unfamiliar contract terms imposed by clients lead contractors to agree to terms and risks, they cannot manage. A lack of trust at the pre-construction stage leads to poor decision-making throughout the project delivery cycle, nobody wins when this occurs – not the client, the contractor or the country,” Sharma said.

Wellington Director of commercial construction company Naylor Love, Nick Clayton, is part of both the Commercial Working Group and Vertical Construction Leaders Group and has been pivotal in the creation of the new resources. He said, when contracting is done well, nothing should be left to chance.

“Clients, both private and government, often seek to transfer risk away from themselves to the contractor by using special conditions. Contractors, who don’t have the specialist expertise and experience then accept those conditions even though it means they take on more risk than they should.

“The Good Contracting Project is about capturing the lessons we have learned from when contracting is done well. From my own experience at Naylor Love, project success is always a team effort led by best for project decisions rather than self-interest. Beyond the technical jargon, this is all about building trust and ensuring all parties have the confidence to proceed with a project,” Clayton said.

“This material has been designed by the sector, for the sector and is reflective of Master Builders’ ethos to Build a Better New Zealand. We look forward to seeing the positive effect these resources can have in terms of lifting productivity in the sector and encouraging contractors to feel confident when they take on projects,” Sharma said.

The Good Contracting Principles & Guidance can be found at masterbuilder.org.nz

About Registered Master Builders:

Registered Master Builders have been building the foundations of this country, its homes, and workplaces for over 100 years. We are the voice of the building and construction industry. We represent quality-built environments where we live, work and play.

We stand for quality, and we back our Master Builders to ensure we deliver value to building owners. We provide them with the support and services they need to build better building businesses, so they can build a better New Zealand.

We work with Government and the sector to develop and uphold the highest standards. We are part of every conversation about the built environment – focused on better homes, better workplaces, and ultimately better lives for all New Zealanders.

Through collaborative working, high craft standards and ethical behaviour, New Zealand can have peace of mind with a Master Builder backed by the Registered Master Builders Association. It means a better-built New Zealand.

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