What is AS4000? An Introduction to AS4000-1997 for Client Side Project Managers

Doug Vincent
Doug Vincent
March 14, 2024

In the Australian construction industry, adherence to standard contractual frameworks such as those provided by Standards Australia is common practice.

The AS 4000-1997 General Conditions of Contract (or simply, AS4000 or AS 4000-1997) is a well-used contract throughout the construction industry.

A 2024 study by the University of Melbourne, ‘Standard Forms of Contract in the Australian Construction Industry, ’ listed AS4000-1997 as the second most used behind AS4300-1995.
A 2024 study by the University of Melbourne, ‘Standard Forms of Contract in the Australian Construction Industry, ’ listed AS4000-1997 as the second most used behind AS4300-1995.

This article explains the AS4000 General Conditions of Contract for client side project managers and introduces the process of managing progress claims within this framework.

What is AS4000?

AS4000, or AS 4000-1997, is a set of General Conditions for Construction contracts developed by Standards Australia. The flexibility and comprehensive nature of AS4000 make it suitable for various capital works projects, from infrastructure to buildings, and it often operates on lump sum.

Standards Australia's contracts can be purchase in their website.
Standards Australia's contracts can be purchase in their website.

It is designed to provide a balanced legal foundation for the contractual relationship between the principal (the party commissioning the work i.e. the owner) and the contractor (the party undertaking the work).

The AS4000 is built on a framework of mutual rights and obligations. It is often administered by a superintendent, aiming to foster fair dealing and efficiency in executing construction projects. Overall, the contract is neutral and does not inherently favour either party.

It covers a wide range of contractual facets, but the execution of work, payments, variations and dispute resolution are prevalent.  

Purchase a copy of AS4000 here.
Large capital works or infrastructure projects often operate on lump sum contracts.
Large capital works or infrastructure projects often operate on lump sum contracts.

Basic Features of AS 4000  

  1. Fixed price /Lump sum price. The contractor is required to execute the work for a fixed price within a fixed timeframe. Changes to the contract price are a variation.
  2. Variations. The contract prescribes a process for dealing with variations, which must be directed in writing.
  3. Payment. The contractor shall claim payment progressively (progress claim) in accordance with the schedule.
  4. Fixed timeframe. The contractor must ensure the works are completed by an agreed ‘date for practical completion’. Else, liquidated damages will apply.
  5. Extensions of time. The contractor may claim extensions of time to the date for practical completion if it is delayed by a qualifying cause, such as an act or omission by the principal.
  6. Provisional sums. The parties can agree on a provisional sum where the design of part of the works is not sufficiently developed to enable the contractor to provide a fixed price. The price of these items is adjusted once the final cost is known.
Read more: 10 Things You Should Know About AS4000

Payment Under AS4000

Progress claims are a key feature of AS4000 under Clause 37: Progress Payments. Clause 37 outlines how a contractor can seek payment for work completed to date under the terms of the contract. Within the AS4000 framework, progress claims are governed by specific clauses that outline the submission, assessment, and payment process, ensuring transparency and fairness for both parties.

1. Submission of Progress Claims

Under AS4000, contractors must submit progress claims at intervals agreed upon in the contract. These claims must detail the work completed during the claim period and the corresponding amount due. The submission must follow the format and requirements specified in the contract, including any necessary documentation to support the claim. Contractors should also follow the relevant Security of Payment Act requirements when submitting a progress claim.

2. Assessment of Progress Claims

Upon receipt of a progress claim, the principal or their representative (in AS4000, this is the ‘superintendent’ and is often a role fulfilled by client side project managers) is tasked with assessing the claim. This involves verifying the work completed and ensuring it aligns with the contract requirements. The assessment should be conducted on time to keep the project moving, but AS4000 gives 14 days after receiving the progress claim to issue the progress certificate. This document outlines the amount to be paid in response to the progress claim and the basis for any adjustments or rejections.  

3. Payment

Once the contractor has received a progress certificate, an invoice will be issued with both the progress claim and progress certificate to the principal, and payment must then be made within seven days.

Read more: How to Respond to a Progress Claim

Navigating Disputes

Despite the clarity and fairness intended by the AS4000 clauses, disputes may arise, particularly with progress claims and work completed. The contract outlines dispute resolution mechanisms, including negotiation, mediation, and arbitration, to resolve such issues. Parties are encouraged to seek resolution through these mechanisms, as they offer a structured approach to address disagreements without resorting to litigation.

Conclusion

Despite being created in 1997, the AS4000 general conditions of contract is still a well-used contract (though, at times, heavily amended) for managing construction projects in Australia under lump sum. Client side project managers administering an AS4000 contract should pay attention to their specific contract requirements and stay on top of payments to keep the capital project moving forward.

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