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Agency Accreditation Framework

for

Delivery of Low Risk Construction Projects under $1 million

2015


Table of Contents

1 Introduction 41.1 Definitions 4

1.2 Background 4

2 Agency Accreditation 52.1 Key factors to be considered 5

2.2 Process of accreditation 5

2.2.1 Accreditation for a programme of future works 5

2.2.2 Accreditation for individual projects 6

2.3 Key construction procurement risks 6

2.4 Review of agency construction program 8

2.5 System management 9

3 Skills Requirements 94 Legislative and Policy Requirements 104.1 Legislative compliance 10

4.1.1 Public Sector Act 2009 and Code of Ethics for the South Australian Public Sector 10

4.1.2 Public Finance and Audit Act 1987 10

4.1.3 Freedom of Information Act 1991 10

4.1.4 State Records Act 1997 11

4.1.5 Development Act 1993 12

4.1.6 Disability Discrimination Act 1992 (Cth) and Disability Services Act 1993 12

4.1.7 Occupational Health, Safety and Welfare Act 1986 12

4.1.8 Building and Construction Industry Security of Payment Act 2009 13

4.2 Policy compliance 13

4.2.1 Construction Procurement Policy: Project Implementation Process 13

4.2.2 Strategic asset management 13

4.2.3 Code of Practice for the South Australian Construction Industry 14

4.2.4 Prequalification of contractors 14

4.2.5 Construction Industry Training Board (CITB) levy 14

4.2.6 Contract disclosure 15

5 Construction Project Practices 155.1 Procurement management 15

5.1.1 Tendering systems 16

5.1.2 Conditions of contract 16

5.1.3 Contract roles 17

5.1.4 Insurance 17

5.1.5 Securities and retentions 18

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5.1.6 Specifications and drawings 18

5.2 Cost management 18

5.3 Time management 19

5.4 Scope management 19

5.5 Quality management 19

5.6 Risk management 19

5.7 HR management 19

5.8 Communications and reporting management 19

5.8.1 Australian Bureau of Statistics (ABS) 20

5.8.2 SAICORP 20

5.8.3 Premier and Cabinet Circular 114: Government Real Property Management 20

5.9 Integration management 20

6 Resources 206.1 Project roles 20

6.1.1 PSC contracts 20

6.1.2 GBC contracts 21

6.2 Accreditation and Project Procurement Assistance 21

6.3 Agency Accreditation Flowchart 22

6.4 Construction procurement roles 23

6.4.1 Project risk management 23

6.4.2 Budget risk management 23

6.4.3 Design risk management 24

6.4.4 Construction risk management 24

6.4.5 Procurement risk management 24

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1 Introduction1.1 DefinitionsAccredited Agency An agency that has met all the requirements for accreditation and has been

granted by DPTI full or partial accreditation for a period of two years.

AGFMA Across Government Facilities Management Arrangements

BPIMS Building Project Information Management System, which consolidates building construction procurement knowledge and documentation held and used by DPTI

DPC Department of the Premier and Cabinet

DPTI Department of Planning, Transport and Infrastructure

GBC general building contractors

GST The tax imposed on goods and services pursuant to A New Tax System (Goods and Services Tax) Act 1999 (Cth). All amounts quotes herein are net and exclusive of the GST

Lead PSC Professional services contractor accountable for leading and coordinating its own work and that of other professional disciplines

Medium Works Lower value, lower risk construction projects between the value of $150,000 and $2 million

Minor Works Low value, low risk construction projects below the value of $150,000

PIP Construction Procurement Policy: Project Implementation Process that governs construction procurement in South Australia

Principal/Client The Minister or Chief Executive for the agency contracting the construction works and nominated in the respective contracts

Project Building or engineering construction works being delivered by DPTI or an accredited agency.

Project Manager Project manager appointed by Project Delivery to lead and coordinate the delivery of a project

Project Delivery A directorate of Safety and Services division, DPTI established to centrally manage across government delivery of building construction projects

PSC PSC being architects, engineers, cost managers, planners, certifiers or other building industry professionals contracted to provide services to the project

RSA Urban Renewal Authority with the business name being Renewal SA

SAICORP South Australian Government Financing Authority insurance group

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1.2 Background

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Cabinet approved the Construction Procurement Policy: Project Implementation Process (PIP) in December 2005. The policy, updated in October 2011, affirms the role of the infrastructure agencies, DPTI and the Urban Renewal Authority (Renewal SA) (RSA), for the procurement of construction. PIP mandates the role of an infrastructure agency in all projects over a $150,000 value threshold, but provides flexibility to allow for delivery of building construction projects up to $1 million either through the AGFMA, or by agencies that can demonstrate existing capability without duplicating current resources in DPTI.Depending upon the type of work and the particular risks associated with individual projects, an agency with accredited construction procurement practices and expertise may, by agreement with Project Delivery, fully or partially manage low risk building construction projects up to $1 million in value.

2 Agency AccreditationSome non-infrastructure agencies have capabilities in construction procurement and are potentially able to independently manage low risk building construction projects up to $1 million in value without duplicating the resources in the infrastructure agencies.Government has established infrastructure agencies with a centralised and core business role in delivering construction projects in recognition that there are specific competencies required to manage project risks, ensure that essential requirements are met and provide best value. Irrespective of the building construction project procurement process, there are a number of essential requirements which need to be met for effective and efficient building asset procurement as detailed in sections 3, 4, 5 and 6.

2.1 Key factors to be consideredIn considering the capabilities of a non-infrastructure agency to deliver low risk building construction projects, the following factors will be considered. The type and risk profile of projects or programmes of work likely to be undertaken by each

particular agency.

The existing capability (knowledge, skills and systems) to effectively manage the risks.

The resources available to Government, within the infrastructure agencies and the non-infrastructure agencies with consideration of the most effective and efficient use of those resources.

2.2 Process of accreditationOnly low risk projects under $1 million can qualify for agency management.The agency must have existing personnel with the necessary expertise and building construction project management systems already in place to qualify for self-management. As a guide, the roles provided by Project Delivery in managing the risks for government building construction projects are included at Section 6.4. An agency may seek accreditation for either a specific project or for a programme of proposed future works which would expedite subsequent assessment of accreditation for individual projects.The process for agency accreditation will follow a risk profile assessment. A description of the steps involved follows for accreditation of a programme of proposed future works and for accreditation of individual projects.

2.2.1 Accreditation for a programme of future works

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Step 1: Identify profile of low risk projects likely to be undertaken by each agency in terms of type, value, complexity and risk based on assessment of projects previously managed.

Step 2: Identify typical risk profile for the type of projects or programme of works with each agency and typical mitigation strategies for managing these risks. DPTI develops a risk assessment framework to provide a risk profile for projects under $1 million. The agency will self-assess risks within the framework and demonstrate capability in the 12 key risk areas.

Step 3: DPTI reviews the self-assessment and determines accreditation level and sets required Gateway reviews or checks at key milestones. The assessment will consider historical performance, existing capabilities and construction procurement practices within the agency, in particular:

1. building asset knowledge and management2. business case, scoping and value management3. consultation and stakeholder management4. construction procurement management and relationships with construction

industry liaison5. process and systems knowledge and capability6. governance, policy and approvals management7. design/technical/construction knowledge management8. statutory requirements knowledge and management9. legal knowledge and contractor performance management10. organisation, communication and collaboration management11. cost and payment system management12. risk management.

Step 4: Agree profile of projects for which the agency is assessed as having existing (essential) practices and capabilities in building construction procurement together with identification of likely risks and potential mitigation strategies in place.

Step 5: Re-Accreditation. Accreditation is for two years and agencies will be required to be re-accredited on expiry. In addition, when circumstances change significantly (e.g. loss of resource capability engaged in project delivery), the agency is required to advise DPTI of the change and its proposed action in regard to its accreditation.

2.2.2 Accreditation for individual projectsStep 1: Agency undertakes self-assessment of management of construction procurement

risk for a particular project using the Agency Accreditation Checklist.

Step 2: Self-assessment checklist submitted to DPTI for review and assessment. Checklist to be accompanied by a Project Brief, Project Risk Assessment and Procurement Plan.

Step 3: DPTI reviews the self-assessment and determines accreditation level and sets required Gateway reviews or checks at key milestones.

Step 4: Re-Accreditation. Accreditation is only for specific project(s) and re-accreditation is required for additional project(s).

An agency may be fully accredited as having all the capabilities necessary to carry out the procurement of building construction projects or ‘partially’ accredited with partial capability, which will require the support of DPTI to mitigate particular risks.

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Once an agency is accredited to deliver low risk projects under $1 million, for each project proposed for delivery under accreditation, the agency will submit the project brief in the BPIMS brief format to DPTI for authorisation.

2.3 Key construction procurement risksThe following risks have been identified as the key risks that must be addressed by the agency’s construction procurement model.

Risk No. Key Risk

1 Building construction projects must be developed in the context of the strategic whole-of-government view on asset management (building asset knowledge and management).

2 Construction projects are significant investments and require expert business case development, costing, programming and a focus on lifecycle cost as well as initial capital cost (business case, scoping and value management).

3 Buildings are lived and worked in by people and stakeholder consultation and ‘buy-in’ is essential to success (consultation and stakeholder management).

4 Construction project tendering and contracting has special and complex requirements and contractors must meet prequalification standards (construction procurement management and construction industry liaison).

5 Major construction projects require extensive financial, payment, tender and contract, project management, records and reporting processes and systems to be delivered effectively (process and systems knowledge and capability).

6 Construction projects have unique government policy requirements, which must be met (governance, policy and approvals knowledge).

7 Building design, documentation and on-site construction is complex and there is a requirement for the purchasing agency to have the necessary skills to judge whether it is ‘fit for purpose’ (design/technical/construction knowledge).

8 Building designs must comply with statutory requirements (statutory knowledge and management – planning, OHS&W, Access to Premises, The Building Code of Australia etc).

9 Design and construction contractors and clients have extensive and detailed obligations under contract and the purchasing agency must have knowledge of roles and obligations to administer contracts effectively (legal knowledge and contractor performance management).

10 Construction procurement is through teams working together over long periods and team effectiveness is essential to successful delivery (organisation, communication and collaboration management).

11 The control of construction project cost is complex and requires expert management of estimating, cost planning, contingencies and escalation allowances and systems that provide for the obligation to pay contractors to be effectively met (cost and payment system management).

12 There are many general and specific risks in construction procurement and the purchasing agency must have well-developed risk identification and mitigation processes and skills (risk management).

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http://www.abcb.gov.au/about-the-national-construction-code/the-building-code-of-australia

http://www.hreoc.gov.au/disability_rights/buildings/access_to_premises.html


These risks are grouped into broad areas with possible mitigation strategies identified for each area.Area of Risk Risk No. Mitigation Strategy

Communication 10 Agency demonstrates its capability in establishing team communication and decision making systems.

Cost 2,11 Agency may access costing advice from DPTI or through engagement of professional cost managers.Agency may access the standard suite of DPTI guide notes and templates.

Human Resources 7,9,10 Agency demonstrates its capability to assess required human resources whether internal or external including identifying skills for construction projects.Agency demonstrates its existing workforce skills, knowledge and experience in construction procurement.

Integration All Agency demonstrates understanding of the timing and impact on construction projects of applicable legislation, policy and Government approvals processes.Agency has resources that able it to develop project plans to ensure that the construction procurement process is lawful and adheres to Government policy within the context of the particular requirements of the project’s objectives and brief.

Procurement 4,5,6,9 Agency must follow PIP and demonstrate that there is system support to the requirements of PIP.Agency must use the DPTI Building and Construction Project Prequalification System for selection of professional service and general building contractors.Agency must demonstrate that it has the necessary legal and contract management skills, resources, procedures and systems for construction procurement.Internal Audit can perform reviews to ensure agency compliance with the approved framework and standard documentation and procedures.Agency must use the standard contracts in use by DPTI.

Quality 1,3,7,8 Agency demonstrates access to SAMISAgency demonstrates capability in accordance with government’s Strategic Asset Management policy.Agency demonstrates that in-house resources have the experience and skills to judge ‘fit-for purpose’ in design and construction program services from contractors.

Risk 12 Agency demonstrates its governance and risk management structures and processes.Agency may access DPTI risk management system.

Scope 3,6 Agency confirms its resources for briefing/scoping projects and demonstrates its value management capability.

Time 2,4,12 Agency demonstrates that in-house resources have the experience and skills to program construction projects. The Agency may access the standard suite of DPTI guide notes and templates.

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2.4 Review of agency construction programOnce an agency obtains full or partial accreditation, it will identify projects proposed for delivery either on an individual project basis or as an annual program of works.A risk assessment of projects or programs of projects proposed to be independently managed by the agency will be required and provided in the form of: a description of the project (using a standard project brief proforma);

a completed risk assessment (using a standard proforma); and

a procurement plan (using a standard proforma).

This information will be provided to DPTI for review, which will assess and determine whether: a fully accredited agency will be authorised to procure assessed low risk building

construction projects up to $1 million with minimal or no support from Project Delivery. The agency will be required to maintain an approved procurement delivery system and provide summary project information to Building Management for database reporting, or

a partially accredited agency will be authorised to procure assessed low risk building construction projects up to $1 million with the involvement of Project Delivery at agreed stages or for agreed services. The agency will be required to maintain an approved procurement delivery system and provide summary project information to Project Delivery for database reporting.

An accredited agency will have access to BPIMS including all standard proforma to assist it in its project procurement and agency project managers will be trained in the use and administration of DPTI standards and proforma to be implemented on all projects.An agency that is not accredited must procure construction in partnership with Project Delivery in accordance with PIP. Project Delivery will assess the most effective use of existing central construction procurement resources and their availability for delivery of projects before providing agreement to agency delivery.

2.5 System managementProject Delivery will: accredit the agency, whether full or partial, for a two (2) year period and will review and

confirm its existing accreditation status on an annual basis

review and revise an agency’s accreditation on its procurement management performances and or changes to its capability (the agency accreditation status may be adjusted on the loss or gain of internal expert personnel)

review, verify and register all project risk profile assessments including a sample review of projects delivered by the agency under the accreditation

provide support to the agency for agreed services or at agreed stages

maintain agency access to key documents, e.g. contracts and provide necessary training

co-ordinate with the agency to maintain ongoing accreditation or to re-accredit (if/as applicable).

An accredited agency will: be responsible for its procurement of building construction projects as agreed by DPTI and

implementation of all Government policies in construction procurement

undertake a risk profile assessment of all construction procurement and building construction projects it manages/procures/delivers and provide the results/reports to Project Delivery

utilise services and support from Project Delivery at any stage or in accordance with any conditions under partial accreditation

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advise Project Delivery of any significant changes to procurement capabilities particularly changes of key project management personnel

liaise with DPTI to review existing processes, upgrading where necessary, to secure ongoing accreditation or re-apply for accreditation (as applicable).

Accredited agencies are to note that should accreditation lapse the accreditation process must be commenced again as a new accreditation.

3 Skills RequirementsProject Delivery has professional and technical employees from the building industry – project managers, architects, engineers, technical officers, cost managers and building inspectors to manage all aspects of building construction procurement and the associated risks. This group of employees is essential to the effective delivery of construction procurement in accordance with government policy and best practice.Professional cost managers review projects at key milestones, advise on management of risks to the approved budget, planned cash flow, expenditure and manage the contract payment processes.Architects, engineers and building inspectors review the designs and contract documents to check that relevant industry, government and project specific design standards have been met, and that the design solution meets the brief.There is a group of specialist tradespeople who go on-site during construction with the PSC teams and advise on technical matters, building materials, good trade practices, quality assurance standards and contractual obligations. The agency will demonstrate that it has the required skills to manage the complexity and risk in major building construction procurement.

4 Legislative and Policy Requirements4.1 Legislative complianceKnowledge of the key legislation for building and construction projects and an understanding of how the Acts and Regulations under the Acts are applied in the public sector context.The agency will have a training program to ensure project management personnel with direct responsibility for managing construction projects are aware of their responsibilities and obligations especially in relation to honesty, accountability, probity and fairness.

4.1.1 Public Sector Act 2009 and Code of Ethics for the South Australian Public Sector

The Public Sector Act 2009 and the Code of Ethics for the South Australian Public Sector provide the foundation for responsible and appropriate conduct by public servants. It has particular relevance when linked to the expenditure of large sums of public monies and to contracting for services from the building construction industry.

4.1.2 Public Finance and Audit Act 1987The Public Finance and Audit Act 1987 regulates the expenditure of public monies and project management personnel require knowledge of its constraints and obligations. Project financial management must be in accordance with the Act. Specific details are included in Treasurer’s Instructions, particularly in Treasurer’s Instruction 8 FINANCIAL AUTHORISATIONS.

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The agency will have a management system in place to ensure there are clear delegations of authority to enter into contracts and to expend public monies, and to monitor and report on expenditure and its authorisation.

Delegations under the Public Finance and Audit Act 1987 include:

- financial – there must be set delegations for authority to expend public monies on projects- contract – there must be set delegations for the acceptance of tenders- project limits – in PIP, Cabinet has determined certain thresholds for approval for projects

to proceed and these must apply.

4.1.3 Freedom of Information Act 1991The Freedom of Information Act 1991 provides for public access to official records. Retention of and access to public records has to be managed, and there needs to be clear lines of responsibility to ensure the appropriate records are kept and are accessible.

Project management personnel must be aware of their responsibilities and obligations especially in relation to keeping accurate and auditable public records of all transactions and decisions in relation to building projects.

The agency will have processes that support responses to freedom of information requests.

4.1.4 State Records Act 1997The State Records Act 1997 requires preservation and management of official records. This is especially important where buildings and land are involved as each has a long history and accurate and detailed records need to be maintained for public information and asset management. Detailed records are essential in the event of legal challenge or liability claims.

Typical information sought on projects includes:

- name- site address- scope description- project stakeholders and governance- approvals records, e.g. expenditure approvals, contract approvals- cost details, e.g. initial budget, final approved budget, final cost, initial estimate, estimate

at end concept, end of documentation, pre-tender estimate- program details, e.g. commencement date, completion date, commencement of

construction, handover; approvals milestones- risk analysis- general project correspondence.Typical information sought on contracts includes:

- name- tender documents- tender details- contract documents- contractor details- date of contract and approving authority- initial contract sum- final contract sum

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- cost of contract variations and approving authority- initial completion period- actual completion period- dispute records- general contract correspondenceEffective long-term management of building assets requires the maintenance of information on the design and construction of the building. Data is used by SAICORP for risk management including public sector building insurance negotiations.

Typical information retained on assets includes:

- original drawings and specifications- as-built drawings and specifications- maintenance and minor works logsThe agency will maintain detailed records of projects.

The agency will maintain detailed records of tendering and contracting activities.

The agency will maintain detailed asset management records.

4.1.5 Development Act 1993All projects must meet requirements under the Development Act 1993 and the delivery of projects requires processes to ensure projects gain development approval through the Development Assessment Commission. There must be application of the Building Rules and The Building Code of Australia to the design, interpretation of Act requirements and monitoring of legislative change.

The agency will:

- access the DPTI register of private certifiers for major Government projects and appoint certifiers independent of the design team

- maintain records of certification and ensure these are related to Development Approval- ensure there is professional service and construction contractor sign off to confirm that the

completed project conforms with contract documents and certified documents- ensure that Schedule 16 – Essential safety provisions (Regulation 76 of Development

Regulations 2008) is provided to the facilities management service provider as part of project handover.

4.1.6 Disability Discrimination Act 1992 (Cth) and Disability Services Act 1993

Asset owning agencies are bound by the Disability Discrimination Act 1992 (Cth). They are also required to provide funding and services in accordance with the Disability Services Act 1993 but have some capacity to interpret these Acts in ways that ensure the spirit and intent of the Acts are implemented. Agencies must conform to the Australian Human Rights Commission guidelines, the policy ‘Promoting Independence: Disability Action Plans for SA’ and Premier and Cabinet Circular PC020 Upgrading of Safety and Access in Crown Buildings.

Agencies may access the DPTI register of accredited access discipline contractors and DPTI guide notes where appropriate

The agency will establish standards for its projects to meet access requirements in The Building Code of Australia, the Disability Discrimination Act 1992 (Cth) and Government policy.

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4.1.7 Occupational Health, Safety and Welfare Act 1986Government requires careful observance and application of the Occupational Health, Safety and Welfare Act 1986 as it applies to the design and operation of its built assets and with regard to the work conditions employed in the construction of these assets.

DPTI has in place systems and processes for management of OHS&W responsibilities associated with contracting and construction activities, which the agency may access. These include:

- procedures and responsibilities when operating on a shared or occupied site to ensure the safety of workers and the public, minimise the possibility of accidents, and protect the Government from liability claims

- guide notes and instructions for processes such as asbestos removal- Government policy and established practice notes.The Agency will have particular regard for compliance with the Act as there is financial impact through a cost premium for breach of this Act, and the risk that the agency Chief Executive will be held personally liable for breach of the Act.

The agency will:

- develop design standards and details of specific design requirements to meet agency OHS&W requirements and ensure they are readily available to professional service and construction contractors

- ensure that agency corporate and local site specific OHS&W policies and guidelines are provided to professional service and construction contractors

- regularly review standards to ensure ongoing compliance with the Act and any amendments and to incorporate feedback from users

- attend to unrealistic demands being made on building construction workers to complete work in short time spans and to undertake dangerous work without the necessary protections being in place

- ensure ongoing monitoring and reporting of industrial accidents and analysis of the base causes contributing to worksite accidents. The Australian Bureau of Statistics requires statistics on workplace accidents and SAICORP insurance rates are affected by the number of accidents recorded.

4.1.8 Building and Construction Industry Security of Payment Act 2009The Building and Construction Industry Security of Payment Act 2009 introduces a system of rapid adjudication to ensure that payment claims in the construction industry are resolved quickly. It applies to all contracts (or other arrangements) for construction work or the supply of goods and services related to construction work including the provision of services by PSC.

The process requires the Client/Principal in a contract for construction works and/or services to meet certain statutory requirements for responding to a claim for payment from a building contractor or PSC. These requirements include:

- to assess the validity of a contractor’s claim in a timely manner- to issue to the claimant a payment statement either concurring with or disputing the

amount claimed and providing reasons why it is disputed within 15 business days of the claim being made.

The failure to meet these requirements can result in a court enforced obligation to pay the claim in full whether the claimant is entitled under the respective contract or not.

The agency will develop a systematic and timely approach to:

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- assess the validity of any progress claims for payment received- issue payment statements with respect to progress claims made in a timely manner.

4.2 Policy compliance

4.2.1 Construction Procurement Policy: Project Implementation ProcessGovernment policy for building construction procurement (PIP) applies.

The agency will demonstrate:

- knowledge of the PIP processes and the roles and responsibilities to be fulfilled- attention to the sign off and acquittals requirements at Gateways in PIP.

4.2.2 Strategic asset managementGovernment policy for strategic asset management must be applied.

The agency will keep specific asset registers which detail the location of dangerous and hazardous materials such as asbestos.

DPTI currently maintains detailed records that can be aggregated and located geographically.

The agency will have a compatible information system in place.

4.2.3 Code of Practice for the South Australian Construction IndustryCompliance with the Code of Practice for the South Australian Construction Industry is Government policy. The agency must have knowledge of the Code of Practice and understanding of how the principles outlined in the Code are applied in the public sector context.

A system for managing complaints is required including processes for investigation that are transparent to ensure fair and equitable treatment. DPTI will investigate complaints from the building industry about the agency and its practices.

The agency will comply with specific requirements in the fields of:

- ethics- tendering code of practice management and understanding- security of payment- industry relationships- skill development and training- best practice- sanctions for breaches of the Code.

4.2.4 Prequalification of contractorsGovernment seeks to work with PSC and GBC that have industry credibility are reputable and have demonstrated their capacity and capability to deliver public sector projects successfully – on time, on budget and to the standard specified.

To ensure consistency in performance Project Delivery requires that only prequalified professional service and construction contractors are eligible to tender for construction projects over $150,000 in value.

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Maintaining the DPTI Building and Construction Project Prequalification System requires a computer based records management system to identify, assess, record and confirm details of those professional service and construction contractors who pre-qualify to undertake Government work in building design and construction.

DPTI provides the process and procedures for the assessment, registration and ongoing performance measurement and management of professional service and construction contractors to ensure that Government only engages those businesses with sufficient financial, technical and management capacity, consistent with established benchmarks.

The agency will utilise the DPTI Building and Construction Project Prequalification System. DPTI requires contractor performance reports from the agency as a means of gathering data for the prequalification system.

4.2.5 Construction Industry Training Board (CITB) levyAs a requirement under the Code of Practice, all State agencies managing construction industry activity must provide a regular report to the CITB of all contracts let and the appropriate specific details including the name and nature of the asset, the name of the successful contractor and the approximate value of the contract/project. Currently DPTI collects the levy for the projects it manages and pays CITB.

The agency will ensure the appropriate levy amount is included in any tender submitted.

The agency will ensure the levy is collected and paid to CITB.

4.2.6 Contract disclosurePremier and Cabinet Circular PC027 Disclosure of Government Contracts requires public authorities to publicly disclose certain contracts involving Government expenditure in particular eligible contracts for expenditure over $500,000.

The Government requires contract disclosure to demonstrate probity and transparency. This requirement applies to all contracts between public authorities and the private sector with the exclusion of all contracts under the Public Sector Management Act 1995, involving the expenditure of public funds and with a value of $500,000 or more (inclusive of GST).

The systems need to be able to aggregate data and maintain long-term records. The requirements of the State Records Act 1997 need to be observed.

The agency will have processes and systems in place to record details of the contracts entered into, the contractors, the amounts and dates.

5 Construction Project PracticesThe procurement of building assets is complex and takes place over an extended period. Government requires certain processes to be observed because it has a direct interest in the long-term viability of the building and construction industry, the fifth largest business in the State.Construction for Government makes up a large percentage of all building construction work in the State. Consequently Government requires fair and open competition for Government work. It seeks value for money (not necessarily the lowest price) and to use those professional service and construction contractors who have demonstrated to Government that they are financially viable and capable of doing the work.

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In response to agency and industry concerns, DPTI has developed and implemented procedures and practices which provide clear guidelines and processes which ensure Government receives the products and services it wants at the right price which is a fair price representing value for money (not necessarily the lowest price). Ongoing development of procedures and practices is a risk management strategy aimed at ensuring that work processes are reviewed and refined regularly so work can be done efficiently and effectively. Examples of procedures and practices include: evaluation of construction contract tenders

dispute resolution guidelines

procedures for variations to contracts.

The agency will regularly refer to Project Delivery to ensure it shares the benefit of ongoing practice development.

5.1 Procurement managementGovernment requires transparent tendering processes that demonstrate that the processes have been fair, equitable, and non-discriminatory and that Government work has been offered to all appropriate suppliers to maintain a competitive marketplace.Tendering on behalf of Government needs to take into account current Government policy as detailed in the AS 4120―1994 Code of tendering AS 4121―1994 Code of ethics and procedures for the selection of consultants.DPTI uses its prequalification system with a public or select tender process that includes advertising the tender electronically on the SA Tenders & Contracts website and in appropriate newspapers as applicable.DPTI has systems and procedures in place for receipt of tenders, opening, scheduling and notification of the success of the tender. This is done in accordance with the AS 4120―1994 Code of tendering, and audit requirements. Once the preferred tender is selected, DPTI does not negotiate the price or attempt to drive down the price by referring to competing bidders.DPTI conducts the evaluation of tenders, assessment of alternatives and makes a recommendation to the agency that has to be approved by an appropriately authorised delegate within that agency. There are timelines to be met to comply with the conditions of tendering, and DPTI works with agencies to ensure those timelines are met, or re-negotiated.DPTI has systems and processes in place to let the contract, administer the contract, manage any variations to work arising from agency requests or from construction issues, manage disputes arising from the contract and finalise the contract so that all aspects including financial payments and outstanding disputes are finalised appropriately. All of this has to be done in a consistent way, with consistent interpretation of contracts and issues arising in accordance with Government standards and legal advice from the Crown Solicitor. The agency will have a tendering and contracting system which has similar principles, practices and systems and which honours the Code of Tendering, orthe agency will tender through Project Delivery Contracts Services section.

5.1.1 Tendering systemsSystems are required to:

- detail all tenders- record queries and responses- check compliance with the AS 4120―1994 Code of tendering- list instances of non-compliance - highlight consistent non-compliance and take action.

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https://www.tenders.sa.gov.au/tenders/index.do


The agency will have systems in place to ensure the tendering process is clear to tenderers, their queries are effectively and fairly answered, tenders are evaluated appropriately and tenderers notified.

5.1.2 Conditions of contract There are some seven forms of standardised contract conditions in use by Project Delivery for engagement of professional service and construction contractors. The contracts have standard special conditions and contract information items.

Contract conditions in general use are:

- AS 2124―1992 General conditions of contract (major construction)- AS 4300―1995 General conditions of contract for design and construct (design and

construct)- GC21 General Conditions of Contract (major construction)- MW 396―12 Conditions of Contract for Minor Works (minor construction – DPTI

developed)- MDW―12 Conditions of Contract for Medium works (medium value construction – DPTI

developed)- AS 4122―2000 General conditions of contract for engagement of consultants (PSC)- MPS―12 Contract for Provision of Minor Professional Services (for Medium Works)

(minor PSC – DPTI developed)The agency will demonstrate that it has appropriate standard conditions of tendering and contract for professional service and construction contractors.

DPTI continually reviews, updates and manages contract conditions to ensure proper risk management and risk allocation is maintained. DPTI also understands the need to ensure appropriate conditions are in place for alternate forms of procurement, e.g. design and construct contracts, schedule of rates contracts.

The agency will demonstrate that it has capability in this area.

5.1.3 Contract rolesOn Project Delivery managed projects, the Minister for Transport and Infrastructure is the Principal or Client (for professional services) in all contracts. Having a single government Minister responsible for government professional service and construction contracts ensures consistency in decision-making. There are specific contract roles for the Principal/Client that require some formal understanding of contracts and contract law.

There are essential contract responsibilities for the Principal/Client including that they must:

- be a Body Corporate- make payments when due under contract- ensure appropriate certificates are issued as and when due- ensure appropriate insurances are in place- provide possession of or access to the site to contractors.The agency will determine a single Principal/Client as either the Lead Minister or the Chief Executive.

The agency will have a system in place that effectively supports the role of the Principal/Client.

In DPTI contracts, the Principal/Client appoints as its representative, the Executive Director Project Delivery who has specialist knowledge and expertise in contracts.

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As the Principal/Client and Representative are not ordinarily involved in the day-to-day matters of the contracts, the project risk manager and the lead PSC (usually the architect for the project) take contract roles and provide the management and advice required.

The agency will appoint a Principal/Client’s Representative.

If Australian Standard (AS) construction contracts or the DPTI developed medium works contract are utilised, it is necessary to appoint a Superintendent. The Superintendent has responsibility for making fair and just decisions in accordance with the contract. The Superintendent may appoint a representative.

In DPTI managed projects, the role is undertaken by the Director Project Services who is able to maintain an objective and fair approach to the administration of contracts, representing neither the Principal nor the Contractor. The Superintendent appoints the Project Risk Manager as its Superintendent’s Representative, who must similarly act in an objective manner in administering the contract.

DPTI practice is to recognise the lead PSC (architect or engineer and subcontractors) as representing the Principal’s interests and for this reason PCS’s are not appointed into the Superintendent’s Representative role. A clear understanding of the different contract roles is paramount to the proper operation of contracts.

The agency will appoint a Superintendent to administer contracts as required.

5.1.4 InsuranceOrganisations contracting with Project Delivery are required to indemnify the Government from any wrongdoing and/or liability as a direct consequence of that contract. Project Delivery does not accept ‘capping’ of liabilities (refer Treasurer’s Instructions).

To ensure consistency in insurance cover on construction contracts, Project Delivery has taken steps to ensure it has Principal controlled insurance in place for works and public liability, and is therefore not reliant on individual contractors that may forgo or under provide insurance. DPTI works with SAICORP to define and arrange appropriate insurance for all its building construction projects. This is cost effective and good risk management practice.

DPTI has the understanding and expertise in managing insurance conditions (at renewal) and matters that arise from losses and events under insurance limitations.

The agency will work with SAICORP to develop its own works and public liability insurance arrangements, whether by Principal or Contractor.

5.1.5 Securities and retentionsDPTI requires PSC and general construction contractors to demonstrate their financial viability to ensure that work contracted will be completed in accordance with contract agreements. Construction contracts have the added requirement for contractors to provide a security (major works) or retention (minor works) for the performance of the contract. Securities may be in a number of forms including cash, unconditional undertakings (bank guarantee) and insurance bonds.

Holding cash securities requires adherence to specific accounting and audit requirements. Unconditional undertakings require specific wording in place, or providers of insurance bonds need to be approved. Other matters include:

- negotiating the bank guarantee which requires an understanding of the type of contract being used as the contract will determine the specific security and type of bank guarantee acceptable

- ensuring there are processes for the return of guarantees and for enforcing of guarantees.

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http://www.treasury.sa.gov.au/dtf/financial_management/financial_and_economic_documents/treasurers_instructions.jsp


The agency will demonstrate that it has an appropriate system for the administration of securities and retentions.

5.1.6 Specifications and drawingsNATSPEC is a specification developed nationally. Its standardised use by Project Delivery is a risk management tool to ensure that GBC are familiar with the layout and content leading to efficient identification of the on-site requirements and the detail of the proposed building work.

Project Delivery has over time developed a customised form of NATSPEC that meets the requirements of the lead agencies. Its policy requires that lead PSC use the standard DPTI modified specification.

The agency will demonstrate that its special requirements are advised to PSC to be incorporated into contract documents, and will require the use of NATSPEC unless otherwise agreed with DPTI.

5.2 Cost managementDPTI operates cost management systems for the management of project estimates and budgets and a financial system that meets accounting and audit standards for construction project contract payments.The cost management systems allows the project budget and progressive estimate of cost to be recorded and tracked, cash flow to be monitored, contract progress and variation payments to be made and expenditure approvals to be recorded. Once the project is initiated and contracts are entered into, the financial commitment is recorded and tracked and regular payments are made to PSC and construction contractors in accordance with contract obligations and the Code of Practice for the South Australian Construction Industry.The agency will have a financial management system in place to ensure PSC and construction contractors are paid appropriately and in a timely manner consistent with the contract.

5.3 Time managementDPTI project management personnel have skills in the development of design and construction programs, utilising programming tools, to include key activities and milestones and to set realistic timeframes for design and construction services delivery by the private sector.The agency will demonstrate capacity to effectively manage construction project time.

5.4 Scope managementDPTI project management personnel apply their experience and skills to manage that the briefed requirements are clear for the PSC, that construction contract documents are in accordance with the brief and the approved budget and that ‘scope creep’ is tightly managed to avoid project time and cost overruns.The agency will demonstrate capacity to effectively manage construction project scope.

5.5 Quality managementDPTI architects, engineers and building inspectors apply their experience and skills to identify design features that do not meet briefed or standards requirements and/or constructability, OHS&W and Development Act 1993 issues. These reviews ensure the quality of the project meets briefed requirements for functionality at handover and during the building’s life cycle.DPTI cost managers review estimates of cost and budgets to ensure alignment and to identify cost risks in relation to cost plan elements particularly contingency and escalation provisions.The agency will demonstrate capacity to effectively manage construction project quality.

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5.6 Risk managementDPTI project management personnel apply their experience and skills to identify construction project risks and to develop a risk management and mitigation plan utilising risk tools which meets the requirements of AS/NZS ISO 31000:2009 Risk management - Principles and guidelines.The agency will demonstrate capacity to effectively manage construction project risks.

5.7 HR managementDPTI applies its knowledge of the services and skills available in the building and construction industry to determine the appropriate human resources for construction project delivery, complementing in-house skills with private sector skills.To ensure consistency in performance, DPTI requires that only prequalified PSC and GBC are eligible to tender for construction projects over $150,000 in value. Refer to Section 4.2.4.The agency will demonstrate capacity to effectively identify required human resources from the building and construction industry and an understanding of the DPTI Building and Construction Project Prequalification System and its application.

5.8 Communications and reporting managementDPTI establishes communications processes within project teams to ensure that there is an integrated approach to design, documentation and construction and to ensure that information is provided in a timely way. There are standard approaches to meetings management and records and contract communication including variation orders, site instructions, site visits, document transmittal etc.The agency will demonstrate effective project communications systems.Government agencies are required to contribute to State and Commonwealth statistical records. There is an obligation on all building asset owning agencies to collect and record data regarding all owned building assets.

5.8.1 Australian Bureau of Statistics (ABS)Details of the building projects, their value and completion date must be collected so the ABS can provide detailed economic analysis of business transacted and buildings constructed. This information is used widely for business planning, workforce planning and as an indicator of the state of the economy.

5.8.2 SAICORPDetails of assets held by Government, including area, condition, location, age, materials, photos etc are required for use by SAICORP when negotiating insurance premiums.

5.8.3 Premier and Cabinet Circular 114: Government Real Property Management

For effective ongoing asset management, Project Delivery requires building plans and drawings to be developed and submitted in a consistent format that is compatible with government systems.

DPTI is working with the building and construction industry to develop a consistent format for electronic records of plans.

The Agency will maintain compatible systems to ensure ongoing asset and records management and access to essential data for asset maintenance, refurbishment, replacement and demolition.

The agency must record a base set of data regarding all owned building assets under Premier and Cabinet Circular 114: Government Real Property Management.

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Government has a number of asset data management systems into which data should be entered so it can be aggregated and used for ongoing planning and forecasting.

DPTI has an existing system, the Strategic Asset Management Information System (SAMIS) to capture historical data, record new building asset data and provide a forward planning tool. The agency may use the system for management of its asset data.

The agency will have systems to collect and aggregate statistics and data to various bodies.

5.9 Integration managementDPTI project managers have specialist understanding of the timing and impact on construction projects of applicable legislation, policy and government approvals processes. Project plans ensure that the construction procurement process is lawful and adheres to policy within the context of the particular requirements of the project’s objectives and brief. The agency will demonstrate knowledge of the relevant legislation, policy and approvals.

6 Resources6.1 Project rolesThe agency will be required to nominate personnel/positions for a number of formal roles in procurement contracts. In the case of the Client/Principal there is a formal delegation of responsibilities to the Client‘s/ Principal’s Representative while the role of the Superintendent/Contract Administrator is defined in the contract form itself.

6.1.1 PSC contractsFormal Contract Roles DPTI Agency

(Agency to nominate)

Client Minister for Transport and Infrastructure

Client’s Representative Manager Project Delivery

6.1.2 GBC contractsFormal Contract Roles DPTI Agency

(Agency to nominate)

Principal(All construction contracts)

Minister for Transport and Infrastructure

Principal’s Representative(All construction contracts)

General Manager Project Delivery

Superintendent(For AS contracts and MDW-12 medium works contracts)

Manager Construction Contracts

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6.2 Accreditation and Project Procurement AssistanceThe following DPTI resources are available to assist agencies. Accreditation assistance

- Manager Project Delivery, Jon Whelan- Registrar Prequalification, Sally Katianos

Project Management

- Manager Project Delivery, Jon Whelan- Principal Project Manager, Amanda Thomas- Manager Medium Works Procurement Program, Sam Miceli

Contracts

- Manager Project Delivery, Jon Whelan- Principal Project Manager, Amanda Thomas

Professional Services

- Principal Architect, Andrew Brown Construction Advice

- Manager Construction Advice, John CalleaAccredited agencies or agencies seeking accreditation are to nominate representative(s) for the implementation, management and maintenance of their accreditation.

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6.3 Agency Accreditation Flowchart

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6.4 Construction procurement rolesAs the Government’s risk manager in the building industry, DPTI works with the lead agency to establish a framework within which the project will be delivered and the project team will operate. DPTI ensures that its expertise and experience in the building industry is applied to the project with the objective of managing risks and achieving the project objectives for value, time, budget, program and quality.DPTI ensures that the policy and program objectives of Government concerning the building industry are honoured and implemented as part of the project delivery.The key elements of DPTI roles are outlined below to provide the agency with a reference for the types of specialist management activities which should be part of its construction procurement model.

6.4.1 Project risk managementReview brief for clarity of scope, stated purpose and technical content.

Advise on the implementation of Government building standards as applicable.

Attend and participate in strategic value management and value management workshops.

Advise on building industry professional service and construction contractors required.

Select contract form for professional service and construction contractors and prepare contract documents.

Select professional service and construction contractor short lists, call tenders, coordinate tender appraisal and tender recommendation and execute contracts.

Administer contracts as Principal/Client, Principal’s/Client’s Representative, Superintendent and Superintendent’s Representative.

Make contract payments to professional service and construction contractors.

Maintain and update professional service and construction contractor registers.

Advise on on-site inspection plans.

Advise on furniture and equipment procurement plans.

Manage dispute resolution, liquidations and bankruptcies if applicable.

Review and manage the project budget.

Manage and make payments for project disbursements including principal controlled insurance and contract printing.

Plan, establish and manage a project program for key activities and milestones.

Advise on quality standards for PSC, contractors and building design.

Identify project risks and classify projects into high, medium and low risk categories.

Advise on, implement and manage a project plan for risk minimisation and management.

Assist with the preparation of statutory and Government approval documents.

Coordinate project reporting and keep project records.

Implement governance and project organisation arrangements.

6.4.2 Budget risk managementEstablish and audit project budget and cost plan.

Overview the PSC cost planning and estimating advice.

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Overview and supplement financial reporting.

Attend and participate in strategic value management and value management workshops.

Attend project control group meetings, liaise with design PSC and provide cost advice on materials alternative methods and construction systems during the design process to ensure that all cost implications are considered in design team decision making.

Process progress payments and contract variations.

Oversee financial finalisation of contract.

6.4.3 Design risk managementLiaise with the appointed PSC at all project phases to ensure the PSC has access to all the available design knowledge in Project Services relevant to the project.

Advise the PSC on relevant agency and Government design standards.

Ensure the design meets the client’s brief.

Expertly review the architectural, engineering and technical solutions on behalf of the client at key stages during the project process including end of concept design, project definition and at 100% through contract documentation.

Review the project brief, if required by the client agency.

6.4.4 Construction risk managementMeet with PSC in early design stages and advise on appropriate design.

Review PSC drawings and specifications for design details and methodology.

Provide advice/assistance to architects, engineers, PSC and contractors on technical matters, materials, good trade practices, standards and contractual obligations.

Monitor the performance of PSC and contractors.

Develop construction detailing and methodology standards and practices on site inspection.

Liaise with appropriate departmental officers on construction matters.

Provide advice and support on Government construction site occupational health and safety.

Advise Government, the industry and DPTI on construction inspection matters.

Provide advice and support on Government construction sites OHS&W issues.

Manage the on-site control and co-ordination of all construction projects by monitoring works in progress.

6.4.5 Procurement risk managementManage the process of identifying which project needs can be best met by procuring products or services outside the project team.

Provide consistent and legal conditions of tender for process and probity risks arising from contracting with the private sector.

Manage probity of tender and contract acceptance.

Ensure tender documents are accurate and satisfy government procurement procedures.

Manage the processes of tendering and the execution of contracts.

Understand implications of delegations/approvals and contract acceptance.

Identify and advise on potential claims prior to acceptance of contract.

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Prepare special conditions to accompany standard contract conditions for particular projects where appropriate.

Match conditions of contract to project outcomes, seek strategic response to project procurement.

Ensure proper execution of contract documents.

Provide advice on contractual matters and support the Superintendent and the Principal.

Manage security responsibilities to be provided by contractors.

Protect the Principal from breach of contract during contract administration.

Apply and manage government risk management through insurance compliance.

Minimise default bankruptcies and liquidations of contractors.

Provide consistent contract advice with regard to potential matters of dispute.

Assist in contract dispute resolution and manage the resolution of contractor disputes.

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Document Control

document.docx

Document Endorsement and Approval

This document is approved for transmission:Name Title Date of Issue Version

Peter Swift Director Project Services Feb 2008 V1-1

John Domino Director Project Services Oct 2012 V1-3

Confidentiality

The information contained in this document is confidential to the Government of South Australia. It may not be disclosed, duplicated or used for any purpose in whole or in part, without the prior written consent of the South Australian Government.

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