NZS 3916 is changing – here’s what you need to know
Changes proposed to NZS 3916 could, if adopted, shift more risk from design consultants to contractors.
Standard form contracts in Aotearoa are changing. After completing and publishing the new NZS 3910:2023 Conditions of contract for building and civil engineering construction, Standards New Zealand is turning its attention to related standards such as NZS 3916:2013 Conditions of contract for building and civil engineering – Design and construct and NZS 3917:2013 Conditions of contract for building and civil engineering – Fixed term.
Responses being reviewed
A draft of DZ 3916:2025 was published for public consultation in February. The consultation period has now ended and the standards committee is reviewing responses. Once this process is complete, the new NZS 3916 will be published.
Many of the proposed changes are intended to bring NZS 3916 into line with NZS 3910:2023.
Key mechanisms introduced in NZS 3910 such as the new roles of contract administrator and independent certifier (which divide the functions previously performed by the engineer) will be adopted into NZS 3916 without further review.
In contrast, other changes carried over from NZS 3910 such as the liability limit in clause 7.2 may warrant further consideration in the design and build context. Consultants’ liability limits are likely to differ from those under NZS 3916, creating a gap risk where contractors may face additional liability.
Significant aspects of NZS 3916:2013 also remain unchanged, including the contractor’s warranty at clause 5.1.8 that the principal’s requirements are suitable, appropriate and adequate. These unamended provisions may be raised during the consultation process for further review.
Key amendments
Several changes are specific to the NZS 3916 contract and have a unique impact on design and build projects that use it. While many of these are beneficial, others introduce what we believe is unnecessary risk transfer. Below, we outline the key amendments in the current draft that are unique to a design and build context.
Definitions (clause 1.2)
‘Principal’s requirements’ have been redefined to the requirements ‘included in the contract and identified as the principal’s requirements, including the documents and any drawings and specifications listed in contract agreement annexure 1 – list of principal’s requirements’. A corresponding annexure is intended to list the principal’s requirements in a single place.
This approach should make the contract easier to navigate. However, the current drafting does not guarantee that all the principal’s requirements will be listed in annexure 1. Material captured by the broader reference to requirements ‘included in the contract’ could still be littered throughout the contract documents.
Ideally, this drafting will be tightened with further review to reduce the potential for uncertainty.
Discrepancy (clause 2.2.7)
This clause concerns situations where a discrepancy arises between the actual quantities for measurable items and those appearing in the schedule of prices. The 2013 version of NZS 3916 deals with this situation in clause 2.2.6 by providing for a variation where any discrepancy in the pricing of a single item is such that it would make the schedule for that item or any other items unreasonable.
The key proposed change is that the contractor will now only be able to claim a variation where ‘a significant discrepancy has occurred, for which the contractor is Not responsible’. In other words, more risk is shifted onto contractors.
Deeds of novation (clause 4.3.1)
Deeds of novation arise where the principal’s existing agreements with design consultants are transferred to the contractor. The 2013 version of NZS 3916 dealt with this situation under clause 4.1.4. The new clause adds a requirement that the principal provide any deeds of novation to the contractor for execution within 10 working days after the tender is accepted.
While this is helpful, a gap remains. There is still no requirement for the principal to execute the deeds, nor are there any consequences for failing to do so. Given the importance of such transfers, it would be preferable to provide the contractor a right to claim a variation where the principal fails to provide executed deeds.
Submission and rejection of design documentation (clauses 5.1.10 and 5.1.11(b))
Under clause 5.1.10, the principal will be able to require that the contractor submits design documentation to the contract administrator at the stages of design development set out in the specific conditions.
Clause 5.1.11(b) requires the contract administrator to include reasons if they reject the design documentation and to only reject if, in their ‘reasonable opinion’, the documentation is non-compliant with the principal’s requirements. These changes are likely to be useful in that the administrator will need to clarify why a design is rejected and ensure there are good reasons for it.
Contractor-arranged professional indemnity insurance (clause 8.6)
One proposed change concerns the length of time that a contractor’s professional indemnity insurance must be in place. The timeframe under the 2013 version is until completion plus 5 years. This would change to completion plus 6 years.
The other proposed change would allow insurance to comprise either annual renewable policies or a single policy covering the full period specified above. The current 2013 version generally only permits the single policy option, although it does allow for annual renewable policies until completion of the contract works.
Compliance with variations (clause 9.1.4)
Under this clause, a contractor is required to comply with any variation unless it falls under one of three stated grounds. The proposed amendments would adjust the number of working days for the contractor to notify the contract administrator – and for the contract administrator to amend the instruction – and would remove the ‘health and safety in the workplace’ ground. Given the importance of health and safety generally, we disagree with its removal here.
Notice of variation (clause 9.2)
Under the revised clause, the contract and contract administrator must ‘endeavour to agree’ as to whether a matter raised in a notice of variation involves a variation. The contract administrator must then issue an instruction within 10 working days of that agreement. If no agreement can be reached, the issue can be referred for determination by the independent certifier within 20 working days.
This change reflects the introduction of two roles to replace the engineer. Under the 2013 version of NZS 3916, the engineer has sole responsibility for determining this matter and must do so within 1 month of receiving the notice of variation. This process was also revised in NZS 3910:2023 but with different wording.
DZ 3916:2025 introduces shorter timeframes, omits the stage where the contract administrator confirms whether the matter constitutes a variation and proceeds directly to the independent certifier deciding in the absence of agreement.
Once the new NZS 3916 is published, be sure to check it out.
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