July 5, 2021
Welcome to the July edition of Projects & Construction Monthly.
Lamont Project & Construction Lawyers provide our clients with market-leading advice and specialised services in public and private projects, both nationally and internationally. We invite you to join us as we extend our services to provide you with the latest industry news, alerts, legislation updates, judgments, and announce upcoming client-focused seminars.
The Projects & Construction Monthly July issue will address:
- the impact of COVID-19 and the importance of remaining vigilant during the new financial year;
- an overview of major projects and infrastructure investments announced from the Federal Budget;
- the commencement dates for the second phase of the Project Trust Account regime under Queensland’s new security of payment regime;
- Western Australia’s security of payment reforms and what to be aware of; and
- the latest railway projects and insights in our new ‘Railway’ series.
Following the recent success of its ‘Railway’ series, LPC Lawyers will be publishing further series’ in relation to ‘Water’, ‘Road’ and ‘Energy’.
Impact of COVID-19
The impact of COVID-19 on the building and construction industry saw supply chain disruption, shortages of subcontractors and materials, and the termination of contracts to control expenses.
Despite this, positive trends in the market suggest a strong forecast as we head into the new financial year. This can be seen in the Australian Bureau of Statistics announcement that the total work done on infrastructure and capital projects in Australia rose 2.4% to $51,975.9m in the March quarter.
Notwithstanding positive trends in the market, construction companies with high levels of debts and low cash reserves should remain vigilant and prepare for increased liquidation and renegotiation of contracts. We further recommend companies continue to review their contracts and prepare appropriate contingencies to reduce the risk of contract termination or ending up in litigation.
The Federal Budget
In May 2021, the Government handed down the Federal Budget 2021-22 which focused on prioritising jobs and investment. It announced that an additional $15.2 billion will be invested into infrastructure projects across Australia over the next 10 years, as part of its 10-year $110 billion infrastructure pipeline investment.
The Government is committed to the following Major Projects:
- $2 billion for the new Melbourne Intermodal Terminal, Victoria;
- $2 billion for the Great Western Highway (east and western sections), New South Wales;
- $500 million for the Princes Highway Corridor – Stage 1, New South Wales;
- $229.4 million for the M12 Motorway, New South Wales;
- $240 million for the Cairns Western Arterial Road duplication, Queensland;
- $178.1 million for the preconstruction of the Gold Coast Rail Line capacity improvements (Kuraby to Beenleigh), Queensland;
- $160 million for the Mooloolah River interchange upgrade, Queensland;
- $200 million for the Great Eastern Highway upgrades, Western Australia;
- $2.6 billion for the Darlington to Anzac Highway section, South Australia ;
- $132.5 million for Canberra Light Rail Stage 2A, Australian Capital Territory;
- $113.4 million for Midland Highway upgrades, Tasmania; and
- $150 million for Northern Territory Network Highway upgrades (Phase 2), Northern Territory.
Security of payment reminder: Queensland
Last year the Queensland Government passed the Building Industry Fairness (Security of Payment) Act 2020. This introduced a new, simplified ‘statutory trust account scheme’ to replace the previous ‘project bank account’ regime. The new scheme is gradually being rolled out in phases, to eventually cover most private and public sector commercial construction projects in Queensland valued at or over $1 million.
The new scheme requires the creation and maintenance of one Project Trust Account (PTA) per eligible project, and one Retention Trust Account (RTA) for cash retention on eligible projects.
Phase 2A of the role out commenced on Thursday, 1 July 2021. This means eligible Government, and Hospital and Health Services building and construction contracts valued at or over $1 million tendered after this date will be subject to the new PTA and RTA schemes.
It is important for those in the contractual chain in the building and construction industry to understand the new scheme and how to comply with any obligations it imposes, as failure to do so may result in serious penalties.
Should you wish to discuss the new scheme in more detail and how it affects your specific circumstances, please do not hesitate to contact us.
ARTICLE: SECURITY OF PAYMENT UPDATE: WESTERN AUSTRALIA
On 25 June 2021, the Western Australian Government passed the Building and Construction Industry (Security of Payment) Bill 2021 to replace WA’s current Construction Contracts Act 2004 (CCA). This article outlines the key changes to be aware of. Read more here.
AUSTRALIAN INFRASTRUCTRE RAILWAY SERIES
LPC Lawyers presents, The Railway Series.
The rail infrastructure space is experiencing an unprecedented boom, with large scale projects underway across Australia. Over five parts, this series unpacks topics relevant to Australia’s current railway projects and provides exciting insights for Principals and Contractors into the complexity of large-scale infrastructure projects.
Railway Series – Part 1 – Australian Infrastructure: The Railways Series
An introduction to the Railway Series, this article discusses Australia’s biggest rail projects and Trent Jones’ experience in this space. Read more here.
Railway Series – Part 2 – Target Cost Contract Model
Target Cost Contracts are quickly becoming the contractual model of choice for large scale projects. This article explores why, and how adopting this method of contracting improves value for money and overall project performance. Read more here.
Railway Series – Part 3 – Pain Share/ Gain Share in Railway Projects
The pain share/gain share mechanism is a contractual means of ensuring parties to a contract have a shared interest in the success of the project. Part 3 discusses the benefits such an approach offers to both Contractors and Principals, and its use in railway projects. Read more here.
Railway Series – Part 4 – Managing Risk in Railway Projects
Risk is an inevitable feature of large-scale projects. This article explores the different risks that arise during railway projects, and how they may be identified and managed through the project’s lifecycle. Read more here.
Railway Series – Part 5 – Stakeholder Engagement through KPI’s
Stakeholder management and engagement is central to the long-term success of a project and can be facilitated through the use of Key Performance Indicators (KPIs). Part 5 of the Railway Series discusses how and why. Read more here.