November 7, 2022
n December 2020, the Queensland Department of Transport and Main Roads (‘DTMR’) introduced its ‘Best Practice Industry Conditions’ (‘Transport BPIC’) which aim to ensure that a workforce is retained for the duration of a project and ensure successful project completion by setting industry wide standards and expectations.
Whilst not mandatory to implement, contractors should consider the cost impacts of the Transport BPIC, including an uplift in labour rate costs through more favourable wage rates and employee entitlements compared to current labour costs on construction projects with a total value of $100 million or more.
Implications of Transport BPIC
Since the introduction of the Transport BPIC, many contractors who tendered in a pre-Transport BPIC market, have encountered difficulties in their ability to engage a workforce at the tendered rates. These difficulties are in addition to those experienced industry wide due to COVID-19 and have compounded on contractors’ ability to comply with contractual obligations related to carrying out the WUC and completing the project.
It is expected that by 2023 there will be more than 100,000 unfilled roles in the major project industry across Australia (read more here). In Queensland, this shortage coupled with the introduction of the Transport BPIC has enabled workers to be more selective in terms of which company they are employed by and move between projects to gain higher wages.
Incidentally, this labour shortage combined with increased labour costs, has resulted in decreased delivery times for materials and equipment necessary for the project, impacting contractors’ ability to efficiently carry out the WUC and causing them to incur additional costs.
What can contractors do now?
Those contractors that are not implementing Transport BPIC may find themselves under increased labour rates pressures. Failure to deal with this, i.e. raise labour rates, typically results in a loss of workforce. Contractors must therefore consider all other contractual options to reduce costs of increased labour.
Such considerations include:
- the ability to incorporate Annexure D into their contracts and if any labour cost impacts fall within the scope of Annexure D;
- whether a mechanism for claiming additional costs for materials exists;
- if they are entitled to an extension of time for increased material costs, including delays to shipping and shortages;
- whether claiming for disruption is available under their contract, particularly as it relates to loss of labour or inability to find the adequate workforce which was expected at tender;
- the application of rise and fall provisions; and
- entitlement for variations which are directly related to the disruptive effects of Transport BPIC on the ability to engage the required labour to complete the Project.
Lamont Project & Construction Lawyers
Lamont Project & Construction Lawyers have the industry knowledge and experience to assist contractors navigate the current construction market. We have a comprehensive understanding of the intricate risks of varying a construction contract, whether it be by way of Annexure D or Annexure E, or through the introduction of a cost reimbursable model.
Our experience enables us to assist with the unique challenges when administering contractual arrangements. If you have any questions about any matters raised in the above article as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Quinn Hironaka
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064