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The Australian Building Industry Contracts (ABIC) are jointly published by Master Builders Australia Limited (Master Builders) and the Australian Institute of Architects (Institute). They are intended for use in building projects where an architect administers the contract.
The 2018 revised editions of the ABIC Major Works (MW) and Simple Works (SW) commercial and domestic documents and template forms (previously called Contract proforma) are now available under the relevant state and territory pages (navigate the side right menu for relevant page).
Page contents:
- ABIC contracts information
- Selecting the right contract
- Differences between SW and the MW contract
- ABIC 2018 Contracts FAQs
- ABIC 2008 MW and SW versions withdrawn from sale and use
For a revised edition of the ABIC Basic Works (commercial) contract refer to ABIC Basic Works BW 2018.
For a table outlining the differences between the 2008 and 2018 contracts, see here.
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Note: The new Corporations Act / insolvency laws will affect all contracts and in particular Section Q of the ABIC contracts, refer to the ABIC MW or SW User guide under the relevant state and territory pages. For an explanation of the changes refer to Termination rights and insolvency events.
ABIC contracts information
ABIC contracts are designed to make contract administration clear and less prone to dispute or time-consuming negotiation. ABIC contracts bring certainty to the process, requiring timely presentation and resolution of claims. They have been extensively refined and field-tested and feature:
- plain English and a clear, logical structure that reflects the sequence of the construction process;
- equitable allocation of virtually all project risks to one party or the other, eliminating uncertainty and many potential disputes;
- an integrated suite of versions for major, simple and basic works, and for housing and non-housing projects; and
- detailed supporting documents, including a user guide, template forms for the architect and the contractor.
Selecting the right contract
There are different contracts for each state and territory for various types of projects. Selecting the right building contract can be critical to the success of a project.
The contract should be selected to suit each individual project, taking account of its complexity, value and any specific project issues or requirements. A contract selected simply because the architect is familiar with its provisions or is comfortable using it, won’t overcome the inherent difficulties that can arise if the contract is inappropriate for the project.
Differences between SW and the MW contract
The SW contract is intended for simpler projects than MW contract. The MW contract is the most comprehensive contract in the ABIC suite of building contracts. Although the differences are numerous, notable differences between the contracts are summarised in the table below:
| Condition | SW Contract | MW Contract |
| urgent instructions | χ | ✓ |
| separable parts to the works | χ | ✓ |
| change of type of security given by the contractor to the owner | χ | ✓ |
| provision of security for payments for off-site plant and materials | χ | ✓ |
| provision by the owner of security to the contractor | χ | ✓ |
| dangerous or contaminated materials | χ | ✓ |
| encroachments | χ | ✓ |
| quality assurance systems | χ | ✓ |
| seperate contractors | χ | ✓ (except in Queensland) |
| identified, project specific potential causes of delay that entitle the contractor to costs | χ | ✓ |
| amendments to programs and the consequences of any amendments | χ | ✓ |
| alternative dispute resolution | χ | ✓ |
| expert determination of disputes | χ | ✓ |
| arbitration of disputes | χ | ✓ |
| contract confidentiality | χ | ✓ |
ABIC 2018 Contracts FAQs
| Questions | Answers |
| If a contractor insists on a 5% deposit, is it reasonable to increase cash retention to 10% for example? | This is a matter of negotiation between the parties. Note that the deposit can be any % or $ amount the parties agree to, but must not be more than the specific limits in the Act applicable in your state or territory. See the relevant MW or SW User Guide for more information. |
| If the deposit is a percentage is it then adjusted with all variations to the contract price? | No, because it is a ‘one-off’ advance payment that is paid at the beginning of the project (see MW or SW H, clause N16 / N17). See the relevant MW or SW User Guide for more information. |
| At the time of certifying/assessing the deposit, does the deposit paid to the contractor attract bank fees or interest and should these be assessed in the certificate when assessing the deposit? | No, because it is an advance payment and the actual amount typically gets applied to the contractor’s preliminaries. The deposit amount is different to the cash retention security, because it doesn’t get paid into a separate bank account that is held on trust in the same way. |
| Is there a practice note to explain how to administer the deposit provision in the contract? |
Both the MW and SW User Guide have a special section with guidance on administering the deposit provision. |
| If stage payments are agreed at contract time, why are other valuations needed? Could a quantity surveyor’s (QS) valuation amend the contract terms unintentionally and place the owner at risk of breach? | If stage payments are agreed at contract time, why are other valuations needed? Could a quantity surveyor’s (QS) valuation amend the contract terms unintentionally and place the owner at risk of breach? A QS can be engaged by the owner, or the owner’s financier. Either way, a QS does not have a role to play under an ABIC contract, nor any contractual effect under that ABIC contract. The owner is a party to the ABIC contract and so is contractually only required to pay the amount on the architect’s certificate (see MW, clause N7). If there is a Bank involved and if the Bank insists on only paying on a QS’ valuation, then this is a matter between the owner and their financier. Under ABIC, the owner still needs to meet the dollar amount in the architect’s certificate issued under section N. |
| If the amount of staged payments is listed in the contract, can the bank still decide to change the amount? | The bank doesn’t have power to change the contract. However, financiers have sometimes been problematic where they choose what (or whose) valuation of a particular stage they accept. In some cases, they might require a QS to be appointed to value the stage. Ultimately, under the terms of finance they have agreed with their customer (the owner), the financier may well have this right to decide to draw down on the valuation they choose. This is a matter between the owner and their financier. Under an ABIC contract, however, the contractor is still entitled to be paid— and the owner must pay what the architect certifies under section N. |
| If the bank guarantee is due to expire and the contractor has made no intent of replacing this, can the architect withhold money from the next claim until these bank guarantees are replaced? | No. But note that the MW contract does allow the parties to change the type of security being given (see clause C4). We suggest that the parties ensure, from the beginning, that any expiry date on the unconditional guarantee document, allows ample time for project delays and the defects liability period, until final certificate. If not, it is good practice that the owner should not accept the document that is provided by the contractor (see MW clause C3.2). |
| Security of Payment (SoP) legislation requires respondents to claims to comply with strict timelines that could place the owner at risk, is there provision in the ABIC contracts for managing these timelines? | Security of Payment legislation operates outside of an ABIC contract and will in all cases, override anything a construction contract says. The ABIC authors have tried to accommodate the payment timelines in the ABIC contracts and the ABIC sub-contracts. However, all parties should be aware that the timelines in the SoP legislation will always takes precedence over the contract and that these may change over time, if the legislation is changed. The Owner should be made aware that SoP takes precedence and both the Contractor and the Architect should be familiar with the timelines that apply in their state/territory. Refer Acumen note Security of Payment (SOP). |
| In regards to unfixed materials on site, is the client obliged to pay for unfixed materials when they are on site eg blockwork, or does the client pay once the materials are installed and form part of the building works eg wall constructed? | The owner only pays for the *contract price (see MW clause N2), which is the *cost of building work plus GST. If materials are not fixed to the *works, then they are not the *cost of building works. Generally, the architect should not certify materials that are not installed/fixed to the *works. |
ABIC 2008 MW and SW versions withdrawn from sale and use
Effective September 2019: The ABIC 2008 versions of MW and SW are no longer published and have been withdrawn from sale and use. They have been replaced with the 2018 revisions of MW and SW, which were released in April 2018. The ABIC co-authors no longer give copyright permission for anyone to use the 2008 versions (and 2011 versions in Queensland) of the ABIC MW and SW contracts, subcontracts, User Guides, the associated ABIC supporting documentation, nor the related Acumen guidance (the ABIC 2008 Materials). The ABIC co-authors do not give anyone permission to use, adapt, modify, reproduce nor communicate the ABIC 2008 Materials, unless permission is given under an express licence. Any such use is a breach of copyright and at a user’s own risk. The Institute no longer provides customer support or guidance about the ABIC 2008 Materials and we encourage all users to purchase and use the 2018 contracts and related supporting documents.