Substitutions

The architect administering the contract should be aware of the following:

• A substitution may be contrary to the owner's requirements. When the owner signs a contract with the contractor the materials described in the specification are a requirement under that contract and the substitution of materials without approval may be a breach of the contract and any applicable warranties.
• If the contractor intends to substitute materials and products it is important that the contractor relies on a provision in the contract to do so. The typical clause used in a contract is the variation clause, which will involve the contractor directing a written variation to the owner, which must be approved by the owner or by the architect, as agent for the owner.
• In a rare circumstance where the contract is silent on substituting materials or products, the contractor should still seek approval from the owner and/or the architect.
• If the contractor substitutes materials without approval, the owner is entitled to give notice to the contractor that the specified materials must be installed, or in the alternative, the owner may claim damages for the substitution because without approval by the owner the contractor may be in breach of the contract.
• If a price differentiation will result from the substitution, the contractor must clearly identify the price variation and the architect should ensure that the owner is made aware and approves of the price change.
• If the contractor recommends a substitute material or product, the architect must ensure a detailed compliance assessment is carried out, assessing the specifications against the National Construction Code (NCC) and all applicable legislation and standards.
• The architect may be in breach of the Institute's Client and Architect Agreement in allowing for the alteration to approved documents, and therefore a substitution without written approval from the owner. If the contractor proposes a substitution for materials specified in the contract documents, the architect should request approval from the owner for the substitution. The architect wanting to avoid such a procedure could, under the Institute's Client and Architect Agreement, obtain authority to vary the specification without the approval of the owner.
• If the materials are not specified in the contract documents, there is no substitution. Where the specification is silent on materials the contractor has the authority under ABIC contracts to install the materials that are in accordance with the standard of building work as set out in the contract documents. If the materials selected by the contractor are not in accordance with the standard or quality of building work specified, then the contractor may be in breach of the contract.
• Importantly, a substitution may be absolutely necessary due to:
  • a change in building standards or legislation; or
  • a manufacturer no longer providing a material or product,and where this occurs, the contractor will have no alternative but to substitute a material or product. In this circumstance, if the architect is the lead design consultant, they should carefully advise the owner and assist in specifying a suitable substitute that complies with the law.

Specifying 'or equal' in the plans or specification

Architects should specify the quality and performance required and one or two acceptable brand names or manufacturers rather than use 'or equal'. When using the term 'or equal', be mindful that this can also mean equal cost, equal appearance, equal size, equal country of manufacture etc.

Architects should also be mindful that considerable time may be required in assessing the quality of proposed substitutions to ensure they are an appropriate substitution.

Architects carry significant legal liability when selecting and specifying materials and products for the construction of a project. A case example of where legal liability was imposed onto an architect was seen in the Lacrosse Decision in 2019, where an architect was held 25 per cent proportionately liable for specifying a non-compliant cladding product and subsequently approving a substitute cladding product that was also non-compliant. The proportion of damages amounted to approximately $1,437,058, which was payable by the architect alone, with $5,748,233 in total damages being awarded to the applicant.

The Building Products Industry Council Substitution of Construction Product Guide published in 2017 recommends a three-step guide to product substitution. The steps include:

1. Think about the law:

• Contractual responsibilities and implied warranties
• Reliance on product performance under the NCC and building laws
• Requirements if building work is involved.

2. Think about the building implications:

• What environmental challenges are there?
• What are the existing design features?
• Are there any restrictions under heritage or health and safety legislation, planning restrictions or similar interaction with other regulatory responsibilities?
• What does the product do in terms of performance required by the NCC, Australian Standards and relevant building law?
• What are the consequences of it failing?
• Products that are components of building systems
• Evaluate the current building context and proposed changes.

3. Make the changes:

• Discuss with all parties
• Record any changes in the contract
• Get building surveyor approval where necessary
• Notify the building surveyor promptly
• Advise the owner of any commissioning and maintenance requirements.

The above three-step process provides a simple and methodical starting point for architects when assessing and determining a substitute material or product. Refer Acumen note Non-complying building products.

Further reading:

Substitution of Construction Products Guide, Building Products Innovation Council, August 2017 

Procurement of Construction Products - A guide to achieving compliance, Australian Procurement and Construction Council (APCC), 2015  

A Guide to Australian Building Product Conformity, NSW Government, April 2018

Further resource:

For information on the NSW Design and Building Practitioners (DBP) Act and Regulations, please refer to our dedicated Institute page.

Related courses - Available via Online CPD

• Learning from LaCrosse