Express law No. 300

21 September 2021

Commonwealth obligations under the Building Code and WHS Accreditation Scheme

Non-corporate and Corporate Commonwealth Entities are reminded of their obligations under the Building Code and WHS Accreditation Scheme.

Background

The Building and Construction Industry (Improving Productivity) Act 2016 establishes 2 separate schemes which impose obligations on Commonwealth entities when procuring or funding building work. These are the Code for the Tendering and Performance of Building Work 2016 (Building Code) and the Building and Construction Industry (Improving Productivity) (Accreditation Scheme) Rules 2019 (WHS Accreditation Scheme).

AGS, in collaboration with the Australian Building and Construction Commission and the Federal Safety Commissioner, recently provided training on the Building Code and WHS Accreditation Scheme to remind Commonwealth entities of their obligations. For a recording of the training visit YouTube AGS virtual Property and Construction Forum - August 2021.

Building work

The Building Code and WHS Accreditation Scheme apply to ‘Building Work’. Building Work includes the construction, alteration, extension, restoration, repair, demolition and dismantling of structures that form, or are to form, part of land. Building Work also includes the installation or removal of fittings from such structures, and preparatory works (e.g. site clearing and excavation). The scope of Building Work is very broad, but there are limited exemptions under the Building Code and the WHS Accreditation Scheme.

Requirements under the Building Code

The Building Code imposes obligations on Non-Corporate Commonwealth Entities (Funding Entities) when procuring or funding ‘Commonwealth Funded Building Work’. This includes:

  1. Building Work (of any value) undertaken for, or on behalf of, a Funding Entity
  2. Building Work indirectly funded by the Commonwealth by a grant or other program, where the Commonwealth’s contribution either exceeds $5 million and represents at least 50% of the total project value, or exceeds $10 million (regardless of total value)
  3. certain ‘Build Own Operate Transfer’, ‘Build Own Operate’, ‘Public Private Partnership’, and ‘Private Finance Initiative’ projects
  4. Building Work that involves a pre-commitment lease (also known as an agreement for lease).

Corporate Commonwealth Entities are not directly required to comply with the Building Code, but may be required to comply contractually (e.g. under the terms of grant agreements) where they are receiving grant funding from the Commonwealth to undertake Building Work.

Where the Building Code applies, entities are required to take a number of steps during the procurement of Building Work to ensure that the requirements of the Building Code are met, including that respondents are eligible to be awarded Commonwealth Funded Building Work and that successful tenderers comply with the Building Code.

Requirements under the WHS Accreditation Scheme

The WHS Accreditation Scheme requires both Non-corporate and Corporate Commonwealth entities to only enter into contracts for and fund, Building Work (above certain thresholds) with builders who are accredited under the WHS Accreditation Scheme. These thresholds include:

  1. directly funded Building Work above $4 million
  2. indirectly funded Building Work, where the Commonwealth’s contribution is at least $6 million and represents at least 50% of the construction project value
  3. indirectly funded Building Work where the Commonwealth’s contribution is at least $10 million.

Further information

Further information on the application and requirements of the Building Code and the WHS Accreditation Scheme can be obtained from the Australian Building and Construction Commission (ABCC) and the Office of the Federal Safety Commissioner respectively. The ABCC and Federal Safety Commissioner also provide model clauses to be included in contracts and approach to market documents for Building Work.

AGS fact sheet 42 offers information on the application of the Building Code. AGS can also provide specific advice on the Building Code and the WHS Accreditation Scheme, including by tailoring documentation to address the requirements of complex or unusual projects.

For further information please contact:

Contacts

Important: The material in Express law is provided to clients as an early, interim view for general information only, and further analysis on the matter may be prepared by AGS. The material should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in this message.