Construct-Only Contracts Explained for Contractors
Under a Construct-Only Contract, the Principal is meant to supply the completed design and the Contractor is then meant to price and build the Works to that design. The Principal engages its own architects and engineers and is meant to keep responsibility for the design, but sometimes amendments to the standard form will shift liability for design onto the Contractor (intentionally or unintentionally). The Contractor carries out the construction works for a lump sum price, which may be varied in certain circumstances and by the Date for Practical Completion. AS 4000-1997, AS 4000:2025 and AS 2124-1992 are the main Australian Standard forms of Construct-Only Contracts, and are often heavily amended.
Key Takeaways
Under an unamended Construct-Only standard form contract, the Contractor builds from the Principal’s design and the Principal is supposed to retain responsibility for that design. Sometimes, however, the Principal passes design risk to the Contractor through amendments to the General Conditions.
Principals rarely issue Construct-Only standard form contracts as published, with Australian research recording amendment rates of 88% for AS 4000-1997 and 97% for AS 2124-1992.
Tender packages sometimes include the Special Conditions without the General Conditions they amend. Contractors need to read both when assessing and pricing the Contract.
The Superintendent administers important payment, Variation, Extension of Time and completion provisions. Where the Superintendent is employed by the Principal, Contractors need to understand both the contractual role and the way assessments are being made in practice, so they don’t get caught out by a conflicted Superintendent.
Around 73% of the Construct-Only Contracts Rachelle reviews contain a fitness for purpose warranty, or wording that produces the same result without using the phrase.
What is a Construct-Only Contract?
A Principal uses a Construct-Only Contract where its architects and engineers prepare the design and it engages a Contractor to construct the Works. Under the traditional risk allocation, the Principal retains responsibility for its design while the Contractor prices, programs and constructs the Project in accordance with the Contract Documents.
That allocation can change significantly through the Special Conditions. A Contract described as Construct-Only may still transfer parts of the design risk to the Contractor.
Which parties sign a Construct-Only Contract?
The Principal contracts separately with its design consultants and with the Contractor. It engages the architects, engineers, Quantity Surveyors and other consultants under consultancy agreements, then engages the Contractor under the Construction Contract.
There is ordinarily no direct contractual relationship between the Contractor and the Principal’s architects or engineers. The Contractor’s direct contractual relationship is with the Principal under the Construction Contract. The Superintendent has a separate role administering that Contract in accordance with the powers and functions given to it.
Subcontractors and Specialist Trade Contractors usually contract with the Head Contractor rather than the Principal. They generally have no direct contract with the Principal, the Superintendent or the Principal’s design consultants.
When a design or construction defect arises, that contractual structure matters. Responsibility may sit with different parties under different contracts, and the Head Contractor may be liable to the Principal even where the underlying problem arose in work performed or designed by somebody else.
Why do Principals choose Construct-Only delivery?
Principals may choose Construct-Only because they want to retain control of the design. Their architects and engineers remain directly engaged by them, rather than the Contractor taking responsibility for completing the design as it would under a typical Design and Construct arrangement.
Ideally, the design is substantially complete before the construction work goes to tender. This also gives the Principal a common basis for comparing bids, with each Contractor pricing the same drawings and specification. Under Design and Construct, tenderers may propose different design solutions, make different assumptions or allow for different levels of design development, so the prices are not necessarily comparing the same scope.
Melbourne Law School and the Society of Construction Law Australia recorded AS 4000-1997 and AS 2124-1992 among the most widely used construction contracts in Australia. Both are Australian Standard Construct-Only contracts.
How does a Construct-Only Contract work?
Under a traditional Construct-Only arrangement, the Principal completes the design, tenders the construction work and engages a Contractor to construct it. A Superintendent administers the Construction Contract between the parties from award through to completion and the Defects Liability Period.
That is the starting position. The executed Contract may allocate the risks very differently, particularly once the Principal’s Special Conditions are taken into account.
What does the Principal do before the tender goes out?
The Principal briefs its architects and engineers and develops the design before putting the construction work to market. The tender package will usually contain the drawings, specification, General Conditions, Special Conditions and Annexure.
Contractors need to read the General Conditions together with the Special Conditions. Unfortunately, some tender packages include the Special Conditions without a copy of the General Conditions they amend, unless the Contractor has purchased its own copy of the relevant Australian Standard contract.
The Annexure sets out Project-specific information such as the Date for Completion, Liquidated Damages, security and retention, the Defects Liability Period and insurance requirements.
The bigger issue is whether the design is actually complete when the Construct-Only tender goes out. We regularly see preliminary drawings, unresolved details and parts of the scope dealt with through Provisional Sums or PC Items. The Special Conditions may also require the Contractor to complete, coordinate, develop or verify parts of the design.
What is the Contractor responsible for under a Construct-Only Contract?
The Contractor must construct the Works in accordance with the Contract Documents and meet the workmanship and quality requirements in the specification. It also programs and manages the construction work and is responsible to the Principal for the Subcontractors and Suppliers it engages. Its other obligations come from the Contract and applicable legislation.
The Special Conditions can significantly increase those obligations, particularly in relation to design.
Even under a genuine Construct-Only arrangement, the Principal retaining responsibility for the permanent design does not mean it designs everything needed to construct the Works. The Contractor will commonly be responsible for its temporary works and construction methodology, which can include formwork, falsework, propping, shoring and lifting arrangements.
Depending on the Project, temporary works can involve substantial engineering, coordination and certification costs that need to be allowed for in the tender price.
How does the Superintendent administer the Contract?
The Superintendent administers important parts of the Contract, including directions, Variations, Extensions of Time, progress certificates, Practical Completion and defects. The exact role depends on the Construction Contract and the amendments made to it.
On some Projects, the Superintendent is an external consultant. On others, the role is performed by an employee or representative of the Principal.
The second arrangement can create practical tension. The Superintendent may be administering the Contract for the Principal while also assessing a claim that affects how much the Principal has to pay or whether the Contractor receives additional time.
Contractors should keep clear contemporaneous records of claims, supporting documents, Superintendent assessments and the reasons given for rejecting or reducing an entitlement. Those records become particularly important if the assessment is disputed months later.
How does the Contractor get paid?
The Contractor usually lodges progress claims at the intervals stated in the Contract, commonly monthly. The Superintendent assesses the claim and issues the payment certificate or assessment required by the Contract, after which the Principal pays the amount due within the applicable contractual timeframe.
The amount claimed and the amount actually paid can be very different. Retention, security, set-off rights and other deductions may affect the payment, and the Special Conditions often make substantial changes to the payment machinery in the unamended Australian Standard contract.
Statutory Security of Payment legislation also applies to construction payment claims across Australia and may override inconsistent contractual payment arrangements. The legislation and payment timeframes differ between jurisdictions.
Contractors should check the contractual payment dates against the legislation applying to the Project before the first progress claim is submitted.
How do Contractors claim time and payment?
A Contractor may seek additional time or money through provisions dealing with Extensions of Time, Variations, latent conditions, delay costs and other contractual entitlements.
These clauses commonly contain notice and claim requirements. Special Conditions frequently change both the timeframes and the information the Contractor must provide.
A contractual time bar may prevent recovery of an otherwise valid entitlement if the required notice is not given on time. Australian research found participants had amended the Extension of Time clauses in 76% of amended standard form contracts, the delay damages clauses in 71%, the site conditions clauses in 68%, and the claims and time bar clauses in 62%.
On award, the Project team should build its notice register from the executed Contract and Special Conditions. Using the notice periods in the published standard form contract without checking the amendments is an avoidable Contract Administration risk.
What happens at Practical Completion and afterwards?
The Superintendent determines whether the Works have reached Practical Completion in accordance with the definition and requirements in the Contract.
Practical Completion can affect several commercial positions at once. Depending on the Contract, it may stop further Liquidated Damages accruing, trigger the release or reduction of part of the security or retention, and start the Defects Liability Period.
During the Defects Liability Period, the Contractor may be required to return to rectify defects identified under the Contract. Final payment, final certification and the release of the remaining security or retention occur in accordance with the particular contractual regime.
Security and retention releases are easy to overlook once the Project team has moved onto the next job. Those dates should be diarised when the Contract is awarded and followed up when they fall due.
What happens when the Principal has not finished the design?
Contractors regularly receive Construct-Only tender packages where drawings remain preliminary, parts of the specification are unresolved, or Provisional Sums and PC Items have been used for work that has not been fully designed or selected.
The commercial problem becomes more significant where the Contractor is also asked to submit a Lump Sum price. If the design changes after award, the parties may disagree about whether the additional work was included in the original scope or should be treated as a Variation.
Unresolved design can also create costs that are less obvious than the cost of the changed work itself. Additional coordination, revised procurement, reprogramming, engineering and Subcontractor costs can erode margin even before the entitlement to a Variation is determined.
Contractors who identify incomplete design during tender can qualify relevant assumptions, make pricing allowances, seek clarification or decide not to bid.
Which pricing structures do Principals use on Construct-Only Projects?
A Construct-Only Project may use a Lump Sum, a Schedule of Rates or a combination of the two.
A Lump Sum is commonly used where the design and scope are sufficiently defined for the Contractor to price the Works as a whole. A Schedule of Rates is often used where the scope can be defined but the final quantities cannot be accurately determined at tender, particularly on civil and earthworks packages.
Provisional Sums and PC Items may sit within either pricing structure. They are commonly used for work, materials or selections that have not been fully defined at tender.
A tender containing numerous Provisional Sums or PC Items may indicate that parts of the scope or design remain unresolved. The Contractor should look beyond the allowance itself and consider the later procurement, coordination, programming and margin consequences.
The pricing structure also affects how quantities, scope changes and additional costs are valued during delivery.
Which Australian Standard contracts could you receive on a Construct-Only Project?
Contractors continue to receive AS 4000-1997 and AS 2124-1992 on Construct-Only Projects throughout Australia. Standards Australia published AS 4000:2025 in June 2025, and that edition has also started appearing in tender packages.
Tender teams should confirm the edition before starting their Contract Review. Clause references, definitions and procedures should not be assumed to be the same across the 1997 and 2025 editions.
The use of AS 2124-1992 for Construction Projects
AS 2124-1992 is the main Construct-Only contract in the older Australian Standard suite. AS 4300-1995 is its Design and Construct counterpart.
Contractors still often receive AS 2124-1992 on civil work, local government work and Projects where a Principal has continued using an established amended template. Australian research recorded an amendment rate of 97% for AS 2124-1992, the highest of the Construct-Only standard form contracts measured.
Experience with AS2124 remains useful, but it does not tell the Contractor what amendments a particular Principal has made. The current Special Conditions still need to be reviewed in full against the General Conditions.
The use of AS 4000-1997 for Construction Projects
AS 4000-1997 is the most common Construct-Only contract still in use in Australia for construction projects.
What did Standards Australia change in AS 4000:2025?
Standards Australia published AS 4000:2025 in June 2025 through Technical Committee MB-010, twenty-eight years after the 1997 edition of AS4000 was published.
The committee consolidated definitions into Clause 1 and added a Formal Instrument of Agreement. It also updated the drafting for GST, the Personal Property Securities Act 2009 (Cth) and work health and safety duties, none of which existed in their current form when the 1997 edition was written.
The dispute resolution provisions were also expanded. Standards Australia has stated that the underlying risk allocation was not substantially changed and continues to reflect the Abrahamson Principles (Source).
The 1997 edition is unlikely to disappear anytime soon, even though AS 4000:2025 has been published. Contractors could therefore receive either edition for its projects for some time.
Why should Head Contractors check their AS 4901-1998 Subcontracts?
Standards Australia has flagged AS 4902-2000 for revision to align with the 2025 edition. AS 4901-1998, the Construct-Only Subcontract, still remains unrevised, which is important to keep in mind if the Head Contract is based on AS 4000:2025, as the drafting may not quite match up.
If the Head Contractor accepts an obligation to the Principal that has not been carried through into the Subcontract, it may remain liable upstream without having the same contractual right against the relevant Subcontractor.
Rachelle Hare regularly reviews, drafts and updates subcontract templates that have been drafted for Contractors, including to align them with obligations accepted under the Head Contract.
Which other contracts do Contractors receive for Construct-Only work?
Contractors also work under ABIC MW-2008 on architect-administered building Projects, GC21 Edition 2 on New South Wales government work, Master Builders Queensland commercial contracts, and Commonwealth and Defence contracts including the AUSDEFCON suite.
Principals and Councils also instead issue bespoke contracts. Australian research recorded standard form contract use falling to 28% on contracts above $500 million, indicating greater use of bespoke contracts on very large Projects. (Source)
A bespoke Principal-drafted Contract removes the benefit of working from a familiar Australian Standard starting point, although where the Australian Standard Contract has been heavily amended, this distinction sometimes isn’t material. The tender team has to identify the risk allocation, notice requirements, payment provisions, design obligations and claims procedures from the Contract that is actually issued for tender, so it is essential to read any Special Conditions together with the General Conditions, the Scope of Work, and any other issued Contract Documents.
How do Principals move design risk into a Construct-Only Contract?
Under a traditional Construct-Only Contract, the Principal provides the design and retains responsibility for it. Special Conditions can change that position by adding design warranties, Buildability Issue clauses, verification requirements or Fitness for Purpose obligations that do not appear in the Australian Standard contract as published.
The drafting also needs to be checked across the whole Contract. Design and performance obligations can appear in the Special Conditions, specification, technical schedules and other Contract Documents.
What does the common law say about a design the Contractor cannot build?
A Contractor cannot assume that because the Principal supplied the design, the Principal has warranted that it can be built as drawn.
The principle dates back to Thorn v London Corporation (1876) LR 1 App Cas 120. The Contractor priced work on Blackfriars Bridge using the caissons described in the specification. When they could not be used, the Contractor adopted another method and claimed the additional cost. The claim failed because the Principal had not warranted the practicality of its specification.
Australian courts have applied the reasoning in Thorn, although the outcome depends on the Contract and circumstances. The High Court considered the requirements for implying contractual terms in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24.
For a Contractor, receiving the design from the Principal does not itself create an entitlement to recover additional costs if the design proves difficult or impossible to construct. Any entitlement will depend on the Contract, including provisions dealing with Variations, discrepancies, latent conditions, design obligations and notices.
Which hidden design warranties and Buildability obligations should Contractors look for in Construct-Only Contracts?
One amendment Rachelle regularly sees requires the Contractor to warrant that it has examined or carefully checked the Principal’s design documents. AS 4000 and AS 2124 do not contain an equivalent general design warranty as published.
Buildability Issue clauses can go further. They may require the Contractor to identify ambiguities, discrepancies, inadequacies, inconsistencies or incomplete coordination in the Principal’s documents and notify them within a short period. The obligation may apply from when the Contractor knew or ought to have known about the problem.
We see notice periods as short as three Business Days. On site, the first person to encounter the problem might be a Site Manager, Engineer or Subcontractor who does not know that a contractual notice period has started. Depending on the drafting, late notice may affect the Contractor’s entitlement to additional time or money. Some clauses also require the Contractor to propose a solution or indemnify the Principal for losses associated with a Buildability Issue that was not notified.
The Project Manager, Contract Administrator, Engineers and other relevant members of the Project team need to know about these clauses before construction starts. The notice requirements should also be built into the Project’s Contract Administration procedures.
Australian research recorded design clauses being amended in 57% of amended standard form contracts. Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2001] NSWSC 752 also demonstrates the significance of contractual warranties concerning the information available to the Contractor and the buildability of the Works.
How does Fitness for Purpose change the Contractor’s design risk?
A Fitness for Purpose obligation can impose a higher standard than an obligation to exercise reasonable skill and care. Instead of looking only at how the Contractor performed its work, the Contract may require the completed Works to achieve a specified purpose or performance requirement.
That creates a particular risk where the Contractor is constructing the Principal’s design. A Contractor may follow the drawings and use the specified materials but still face a claim if it has separately warranted that the completed Works will achieve a particular result.
The words “Fitness for Purpose” do not have to appear. Rachelle also sees requirements for the Works to be “suitable for their intended purpose”, achieve specified performance criteria or comply with other warranties that may produce a similar result. These obligations can appear in the specification and schedules as well as the Special Conditions.
Melbourne Law School and the Society of Construction Law Australia recorded a Fitness for Purpose warranty being added to 49% of amended standard form contracts. Around 73% of the Construct-Only Contracts Rachelle has reviewed in 2026 contain a Fitness for Purpose warranty or wording that may produce a similar result.
Does a Construct-Only Contractor still have design responsibility?
A Construct-Only Contractor can still have design responsibility even where the Principal retains responsibility for the main permanent design.
As discussed earlier, Contractors commonly design temporary works and construction methodology. Depending on the Project, they may also be responsible for shop drawings, connections, fixings and Specialist Trade Contractor design. mechanical, electrical, façade and other specialist packages can contain significant design components.
The Contract can add further responsibilities. A requirement to complete, develop, coordinate or verify part of the Principal’s design needs to be examined carefully to establish whether the Contractor is simply coordinating the design or taking responsibility for it.
This distinction is sometimes missed during tender because the Project is described as “Construct-Only”. The Tender Team unfortunately can incorrectly assume that design remains with the Principal, while the actual Contract Documents and scope leave the Contractor responsible for parts of the design.
In Queensland, professional engineering work needs to comply with the Professional Engineers Act 2002 (Qld). Section 115 restricts the carrying out of professional engineering services unless the person is a Registered Professional Engineer of Queensland or carries out the service under the direct supervision of one, subject to the statutory exceptions.
Novation is not normally part of a Construct-Only Contract. If a tender described as Construct-Only nevertheless requires the Principal’s design consultants to be novated to the Contractor, the Contractor needs to examine what design responsibility is being transferred with them. Depending on the drafting, the proposed Contract may be moving away from a conventional Construct-Only risk allocation.
Why is Professional Indemnity Insurance important in a Construct-Only Contract?
One of the risks Rachelle sees often in this type of contract is a mismatch between the design responsibility a Contractor has actually taken on and the insurance it usually carries.
Contractors sometimes assume they do not need Professional Indemnity Insurance because they are working under a Construct-Only Contract. Yet the same Contractor may be designing temporary works, preparing or taking responsibility for shop drawings, using Specialist Trade Contractors with design obligations, or carrying out engineering or verification work internally. Special Conditions can subtly add further design responsibilities without changing the description of the Contract, and some of these drafting implications need a Construction Lawyer to pick them up.
Holding Professional Indemnity Insurance does not automatically resolve the problem. The policy needs to respond to the work the Contractor is actually performing and the liability it has accepted under the Contract.
Fitness for Purpose is a particular concern. A Construction-Only Contract can impose a liability that goes beyond an ordinary professional obligation to exercise reasonable skill and care, and that additional contractual liability may not be covered by the Contractor’s policy. Contractors should have their broker check the proposed design obligations against the actual policy wording before signing.
There is also a cost that can be missed at tender. If the Contract requires part of the Principal’s design to be reviewed or verified, the Contractor may need to engage an appropriately qualified Engineer or other design consultant to carry out that work. Both the consultant cost and the insurance implications need to be understood before the price goes in.
Professional Indemnity Insurance is commonly written on a claims-made basis. Appropriate cover may therefore need to remain in place for years (often 7 years in Australia, to cover the Statute of Limitations period) after the construction work has finished, rather than simply being held while the Project is under construction.
What did the Star Casino cladding case decide about Design Responsibility?
The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd trading as “Buildcorp Interiors” [2026] NSWSC 27 provides a recent example of why Design Responsibility needs to be stated clearly in a Construct-Only Contract.
The Star engaged Buildcorp under a Construct-Only Contract for refurbishment works at The Star in Sydney. Buildcorp had Design Management obligations, but clause 3.4 expressly stated that it had no Design Responsibility in connection with the Works. The Star separately engaged the relevant design consultants.
The dispute concerned allegedly non-compliant aluminium composite panels on the external façade. The Star sought to recover the replacement cost from Buildcorp. Its claim against Buildcorp failed in circumstances where the Contract expressly excluded Buildcorp’s Design Responsibility.
Buildcorp also brought a cross-claim against the architect concerning a colour sample and review of the panel installer’s shop drawings. Rees J found that section 29 of the Australian Consumer Law did not apply because there was no relevant supply between Buildcorp and the architect. Section 18 was engaged in relation to the architect’s conduct, including its silence when it disagreed with the proposed product.
Lessons for Contractors
Consider an express exclusion of Design Responsibility where the Contractor is genuinely engaged on a Construct-Only basis.
Keep Design Management and coordination obligations separate from responsibility for the underlying design.
Check the Special Conditions, specification, schedules and other Contract Documents for wording inconsistent with the design exclusion.
Be clear about responsibility for shop drawings, samples and approvals.
Record material disagreements with the Principal’s design consultants in writing.
One useful aspect of The Star v Buildcorp is the distinction between managing design and being responsible for it. A Contractor can have coordination and Design Management obligations without necessarily accepting responsibility for the Principal’s underlying design. The wording of the Contract determines where that line is drawn.
Rachelle Hare reviews and negotiates Design Responsibility provisions in Construct-Only Contracts and checks the wider Contract Documents for inconsistent design obligations.
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Rachelle Hare, In My Experience
I review a lot of Contracts that say Construct-Only on the front page but impose design obligations once you get into the Special Conditions, specification and other Contract Documents. Around 73% of the Construct-Only Contracts I have reviewed in 2026 contain a Fitness for Purpose warranty, or wording that may produce a similar result.
Contractors often tell me they are not doing any design because it is a Construct-Only Project. When we work through the scope, they may be designing temporary works, preparing shop drawings or fixing details, carrying out engineering internally, or engaging Specialist Trade Contractors with their own design obligations.
The risk is not just what the Contract says. It is whether the Contractor has the people, consultants and Professional Indemnity Insurance needed for the design responsibility it is actually carrying. I would much rather identify that during the tender than after a design or defects claim has been made.
Which clauses should you check before pricing a Construct-Only tender?
The clauses that deserve the most attention are the ones that can change the Contractor’s price, time entitlement, cash flow or exposure if something goes wrong. They will not necessarily appear together in the Contract, and important departures can be buried in the Special Conditions, Annexure, specification or schedules.
When Rachelle reviews a Construct-Only Contract, the Legal Contract Review commonly includes:
The order of precedence between the General Conditions, Special Conditions, drawings, specification and other Contract Documents.
Design warranties, Buildability Issue clauses, Fitness for Purpose obligations and other design responsibilities.
Extensions of Time, including qualifying causes of delay, notice periods, delay costs and any discretion given to the Superintendent.
Time bars applying to Variations, Extensions of Time, latent conditions and other claims.
Latent and site conditions, including information supplied by the Principal and any Special Conditions transferring that risk.
Variations, including how they are directed, when the Contractor must proceed and how they are valued.
Payment, including progress claims, certification, payment timeframes and set-off rights.
Liquidated Damages, including the rate, any cap and how the clause interacts with Extensions of Time.
Limitation of liability, exclusions of consequential loss and any carve-outs from those protections.
Security and retention, including the amount, reduction and release requirements and the circumstances in which security can be called.
Insurance requirements, particularly Professional Indemnity Insurance where the Contractor has design or professional obligations.
Defects, including the Defects Liability Period and any provision extending or restarting it for rectified work.
Termination, suspension and step-in rights.
Dispute resolution and the steps required before a claim can proceed.
Not every departure deserves the same negotiating effort. The Legal Contract Review identifies and prioritises the legal risks and recommended departures so the tender team knows which provisions need attention before the Contract is signed.
A separate Commercial Review can be added where the Contractor also wants Rachelle to assess the commercial effect of the Contract, including what should be priced, what should be negotiated and how particular risks may affect cash flow, working capital, margin and Project delivery.
Contractors can request a fixed-price Construction Contract Review for their Construct-Only Contract, with a Commercial Review added separately if required.
Which Queensland laws apply to a Construct-Only Contract?
Queensland Contractors also need to consider legislation that applies regardless of what the Contract says.
The Queensland Building and Construction Commission Act 1991 (Qld) regulates areas including licensing and particular requirements applying to building contracts, security, retention and defects. The Building Industry Fairness (Security of Payment) Act 2017 (Qld) regulates construction payment claims, payment schedules and adjudication and also contains Queensland’s statutory trust account regime.
These requirements can affect Contract provisions dealing with payment, security and retention. Contractors should not assume that a Special Condition is enforceable simply because it appears in the Contract.
See Security and Retention in Construction Contracts for more detail on the Queensland requirements affecting security and retention. Equivalent Security of Payment legislation applies in the other Australian states and territories, although the legislation and procedures differ.
How does Construct-Only differ from Design and Construct?
The main difference is design responsibility. Under a traditional Construct-Only model, the Principal engages the design consultants and provides the design for the Contractor to construct. Under Design and Construct, the Contractor accepts responsibility for developing the design required by the Contract as well as constructing the Works.
| Construct-Only | Design and Construct | |
|---|---|---|
| Who prepares the main design? | Principal’s design consultants | Contractor and its design consultants |
| Typical Australian Standard head contracts | AS 4000-1997, AS 4000:2025, AS 2124-1992 | AS 4902-2000, AS 4300-1995 |
| Australian Standard Subcontract | AS 4901-1998 | AS 4903-2000 |
| When is the Contractor usually engaged? | After the Principal has substantially developed the design | While design development remains part of the Contractor’s scope |
| Design risk | Principally retained by the Principal under the traditional model, subject to the Contract | Substantially allocated to the Contractor |
The table describes the traditional delivery models. Special Conditions can move significant design responsibility into a Construct-Only Contract, which is why the Contract itself is more important than the description given to the delivery model.
For a more detailed comparison, see Design and Construct v Construct-Only Contracts.
How do Head Contractors pass risk down to their Subcontractors?
A Head Contractor may be liable to the Principal for work performed by its Subcontractors, so the Subcontract needs to deal properly with the obligations relevant to each Subcontractor’s package.
Australian research recorded 75% of head contracts starting from a standard form contract, compared with only 33% of Subcontracts. In practice, Head Contractors frequently use their own template Subcontract across multiple Projects.
That creates risk when the head contract changes but the Subcontract does not. A Head Contractor might accept a new time bar, Buildability Issue clause, Fitness for Purpose warranty or other obligation to the Principal, then issue a template Subcontract that does not pass the relevant obligation down to the trade responsible for that work.
A genuinely back-to-back Subcontract needs more than a general clause saying that the Subcontractor assumes the Head Contractor’s obligations under the head contract. The Head Contractor needs to identify which obligations apply to the particular trade and make sure the Subcontract deals with them properly.
Head Contractors using template Subcontracts should therefore check them against each new head contract before issuing them for pricing.
What should Subcontractors check in a back-to-back Subcontract?
The reverse problem arises for Subcontractors. A back-to-back clause may incorporate obligations from a head contract they have never seen.
Subcontractors should ask for the head contract provisions incorporated into their Subcontract before they price it. This is particularly important for notice and time bar provisions, design obligations, programming requirements, set-off rights and other clauses that can affect their entitlement to time or money.
The Subcontract also needs to give the Subcontractor a practical way to comply with any upstream obligation being passed down. A notice provision creates obvious problems if the Subcontractor does not know the relevant head contract requirement or when the upstream notice period started.
Rachelle Hare reviews Subcontracts for Subcontractors and Specialist Trade Contractors and drafts and updates template Subcontracts for Head Contractors.
Get advice on your Construct-Only Contract from Rachelle Hare
Rachelle Hare reviews, drafts, advises on and negotiates Construct-Only Contracts and Subcontracts for Contractors, Subcontractors and Specialist Trade Contractors across Australia. Fees are agreed before the work starts.
Rachelle Hare’s Construction Law and Commercial Management experience
Rachelle is a Construction Lawyer, Commercial Manager and Business Adviser with more than 25 years of construction legal and commercial experience. Her background includes private legal practice, in-house Construction Law and General Counsel roles, work with Tier 1 and Tier 2 Contractors and Commonwealth clients, and six years working full-time as a Commercial Manager.
Her Commercial Management experience also allows Contractors to add a separate Commercial Review to the Legal Contract Review. This examines the commercial effect of the Contract terms on tender pricing, cash flow, working capital, margin and Project delivery.
How can Rachelle help with a Construct-Only Contract?
Rachelle provides:
Fixed-price Construction Contract Reviews with detailed legal advice and prioritised recommendations.
A separate Commercial Review add-on covering the commercial and pricing effect of the Contract terms.
Risk Analysis covering legal, commercial, financial and Project risks for management or board consideration.
Construction Contract Drafting for head contracts and template Subcontracts.
Construction Contract Negotiation of Special Conditions and contractual departures.
Construction Contract Advice on issues arising after the Project starts.
For a Contract Review, send Rachelle the Contract Documents, your role on the Project and the tender deadline. Rachelle will confirm the scope and provide a fixed-price quote before starting the review.
FAQs about Construct-Only Contracts
1. What is a Construct-Only Contract?
A Construct-Only Contract is a delivery model where the Principal generally engages its own architects and engineers to prepare the design and then engages the Contractor to construct the Works. The Principal traditionally retains responsibility for its design, although Special Conditions can transfer significant design obligations and other risks to the Contractor.
2. Which Australian Standard contracts are Construct-Only?
The main Australian Standard Construct-Only head contracts are AS 4000-1997, AS 4000:2025 and AS 2124-1992, with AS 4901-1998 the Construct-Only Subcontract. AS 4300-1995 and AS 4902-2000 are Design and Construct standard form contracts, and AS 4903-2000 is the Design and Construct Subcontract.
3. What changed in AS 4000:2025?
AS 4000:2025 consolidated the definitions, added a formal Instrument of Agreement, updated provisions dealing with GST, the Personal Property Securities Act 2009 (Cth) and work health and safety, and changed the dispute resolution provisions. Standards Australia has stated that the underlying risk allocation continues to reflect the Abrahamson Principles.
4. Does a Construct-Only Contractor still have design responsibility?
A Construct-Only Contractor can still have design responsibility for temporary works, construction methodology, shop drawings, connections, fixings and Specialist Trade Contractor design. Special Conditions may add obligations to check, complete, develop, coordinate or verify the Principal’s design, so Contractors need to identify their actual design responsibilities rather than relying on the Construct-Only label.
5. What is a Buildability Issue clause?
A Buildability Issue clause may require the Contractor to identify and notify ambiguities, discrepancies, inadequacies, inconsistencies or incomplete coordination in the Contract Documents within a short period. The Contractor needs to check the definition, when the notice period starts and what happens if notice is late.
6. Why is Professional Indemnity Insurance important in a Construct-Only Contract?
Professional Indemnity Insurance is important where a Construct-Only Contractor performs design, engineering, verification or other professional work. Contractors should also have their broker check whether the policy responds to the contractual liabilities they are accepting, particularly Fitness for Purpose obligations or other warranties that may extend beyond an ordinary duty to exercise reasonable skill and care.
7. How often do Principals amend Construct-Only standard form contracts?
Research by Melbourne Law School and the Society of Construction Law Australia recorded amendments to 88% of AS 4000-1997 contracts and 97% of AS 2124-1992 contracts in its sample. Contractors should therefore review the actual Special Conditions rather than assume the published Australian Standard risk allocation still applies.
8. How does Construct-Only differ from Design and Construct?
Construct-Only traditionally leaves responsibility for the Principal’s design with the Principal, while Design and Construct places substantial responsibility for developing and delivering the design on the Contractor. Special Conditions can blur that distinction by transferring design warranties, verification requirements and Fitness for Purpose obligations to a Construct-Only Contractor.
9. Which Queensland laws apply to a Construct-Only Contract?
Queensland Construct-Only Contracts may be affected by the Queensland Building and Construction Commission Act 1991 (Qld) and the Building Industry Fairness (Security of Payment) Act 2017 (Qld), including requirements relating to licensing, payment, security, retention and statutory payment rights.
10. What should a Subcontractor check in a Construct-Only Subcontract before signing?
A Subcontractor should check the scope, payment provisions, Variations, Extensions of Time, time bars, security and retention, set-off rights, design obligations, defects and termination provisions. Where obligations are incorporated from the head contract, the Subcontractor should obtain the relevant head contract provisions before pricing the Subcontract.
11. When should a Contractor get a Construct-Only Contract reviewed?
A Contractor should ideally have the Construct-Only Contract reviewed before the tender closes so it can negotiate or qualify unacceptable provisions and price the risks it retains. A review after award can still identify notices, time bars, payment procedures and other Contract Administration requirements the Project team needs to follow, so getting that review is valuable at any time.
Get your Construct-Only Contract reviewed before you sign
Rachelle Hare reviews, drafts, advises on and negotiates Construct-Only Contracts for Contractors, Subcontractors and Specialist Trade Contractors across Australia.
Send Rachelle the Contract Documents and tender deadline for a fixed-price quote. A separate Commercial Review can also be added if you want advice on the commercial and pricing effect of the Contract terms.
Call Rachelle Direct on (07) 3063 3373
Request a Fixed-Price Quote
