What is a Construct-Only Contract?
A Construct-Only Contract is a Construction Contract under which the Principal ordinarily arranges the main design and engages a Contractor to build the Works. Contractors and Subcontractors still need to check the scope and Contract Documents for any design work allocated to their packages.
Construct-Only Contracts are a common Construction Contract Type in Australia. Contractors may tender against an Australian Standard form with extensive Special Conditions, another standard form contract or a Principal-drafted Construction Contract. The tender team should establish whether the proposed terms transfer design responsibility, site conditions, delay or claims risk to its business.
What must Contractors and Subcontractors check before signing?
Contractors and Subcontractors should compare their tender assumptions with the complete Contract Documents while preparing their response. The review should answer these questions before the business commits to the price:
Which drawings, specifications and quantities form the priced scope, and what remains unresolved?
Which design, site and interface duties does the business accept under its own Contract?
When can the business claim additional time or payment, and what notices must it give?
How will payment, security, Liquidated Damages and liability limits affect its cash flow and exposure?
The answers may call for a pricing allowance, a tender qualification or a proposed amendment. A Subcontractor should also obtain the Head Contract terms incorporated into its package before agreeing to them.
How does a Construct-Only Contract work?
The Principal ordinarily engages architects and engineers to prepare the main design, then engages a Contractor to build the Works. The Contractor prices and programs construction against the drawings, specification, scope, General Conditions, Special Conditions and Annexure issued for tender.
The Contractor generally manages its construction methods, Subcontractors and Suppliers. The Principal commonly appoints a Superintendent to administer directions, payment assessments, Variations, Extensions of Time, Practical Completion and defects under the Contract.
Contractors may receive a Lump Sum, Schedule of Rates or another pricing arrangement. A Construct-Only delivery method does not require any particular pricing method. Where drawings remain preliminary or quantities are uncertain, the Contractor must decide how much can reasonably be priced and what assumptions need to be recorded before accepting a Construct-Only Contract.
Which Construct-Only standard form Contracts might the tender use?
Contractors commonly receive AS 4000-1997 and AS 2124-1992 for Construct-Only head contracts. Standards Australia published AS 4000:2025 in June 2025, so the tender team should confirm the edition before relying on familiar clause numbers or procedures. AS 4901-1998 is a Construct-Only Subcontract form. Standards Australia describes the AS 4000:2025 update.
Contractors can examine the separate pages on AS 4000-1997 and AS 2124-1992. A Principal may instead issue its own Contract or amend a published form substantially. The tender team needs both the General Conditions and every Special Condition to assess the actual Construct-Only Contract.
How can incomplete design affect the tender price and Project?
Incomplete drawings can leave Contractors and Subcontractors uncertain about quantities, details, specifications or interfaces with other trades. A tenderer may price one construction method and later discover that the completed design requires different materials, engineering, sequencing or access.
For example, a Subcontractor may price installation from tender drawings that do not show the final connection details. When the Principal’s consultant issues the details after award, the Subcontractor may need different fixings, engineering input and another site visit. It will then need to establish whether those requirements were already within its scope and whether the Subcontract allows extra time or payment.
Revised details can delay procurement, require further coordination and disrupt the program. Those effects can reduce margin where the Contractor or Subcontractor cannot recover the additional work or delay. A Provisional Sum or PC Item may identify an allowance for a particular item, but the tenderer still needs to consider who pays for associated work and design completion.
During tender, Contractors can seek missing information, state pricing assumptions and propose departures where the Principal expects a firm price against unresolved design. Subcontractors should do the same for their trade packages and check whether the Head Contractor has passed down a wider risk than the Subcontractor priced. Both should establish how later revisions will be instructed and valued under the Construct-Only Contract.
Are there hidden design obligations in a Construct-Only Contract?
Contractors often expect the Principal to retain responsibility for the main permanent design. They may nevertheless need to design temporary works, construction methods, connections or elements of a specialist package. A Subcontractor may accept its own design tasks through the scope or Subcontract.
The General Conditions, Special Conditions, scope, specification and technical schedules may require a Contractor or Subcontractor to check, verify, develop or complete design information. Tenderers should distinguish a duty to coordinate information or notify an apparent discrepancy from a warranty that the Principal’s design is complete, compliant or fit for a stated purpose.
The industry debates how much design work a Construct-Only Contractor necessarily performs. Tenderers need to identify the tasks and liabilities allocated to their business under the proposed documents. Neither the Construct-Only label nor the heading on a shop drawing answers that question. Contractors should identify hidden design obligations before accepting a Construct-Only Contract.
Temporary works and specialist design
Contractors commonly arrange temporary works needed for their construction methods, such as formwork, propping, shoring or lifting arrangements. Those items may require engineering and certification. Some specialist trade packages also require design of connections, fixings or components.
In Queensland, a business arranging professional engineering services must account for the registration and supervision requirements in s 115 of the Professional Engineers Act 2002 (Qld). The Contractor or Subcontractor should identify who will perform the work and allow for it in the tender price.
Buildability and Fitness for Purpose obligations
A Buildability clause may require a Contractor to identify discrepancies or incomplete information within a short notice period. Other provisions may require the Contractor to propose a solution or accept responsibility for information it was expected to check. A Fitness for Purpose warranty can create a more demanding obligation than a duty to exercise reasonable care.
Contractors and Subcontractors should compare those obligations with their scope, available information and Professional Indemnity Insurance. Their broker or insurer can advise whether a proposed policy responds to the particular design work and warranties. The business should negotiate obligations it cannot perform, price or insure under the Construct-Only Contract.
How do changes to the design affect Variations and Extensions of Time?
Contractors should compare each revised drawing or instruction with the original Contract scope. A revised drawing may change the Works, clarify an existing obligation or complete information the Contractor had already agreed to provide. The classification affects the Contractor’s entitlement, but the applicable Contract wording and facts must be examined.
The Project team should record the original and revised documents, the direction received, the work affected and the effect on procurement and the program. It should then give any required Variation or Extension of Time notice within the contractual period. A Subcontractor should give the Head Contractor enough information and time to meet any upstream notice requirement.
Our Construction Contract Variations page offers insights into how to make Variation claims under your contract. Tenderers should analyse the notice and valuation provisions in the Variation clause before assuming they will recover the cost of a later design change under a Construct-Only Contract.
How can payment and security affect cash flow?
Contractors usually submit progress claims at the intervals stated in their Contract. The Superintendent may assess the amount payable under the head contract. A Subcontractor’s payment process depends on its own Subcontract and the legislation applying to the work.
Retention, security, set-off and certification provisions can leave a business funding wages, Suppliers and Subcontractors before it receives the corresponding payment. Contractors should check payment dates, any right to deduct disputed amounts, when security reduces and what they must do to obtain final release.
For Queensland Projects, Contractors and Subcontractors also need to apply the Building Industry Fairness (Security of Payment) Act 2017 (Qld). Other states and territories have their own Security of Payment legislation and procedures. The Project team should check the applicable law as well as the payment provisions in the Construct-Only Contract.
Which other clauses should Contractors and Subcontractors review?
Contractors and Subcontractors should prioritise the terms that can change their price, program, cash flow or exposure if the work does not proceed as expected:
The scope, drawings, specification and order of precedence between Contract Documents.
Design tasks, Buildability duties, warranties and insurance requirements.
Latent conditions, Variations, Extensions of Time, delay costs and notice periods.
Progress claims, set-off, security, retention and release requirements.
Liquidated Damages, liability limits, defects, suspension and termination.
The tender team should identify the provisions it can administer, the risks it can price and the departures it needs to negotiate. For a Subcontractor, that review must include any Head Contract obligations incorporated into the Subcontract. A Construction Contract Review can prioritise the issues before the business commits to a Construct-Only Contract.
How should Head Contractors and Subcontractors deal with back-to-back terms?
A Head Contractor may owe the Principal obligations for work performed by its Subcontractors. It should identify which obligations apply to each trade and ensure its Subcontracts allocate the relevant scope, design tasks, notices and warranties. A general statement that the Subcontractor assumes all Head Contract obligations can leave uncertainty about the trade’s duties.
A Subcontractor should request the incorporated Head Contract provisions before pricing. It needs to know whether an upstream design warranty, time bar or payment condition applies to its package and whether the Subcontract gives it a practical way to comply. If the Head Contractor must notify the Principal within a short period, the Subcontractor needs a workable process to alert the Head Contractor even sooner.
Rachelle assists Contractors with Construction Contract Drafting and assists both Contractors and Subcontractors with Construction Contract Negotiation where those terms need to change.
Rachelle Hare – In my experience
Contractors sometimes tell me that a Construct-Only tender contains no design work. When I examine the scope, I often need to ask who is designing the temporary works, creating the shop drawings, preparing specialist details and responding when the Principal’s drawings are incomplete.
I then work through the Special Conditions and Subcontracts with the tender team. They need to know who will perform each task, what they have allowed in the price and whether their insurance responds to the obligations they are being asked to accept. Many times, my clients thought they were providing construction-only work but were, in their insurers’ eyes, actually carrying out D&C obligations, meaning they wouldn’t be covered if the Principal later sued them for design defects or defective work due to an incorrect shop drawing.
FAQs About Construct-Only Contracts
1. What is a Construct-Only Contract?
A Construct-Only Contract is a Construction Contract in which the Principal ordinarily arranges the main design and engages a Contractor to build the Works. The Contractor and its Subcontractors may still have design tasks under their scopes, and Special Conditions can alter the conventional allocation of responsibility.
2. Does a Construct-Only Contractor do any design?
A Construct-Only Contractor may design temporary works, construction methods or specified elements of the permanent Works. A Contractor should examine its scope, the General Conditions, Special Conditions and technical documents before concluding that the Principal has retained all design responsibility.
3. Can a Construct-Only Subcontractor have design obligations?
A Construct-Only Subcontractor can have design obligations for its trade package, including connections, fixings or other specialist elements. The Subcontractor should identify the required work and any Head Contract obligations incorporated into its Subcontract before pricing or signing.
4. Does incomplete design automatically entitle the Contractor to extra payment?
Incomplete design does not automatically entitle a Contractor to extra payment. The Contractor must establish what its original scope included, whether the Principal directed a change and what notices and valuation rules apply. It should assess any separate entitlement to additional time under the Contract.
5. Is a Construct-Only Contract always a Lump Sum Contract?
A Construct-Only Contract can use a Lump Sum, Schedule of Rates or another agreed pricing arrangement. Contractors should check how the price deals with unresolved quantities, Provisional Sums, PC Items and later design changes before accepting the tender terms.
6. When should a Contractor or Subcontractor seek a Contract Review?
A Contractor or Subcontractor should seek a Contract Review while it can still qualify its tender, negotiate terms or adjust its price. A review after award can help the Project team identify notices, claims procedures and payment requirements, but it cannot restore an opportunity to negotiate that has already passed.
Review your Construct-Only Contract before you commit your tender price
Send Rachelle Hare the draft Contract, Special Conditions, scope and tender deadline while you can still qualify your price or negotiate departures. Rachelle will scope a fixed-price Construction Contract Review and give your business prioritised advice on the legal terms that need attention. Contractors and Subcontractors can also request a separate Commercial Review of the effect on pricing, cash flow, margin and Project delivery.
Call Rachelle direct on (07) 3063 3373 or send your Contract Documents to request a fixed-price quote.
