Major Project Assessment – Project Terminology

Major Project Assessment – Project Terminology 1
MAJOR PROJECT ASSESSMENT – PROJECT TERMINOLOGY
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Major Project Assessment – Project Terminology 2
Table of Contents
Introduction...............................................................................................................................................3
1. Construction industry contracts.......................................................................................................3
2. Construction industry subcontracting system.................................................................................4
a. Business Victoria............................................................................................................................4
b. Australian Taxation Office............................................................................................................4
3. List of documents...............................................................................................................................4
4. Calculate material quantities and labour hours..............................................................................5
5. System for industrial relations..........................................................................................................6
a. Master Builders Association.........................................................................................................6
b. CFMEU..........................................................................................................................................6
c. Enterprise agreements...................................................................................................................7
6. Licensing requirements.....................................................................................................................7
a. Commercial builder.......................................................................................................................7
b. Plant................................................................................................................................................8
c. Electrical.........................................................................................................................................8
d. Plumbing........................................................................................................................................9
e. Architects.....................................................................................................................................10
f. Building surveyor........................................................................................................................10
7. Medium rise building projects........................................................................................................11
a. State government legislation.......................................................................................................11
b. Three building and construction standards...............................................................................11
c. Two building and construction codes.........................................................................................11
8. Workplace safety.............................................................................................................................11
a. Sections of OHS Act 2004............................................................................................................11
i) Duties of employers to employees.............................................................................................12
ii) Duties of suppliers of plant or substances..................................................................................12
iii) Duties of employees...............................................................................................................12
iv) Duty not to recklessly endanger persons at workplaces.........................................................12
Conclusion................................................................................................................................................12
References................................................................................................................................................13

Major Project Assessment – Project Terminology 3
Introduction
This report presents a review of a commercial construction project – a class 2 to 9 commercial
building with a minimum gross floor area of 1,000 m2 and a height not exceeding three stories.
Different construction practices and procedures are reviewed in the report.
1. Construction industry contracts
The main construction industry contracts include the following:
Lump-sum contract – it is a construction contract type where the contractor agrees to
complete the work stipulated in the contract at a total fixed price. It is also referred to as a fixed
price contract.
Unit price contract – it is a construction contract type where quantities of items needed to
complete the project and their unit prices are determined and used to estimate the total price of
the project. The overhead costs and profit of the contractor are also included in the rates.
Cost plus contract – it is a construction contract type where the contractor is paid the
actual costs incurred directly in performing work stipulated in the contract plus a certain pre-
negotiated amount to cover for the overheads and profit of the contractor. There are different
types of unit price contracts including: cost plus fixed fee, cost plus fixed percentage, cost plus
with guaranteed maximum price and bonus, and cost plus with guaranteed maximum price.
Guaranteed maximum price contract – it is a construction contract type where the client
agrees to pay a contractor a certain amount of money to compete the work stipulated in the
contract (which usually covers for the cost of performing the work plus the overhead and profit
of the contractor) up to a predefined maximum amount. In case the maximum amount is

Major Project Assessment – Project Terminology 4
exceeded (cost overrun), the contractor has to bear them but in case of cost underruns, the
amount saved is reimbursed to the client.
Time and materials contract – it is a construction contract type where the cost of
materials needed to complete the project and standard labour rate per hour are determined and
used to estimate the total price of the project that is paid to the contractor by the client.
2. Construction industry subcontracting system
Construction industry subcontracting system as described in:
a. Business Victoria
Construction industry subcontracting system is where a general construction contractor
outsources or assigns a certain portion of the work stipulated in the contract to an independent
certified sub-contractor with specialized skill set and experience, at an agreed contractual fee.
However, the general contractor retains the overall responsibility of executing and completing
the project in accordance with the client’s expectations.
b. Australian Taxation Office
Construction industry subcontracting system is where a construction contractor delegates the
work to another person or company that meets their tax obligations and pays them to do the work
on their behalf. The subcontracted company provides most or all the assets (such as equipment
and tools) needed to complete the work and submits taxable payment annual report to the
Australian Taxation Office. In this system, the subcontractor is legally responsible for
completing the work and liable for costs incurred in remedying any flaws in the work done.
3. List of documents
The various documents that make the complete contract package include the following: