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15 July 2019
As well as being fully compliant with recent legislation changes, the new versions of the Period Subcontract Agreement (PSC) and Work Order (WO) are more comprehensive than previous versions.
What are the changes?
The most significant change is the result of member feedback. Under the new PSC, the Subcontract Price can be either a Lump Sum Price (e.g. from a quote) or determined using an agreed Schedule of Rates. The PSC applies for an agreed period of time e.g. yearly, with a Work Order issued for each individual package of work to be carried out by the subcontractor. This new arrangement provides the parties with flexibility to cover a variety of arrangements that may arise over the duration of the PSC.
The general conditions of the PSC are essentially the same as for the stand-alone Subcontract Agreement (SC-2).
A few of the key inclusions and differences with the new PSC and WO include:
- Business day definition
- Forms of security – options for no security, bank guarantees or cash retention
- Defects liability period
- Retention release obligations
- Termination rights
- Delay costs – option to apply
- Extension of time claims
- Liquidated damages options – not applicable, agreed rates and/or limits
- Payment provisions
- Due Date for Payment – addresses conflict between the QBCC Act and the BIF Act and common mistakes made by contractors/subcontractors
- Right to terminate immediately for unlicensed work
- Dispute resolution options including without prejudice conference, mediation, arbitration and expert determination.
When should the PSC be used?
The PSC is suitable for the engagement of subcontractors who work regularly for the same contractor. It can be used for subcontractors engaged by builders, and for sub-subcontractors engaged by subcontractors.
The PSC applies for an agreed period of time (Subcontract Period) and is an agreement to agree terms that will apply when a later contract is formed, i.e. a separate contract is formed with the PSC and each WO that is issued under the PSC.
The Work Order gives the parties the freedom to select either an agreed lump sum price or a price calculated using the agreed Schedule of Rates that is set out in the PSC. This new arrangement gives members flexibility to use the same PSC for different projects, different arrangements, and different Head Contract terms.
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Help or more information
Need assistance with your contract or advice on which contract to use? Contact us and one of our friendly team will be in touch to assist.