Changes to provide certainty to building and construction industry

Tuesday, 6 September 2022

The State Government is moving to ease inflationary pressure on local businesses, with a fresh approach to commercial construction contracts for firms working on government projects.
The changes, which came into effect in August 2022 and can apply to claims on contracts signed since 1 January 2022, will see ‘Rise and Fall’ clauses inserted into all ‘Commercial Construction General Building Contractors’ contracts with the Department for Infrastructure and Transport. It follows a similar provision for transport projects managed by the Department.

The move has been welcomed by Master Builders SA, which asked for the introduction of ‘Rise and Fall’ clauses in building contracts with the department as a way to reduce pressure on both builders and subcontractors and help protect the jobs of the more than 70,000 South Australians directly employed in the building and construction industry.

The new Rise and Fall clauses permit a Commercial Construction Contract to increase or decrease in line with marked changes in supply prices, particularly for building materials in the local market.

Head Contractors will be required to include comparable rise and fall clauses in all subcontracts and supply agreements, and pass on rise-and-fall-related payments accordingly.

The new Rise and Fall contract arrangements will be reviewed in mid-2023.

To further assist industry, the State Government is also reducing its tender validity period from 90 days to 60 on all DIT Commercial Construction contracts.