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Guide to Appointing Principal Contractors

Why do we need this Guide?

The question of principal contractor appointment is a source of great confusion. It is important that contractors are only appointed as principal contractors where it is appropriate to do so.

Who is a principal contractor?

The term ‘principal contractor’ has specific meaning under the WHS Regulations. Principal contractors have specific duties under the WHS Regulations; however, appointing a principal contractor will not relieve University of Tasmania of its obligations under the WHS Act.

The following are some of the incorrect myths about appointing principal contractors:

  • You should appoint a principal contractor for every contract for work
  • You do not need to do anything else once you have appointed a principal contractor
  • If you audit or inspect a principal contractor, you could make University of Tasmania the principal contractor

Under the WHS Regulations, if University of Tasmania commissions a construction project valued at $250,000 or more, it will automatically be the principal contractor. This is, unless, it has appointed another party as the principal contractor, has authorised them to have management or control of the workplace and appoints them to discharge the duties required under the WHS Regulations.  

Failure to follow this guide could result in University of Tasmania breaching the WHS Regulations.

When should University of Tasmania appoint a principal contractor?

University of Tasmania must only appoint a principal contractor in relation to a construction project where:

  • STEP 1: the project involves construction work (as defined under the WHS Regulations) and
  • STEP 2: the cost of the construction work is approximately $250,000 or more.
What does it mean that a construction work costs $250,000 or more?

The relevant cost is the cost being done on a project at a particular site. A common mistake is to add up costs of several projects across different sites and different times believing that the cost on the face of the contract is the relevant cost for these purposes. This is not the case. You have to treat each piece of construction work separately. Work done over separate disparate sites or over separate time periods are separate construction projects.

What is a construction project?

A construction project is any project that involves construction work where the cost of the construction work is $250,000 or more.

What is construction work?

Construction work is defined very broadly under the WHS Regulations, as any work carried out in connection with the construction, alteration, conversion, fitting-out, commissioning, renovation, repair, maintenance, refurbishment, demolition, decommissioning or dismantling of a structure.

It includes the following:

  1. any installation or testing carried out in connection with an activity referred above
  2. the removal from the workplace of any product or waste resulting from demolition
  3. the prefabrication or testing of elements, at a place specifically established for the construction work, for use in construction work
  4. the assembly of prefabricated elements to form a structure, or the disassembly of prefabricated elements forming part of a structure
  5. the installation, testing or maintenance of an essential service in relation to a structure
  6. any work connected with an excavation
  7. any work connected with any preparatory work or site preparation (including landscaping as part of site preparation) carried out in connection with the above activity
  8. any activity referred to above, that is carried out on, under or near water, including work on buoys and obstructions to navigation
What is a structure?

A structure is defined in the WHS Act as anything that is constructed, whether fixed or moveable, temporary or permanent, and includes buildings, masts, towers, framework, pipelines, transport infrastructure and underground works (shafts or tunnels), and any component of a structure, and part of a structure.

What is a Project?

While the term ‘project’ is not further defined under the WHS Act, it is normally used to describe all the work involved in a construction project (ie design, engineering, building surveyors, quantity and cost surveyors etc) at one site.  

The intention is to have a defined site where someone maintains control. Adjacent sites forming part of a project may be the same project but disparate sites will not be.

What is excluded from construction work?

Construction work is defined as excluding a number of activities, including relevantly, testing, maintenance or repair work of a minor nature carried out in connection with a structure.

Construction work does not include any of the following:

  1. the manufacture of plant
  2. the prefabrication of elements, other than at a place specifically established for the construction work, for use in construction work
  3. the construction or assembly of a structure that once constructed or assembled is intended to be transported to another place
  4. testing, maintenance or repair work of a minor nature carried out in connection with a structure
  5. mining or the exploration for or extraction of minerals
Can University of Tasmania appoint multiple principal contractors?

There can only be one principal contractor for each ‘construction project’ at any one time. However, University of Tasmania may appoint two or more principal contractors under the same program of works where:

  1. there are two or more construction projects within the meaning of WHS Regulations – that is, each involves a contract for construction work valued at $250,000 or more; and
  2. the workplaces associated with each construction project are defined as separate and distinct.
What are the duties and obligations of a principal contractor?

Principal contractors have specific duties and obligations under the WHS Regulations, including, for example:

  1. signage identifying principal contractor
  2. preparation of the work health and safety (WHS) management plan (includes site rules):
  • duty to inform all persons of plan before they commence
  • duty to review – must remain up-to-date
  • must obtain safe work method statement (SWMS) before high risk construction work commence
  • put in place arrangements for ensuring compliance with specified requirements such as facilities and amenities
  • manage risks associated with construction materials and waste, plant, traffic and essential service
What are the duties and obligations of University of Tasmania (as a PCBU) once it appoints a principal contractor?

Appointing a principal contractor does not relieve University of Tasmania of its obligations under the WHS Act. University of Tasmania remains a person conducting a business or undertaking (PCBU) and retains all PCBU obligations. These are set out in Chapter 3 of the WHS Regulation and include an ongoing obligation to identify hazards and manage risks. Accordingly, when appointing a principal contractor, the requirements set out in University of Tasmania’s WHS contractor management procedure must be complied with.

This will also include monitoring and reviewing a principal contractor’s performance against strict WHS targets and objectives. University of Tasmania must ensure that the principal contractor is performing the work in a safe manner as stipulated in their documentation. This may include undertaking site inspections and audits as identified under the WHS contractor management procedure. Undertaking site inspections and audits will not have the effect of making University of Tasmania the principal contractor and is in fact a critical step for University of Tasmania in managing its obligations as a PCBU under the WHS Act.

What is the effect of an invalid principal contractor appointment?

Where University of Tasmania fails to correctly appoint a principal contractor in accordance with the WHS Regulations, it can lead to the appointment being invalid. Where the appointment is invalid, University of Tasmania may be the principal contractor. An invalid appointment may expose University of Tasmania to liability under the WHS Act, as it may not have discharged the specific duties of a principal contractor.

What is the effect of appointing a contractor as a principal contractor where a principal contractor appointment is not available under the WHS Act?

If University of Tasmania seeks to appoint a principal contractor in circumstances where the a principal contractor cannot be appointed, for example, the project or program does not involve construction work then University of Tasmania may fail to provide the required level of oversight and supervision of the contractor as University of Tasmania is operating under a mistaken belief that the contractor is a principal contractor and as a result this may expose University of Tasmania to liability under the WHS Act.

What should University of Tasmania do where the work is not construction work or it is less than $250,000?

Where the work is not construction work or it is less than $250,000, University of Tasmania should not seek to appoint a principal contractor. Instead, University of Tasmania may choose to authorise its contractor to have management or control of the workplace under the contract.

Additionally, University of Tasmania may choose to require its contractor to meet additional WHS requirements in its contract some of which may be similar to the duties imposed on principal contractors under the WHS Regulations, such as:

  1. preparing a WHS Management Plan
  2. obtaining SWMS.  

However, not all of these obligations will necessarily be appropriate for contractors that are not principal contractors (for example, signage obligations).  

Accordingly, University of Tasmania must follow a risk based approach to specifying the WHS requirements for contractors as set out in University of Tasmania’s WHS Contractor Management framework.

If they are not a principal contractor, does that mean they have to follow the procedures that apply to our employees?

No. The Contractor Management framework requires contractors to develop safe work method statements and for complex work, a WHS Management Plan.

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