Scope of Works (New Zealand)

A Scope of Works in New Zealand records the services to be provided, the fees, the service levels, and each party's obligations between the provider and the client under the Companies Act 1993.

The Construction Contracts Act 2002 is the central legislation governing payment obligations between principals and contractors on construction projects in New Zealand. The CCA applies to any contract under which one party agrees to carry out 'construction work' for another party for payment. 'Construction work' is broadly defined in section 6 of the CCA and includes the construction, erection, installation, alteration, renovation, repair, maintenance, and demolition of any building, structure, or civil engineering works. Under the CCA, contractors have the right to serve periodic payment claims on principals, principals must respond with payment schedules within prescribed timeframes, and disputes about payment can be referred to rapid adjudication — a fast-track dispute resolution mechanism designed to keep money flowing on construction projects.

The Building Act 2004 is the primary legislation governing building control in New Zealand. It requires that building consents be obtained from the relevant territorial authority (city or district council) for most building work, and that restricted building work (RBW) be carried out or supervised by a Licensed Building Practitioner (LBP) who holds the appropriate licence class. The LBP scheme was introduced to improve the quality of building work and reduce the incidence of weather-tight and other building defects that caused significant harm to New Zealand homeowners in the so-called 'leaky homes' crisis of the 1990s and 2000s.

A Scope of Works document forms part of — or is incorporated into — the overall construction contract between the principal and the contractor. It provides a detailed, itemised description of the works to be performed, the materials to be used, the New Zealand Standards to be complied with, the exclusions from the scope, the contract price and GST treatment, the payment schedule, the programme (construction timeline), the practical completion date, and the defects liability obligations. A well-drafted Scope of Works reduces the likelihood of scope disputes, variation claims, and delay claims, which are among the most common causes of construction litigation in New Zealand.

For residential construction in New Zealand, the Scope of Works must also reflect compliance with the New Zealand Building Code (Schedule 1 to the Building Regulations 1992), which sets out the minimum performance requirements for all buildings. Building consent documents approved by the territorial authority form part of the legal framework within which the works must be performed. The code compliance certificate (CCC) issued by the territorial authority after completion confirms that the works comply with the building consent and the building code, and is important for property insurance and resale purposes.

Health and safety on construction sites in New Zealand is governed by the Health and Safety at Work Act 2015 (HSWA) and associated regulations. The HSWA imposes primary duties on persons conducting a business or undertaking (PCBUs), including contractors who manage or control a construction site. These duties require contractors to eliminate or minimise health and safety risks so far as is reasonably practicable, and to confirm that workers are properly trained, inducted, and equipped. WorkSafe New Zealand is the regulator responsible for enforcing the HSWA in the construction sector.

A Scope of Works document is essential for any construction project in New Zealand, regardless of size or complexity. The document serves as the primary reference point for both the principal and the contractor throughout the project and is a key risk management tool.

You need a Scope of Works when engaging a contractor to carry out any building work that requires a building consent under the Building Act 2004. The scope defines precisely what the contractor is and is not responsible for and prevents the parties from having different understandings of what has been agreed. This is particularly important for residential construction and renovation projects in New Zealand, where scope disputes between homeowners and builders are among the most frequently litigated construction matters.

A Scope of Works is required for all projects subject to the Construction Contracts Act 2002, which covers the vast majority of construction contracts in New Zealand. Because the CCA gives contractors the right to make payment claims for work performed, the scope defines the work against which payment claims can be assessed. A clearly defined scope makes it easier for principals to assess whether a payment claim is valid and to identify any disputed items.

Developers and commercial property owners need a detailed Scope of Works whenever they commission a contractor to carry out fit-out, refurbishment, or new construction work. In commercial construction, the Scope of Works is typically accompanied by a set of drawings and specifications prepared by architects and engineers, and must be consistent with those documents.

The Scope of Works is also essential for insurance purposes. A contract works (material damage) insurance policy provides cover for the works in progress against accidental damage and other insured events. The policy schedule typically requires the insured works to be described, and the Scope of Works provides the basis for that description. Without a clear scope, there is a risk that the policy will not respond as intended.

Subcontractors engaged by a head contractor on a construction project also need scope documents to define the specific trade works they are responsible for (e.g. plumbing, electrical, roofing, external plastering). A subcontract scope should align with and be subordinate to the head contract scope, and should clearly define any interfaces between trades to avoid gaps or overlaps in responsibility.

A thorough New Zealand Scope of Works should include the following key provisions to provide legal certainty and protect both the principal and the contractor.

Parties and Credentials — Identify each party by their full legal name and, for business entities, their New Zealand Business Number (NZBN). For contractors carrying out restricted building work (RBW), include the contractor's Licensed Building Practitioner (LBP) licence number. Under sections 14B and 45 of the Building Act 2004, RBW must be carried out or supervised by a licensed LBP.

Project and Site Description — Clearly identify the construction site address and provide a thorough description of the overall project. Include the building consent number issued by the territorial authority, as the approved building consent documents form part of the legal framework within which the works must be performed.

Detailed Scope of Works and Exclusions — Describe the specific works to be performed in detail, referencing applicable New Zealand Standards (e.g. NZS 3604 for timber-framed buildings, NZS 4229 for concrete masonry construction). State clearly what is excluded from the scope. Exclusions are equally as important as inclusions — common exclusions for residential projects include landscaping, driveway construction, swimming pools, appliances, and floor coverings.

Contract Price, GST, and Payment Schedule — State the agreed contract price in New Zealand dollars (NZD) and whether the price is inclusive or exclusive of GST at 15% under the Goods and Services Tax Act 1985. Include a payment schedule that complies with the Construction Contracts Act 2002, setting out milestone payments tied to completion of defined stages of the works.

Programme and Practical Completion — Set out the expected start date and the practical completion date. Define what constitutes practical completion and the process for certifying it. Include a mechanism for extending the completion date in defined circumstances (e.g. variations, weather delays, or causes beyond the contractor's control).

Liquidated Damages — Where the principal requires certainty about delay damages, include a liquidated damages clause specifying a daily rate representing a genuine pre-estimate of the principal's loss for each day of delay beyond the practical completion date. This avoids the need to prove actual loss.

Variations Process — Define the process for instructing and pricing variations. Require all variations to be in writing before work commences. Specify whether variations will be priced on a lump-sum or time-and-materials basis.

Defects Liability Period — Specify the defects liability period (typically 12 months from practical completion) during which the contractor must remedy defects at no cost to the principal. Note that the Limitation Act 2010 provides a 10-year longstop period for building claims in New Zealand.

Health and Safety Obligations — Include express provisions requiring the contractor to comply with the Health and Safety at Work Act 2015 and associated regulations, including the obligation to maintain a site safety plan.

Insurance Requirements — Specify the insurances to be maintained by the contractor, including contract works (material damage) insurance, public liability insurance, and ACC cover.

Governing Law — The document should be governed by the laws of New Zealand, with specific reference to the Construction Contracts Act 2002 and the Building Act 2004. Each party should submit to the non-exclusive jurisdiction of the courts of New Zealand. The forms-legal.com Scope of Works (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.