Engineering Services Agreement (New Zealand)

An Engineering Services Agreement in New Zealand records the engineering services to be provided, the fees, the service standards, and each party's obligations between the provider and the client under the Contract and Commercial Law Act 2017.

Unlike architects regulated under the Registered Architects Act 2005, engineers in New Zealand are not subject to a dedicated statutory registration scheme. Anyone may use the title 'engineer' in New Zealand. However, engineers who wish to demonstrate professional competence and ethical standards may obtain the Chartered Professional Engineer (CPEng) designation administered by Engineering New Zealand (formerly the Institution of Professional Engineers New Zealand, IPENZ), or the Registered Consulting Engineer (RCNZ) designation for consulting engineers. Many Building Consent Authorities (BCAs) require that engineering Producer Statements — certification documents used in the building consent process under the Building Act 2004 — are signed by a CPEng or equivalent.

The CCLA 2017 consolidates and modernises eleven previously separate commercial statutes and governs the general contractual rights and obligations of parties to engineering services agreements. Under the CCLA 2017, services must be performed with reasonable skill, care, and diligence. The CCLA 2017 also provides rights of cancellation under section 28, damages under section 49, and other remedies for breach of contract.

The CCA 2002 applies to engineering services agreements where the services are provided in connection with construction work, as broadly defined in Section 6 of the Construction Contracts Act 2002. The CCA 2002 provides mandatory protections for both clients and engineers, including the right to make payment claims under Section 20 of the Construction Contracts Act 2002, the obligation to respond with a payment schedule under Section 21 of the Construction Contracts Act 2002, the right to suspend services for non-payment, and access to rapid adjudication for payment disputes. These rights cannot be contracted out of under Section 13 of the Construction Contracts Act 2002.

A well-drafted Engineering Services Agreement provides both the client and the engineer with certainty about the scope of services, the fee structure, the programme, the Producer Statement obligations (PS1 and PS4 as applicable under the Building Act 2004), the professional indemnity insurance requirements, and the dispute resolution process through the District Court, High Court of New Zealand, or AMINZ arbitration under the Arbitration Act 1996. Given the seismic risk in New Zealand and the critical role of structural engineers in ensuring buildings comply with NZS 1170.5 (Earthquake Actions), a thorough written agreement is essential for all engineering engagements.

A written Engineering Services Agreement should be put in place before any engineering services commence in New Zealand. There are numerous situations in which a formal agreement is particularly important.

For structural engineering services on residential and commercial building projects, an engineering services agreement is essential to define the scope of structural design, documentation, and Producer Statement obligations under the Building Act 2004. The agreement should specify whether the engineer will provide a PS1 (Design) Producer Statement for the building consent application and a PS4 (Construction Review) Producer Statement on completion, and the conditions under which these statements will be issued by the Building Consent Authority (BCA).

For geotechnical engineering services, a written agreement is needed to define the scope of site investigation, geotechnical report, and design recommendations. Geotechnical services are particularly important in New Zealand given the country's complex geology, high seismic risk under NZS 1170.5, and the findings of a geotechnical investigation can significantly affect the design and cost of foundations and ground improvement.

For civil engineering services — such as roading, drainage, water supply, and wastewater infrastructure — an engineering services agreement is needed to define the scope of engineering design, specification, and construction supervision. Civil engineering services on subdivision projects must comply with the Resource Management Act 1991 and the relevant local authority infrastructure standards issued by territorial authorities such as Auckland Council, Wellington City Council, and Christchurch City Council.

For mechanical and electrical engineering services on commercial and industrial building projects, a written agreement is needed to define the scope of services (including HVAC design, fire engineering under the New Zealand Building Code Clause C, and electrical services design) and the coordination responsibilities with the architect and other consultants.

In all cases, a written Engineering Services Agreement protects both the client and the engineer by clearly defining what services will be provided, for what fee, and within what programme, and by establishing clear frameworks for Producer Statements, professional indemnity insurance, liability, and dispute resolution through mediation, AMINZ arbitration under the Arbitration Act 1996, or proceedings in the High Court of New Zealand. Pair an Engineering Services Agreement with a Project Management Agreement (New Zealand) for large infrastructure projects.

A thorough Engineering Services Agreement for New Zealand should include the following key provisions.

Parties clause: the full legal names and addresses of the client and the engineering firm or individual engineer. Where the engineer holds CPEng (Chartered Professional Engineer) or RCNZ (Registered Consulting Engineer) designations administered by Engineering New Zealand, these should be noted. For corporate engineers, the New Zealand Business Number (NZBN) from the Companies Office register should be included.

Project and scope of services: the most important provisions in the agreement. The project clause should describe the project by name and identify the site address. The scope of services clause should describe each stage of engineering services — for example, concept design, developed design, building consent documentation, construction monitoring, and as-built record drawings — together with the deliverables for each stage (reports, drawings, specifications, and calculations). Producer Statement obligations should be explicitly stated: whether the engineer will issue a PS1 (Design) statement for the building consent application, a PS3 (Construction Monitoring) statement during construction, and a PS4 (Construction Review) statement on completion, all as accepted by the relevant Building Consent Authority (BCA) under the Building Act 2004. Any services expressly excluded from the agreement should be listed.

Fees and payment: the fee basis (lump sum, hourly rate, or percentage of construction cost), the fee amount in NZD exclusive of GST, the GST treatment under the Goods and Services Tax Act 1985, invoicing frequency and payment terms, reimbursement of disbursements, and the process for agreeing additional fees for scope changes. Where the CCA 2002 applies, payment provisions must comply with its mandatory payment claim and payment schedule requirements.

Programme: anticipated timeframes for each stage of engineering services, milestones aligned with the building consent process under the Building Act 2004, and extensions of time for delays outside the engineer's control including consenting delays by BCAs or territorial authorities.

Professional indemnity insurance: the engineer's PI insurance details — insurer, policy number, and indemnity limit — and the obligation to maintain adequate PI insurance for the duration of the project and for a minimum period (typically six years) after practical completion, consistent with the limitation period under the Limitation Act 2010.

Liability: the extent and limitations of the engineer's liability to the client. New Zealand engineering agreements commonly include a cap on liability linked to the fee paid or PI insurance cover, reflecting the principle in Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) that liability for defective design is subject to reasonable limits.

Dispute resolution: CCA 2002 adjudication for payment disputes; AMINZ mediation for technical disputes; Arbitration Act 1996 arbitration or proceedings in the High Court of New Zealand for other disputes.

Termination: the procedure and financial consequences if either party terminates the agreement, including payment for services completed to the date of termination and the basis for the engineer retaining or transferring intellectual property in engineering documentation.

The forms-legal.com Engineering Services Agreement (New Zealand) provides a ready-to-use template covering all these provisions. Related documents include the Project Management Agreement (New Zealand) and the Construction Contract (New Zealand).