Defining building work for a project bank account
To decide whether a contract does or will need a project bank account (PBA), a head contractor needs to apply several threshold tests. One test involves determining how much of the contract value relates to building work.
They may need a PBA if more than 50% of the contract price is building work as defined by law.
'Building work' is defined in several Queensland Acts. However, for the purpose of PBAs, building work is defined in the:
- Building Industry Fairness (Security of Payment) Act 2017 (BIF Act)
- Building Industry Fairness (Security of Payment) Regulation 2018.
Activities that are building work
For the purposes of a PBA, building work includes:
- erecting or constructing (and any related site work for) a building
- renovating, altering, extending, improving or repairing (and any related site work for) a building
- providing (and any related site work for) lighting, heating, ventilation, air-conditioning, water supply, sewerage or drainage for, or in connection with, a building
- preparing plans or specifications (including work performed by architects, engineers and licenced surveyors) and conducting completed building inspections for the building work
- performing contract administration in relation to the construction of a building that the person has designed
- fire protection work
- termite inspections, investigations, advice or reports
- building certification work
- assessment of a building's energy efficiency
- erecting, managing and removing scaffolding if it is or was used for other building work.
Building work also includes work performed by these professionals as part of their professional practice, but only to the extent that the work relates to other 'building work':
- an architect under the Architects Act 2002, schedule 2
- a registered professional engineer under the Professional Engineers Act 2002, schedule 2
- a surveyor under the Surveyors Act 2003, schedule 3.
Examples of activities that are considered building work are:
- refurbishing a high school home economics block
- replacing administrative offices roof
- upgrading a chilled water air-conditioning
- altering a courthouse
- constructing a sports clubhouse.
Activities that are not building work
Building work does not include:
- civil, engineering and infrastructure projects, such as bridges, roads, tunnels and ports
- the construction, maintenance or repair of a busway, road, railway or a tunnel for a busway, road or railway and associated bus/rail platforms and stations
- an authorised activity under a resource authority
- activities that are exempt under the BIF Act, part 2, division 2 of chapter 2, including:
- residential construction work (except residential construction contracts for 3 or more living units where the Department of Housing and Public Works is the principal)
- maintenance work that includes ongoing restoration, repair or replacement of a building or part of a building (and excluding building refurbishment and capital improvements)
- government contracts advertised or tendered before 1 March 2018.
Examples of activities that are not building work are:
- extending a public shared pathway
- upgrading or repairing dam and weirs
- upgrading a car park
- marking pavements
- demolishing a building.
Definition of maintenance work
'Maintenance work' is defined as work required on an ongoing basis to:
- prevent deterioration or failure of a thing
- restore a thing to its correct operating specifications
- replace a component at the end of its working life.
Maintenance work doesn't include:
- improving a building to increase its capabilities or functions, or meet new statutory requirements applying to the building
- refurbishing or replacing a building to extend the life of the building.
Determining the percentage of building work
The contract value for most contracts is all for building work, so determining that a PBA is required is straightforward.
Some contracts include combinations of building work. For example, civil, infrastructure and transport projects often include activities defined as building work, so determining the percentage of building work is more complicated.
For example, a project to install new elevator facilities at a town hall, and provide ongoing lift maintenance and servicing, would involve both included and exempt building work for the purposes of a PBA (installation - building work; ongoing maintenance - exempt work).
The head contractor would need to establish how much of the contract price comes from building work and how much from maintenance work to apply the 'more than 50% of contract price' test.
If the contract involves only excluded building work or exempt building activities, it doesn't need a PBA.