The superintendent’s dual role in construction contracts: Balancing agency and independence

In construction contracts, particularly those based on widely used standard forms such as AS4000 and AS4902, the superintendent plays a pivotal role in administration and therefore liability of the parties.

It is essential for principals to understand the dual role a superintendent holds and to manage interactions carefully, to ensure the integrity of the contract is preserved and avoid unintended legal consequences (which in a project setting, equals unwanted time and cost).

Superintendent dual role

The role of a superintendent is a contractual role and its functions are regulated by the relevant construction contact.

We refer to the role as that of a ‘superintendent’ but it is important to note that the title does not define the role. The same role is often defined as ‘principal’s representative’ or ‘owners architect’, but in all instances what we are looking at is a person undertaking a contract administration role – that is a person who is responsible for exercising directive, determination and assessment functions under the relevant contract.

Under a construction contract, it is commonly a requirement that the principal ensure that there is a superintendent appointed and that the superintendent perform their functions in accordance with the construction contract. The principal will, under a separate services agreement or by internal appointment, engage a person to provide the superintendency services. The construction contract then stipulates the functions of the superintendent appointed.

In exercising its functions, a superintendent typically acts in two capacities under a construction contract:

• Principal’s agent: Performs administrative and representative functions on behalf of the principal such as issuing directions to the contractor, reviewing programs, or approving drawings.
• Certifier: Makes assessments such as extension of time, variation valuations, payment claims, or assessing practical completion.

These two capacities have the tendency to overlap and, subject to the contractual terms regulating how the superintendents function is to be exercised, this overlap can cause serious issues and undermine the validity of the functions exercised.

Exercising the function

The key issue is not the function being exercised by the superintendent, but how that function is to be exercised. The exercise of a superintendent’s function is usually captured under one of the following options:

• Principal administered (Option 1): This is where all functions of the superintendent are exercised for or on behalf of the principal and in accordance with the principal’s directions, objectives and requirements.
• Independently administered (Option 2): This is where all the functions of the superintendent are exercised independently, impartially, reasonably, fairly and honestly. This is largely the unamended position in the Australian Standard contracts.
• Split function (Option 3): This is where the functions of the superintendent are split, with some exercised as principal’s agent and others independently administered.

Whilst Option 1 carries risk of unenforceability (especially when considering things such as the unfair contracting regime) and scrutiny due to its biased and seemingly unfair outcomes,¹ it is Options 2 and 3 that are often exercised incorrectly and cause the most concerning risk to time and cost on a project.

Independent function

The key issue with Options 2 and 3 is that a superintendent’s independent functions often appear inconsistent with their separate engagement by the principal. It is easy for a principal to assume the superintendent acts solely in their favour, given they are the appointing party. However, this is not always the case.

Where a construction contract requires the superintendent to act in good faith, fairly, reasonably, independently, honestly, or impartially, those obligations override (to the extent the contractor and the construction contract is concerned) any services agreement between the principal and superintendent. The principal must ensure the superintendent performs their functions in accordance with the construction contract. If the superintendent fails to do so, the principal (not the superintendent) may be in breach of the construction.

The most common mistake arises in communications between the principal and the superintendent (particularly where the superintendent is the principal’s employee). If a court finds that the principal improperly influenced or directed the superintendent in circumstances requiring independence, it may uphold a breach of contract claim against the principal. This can result in remedies for the contractor, including setting aside superintendent determinations/assessments made under the construction contract and awarding damages against the principal.

Best practice principles

Principals should adopt protocols to govern superintendent communications, including:

• identify whether the communication relates to the superintendent’s agency function or independent function;
• do not privately communicate with the superintendent on matters requiring independent judgement;
• do not attempt to pressure or influence the superintendent’s assessment;
• when addressing the superintendent in their certification role:
  • use formal written submissions presenting the principals position (as opposed to directing the superintendent to an outcome);
  • consider whether it is prudent to copy the contractor (and any other relevant parties) into submissions or other correspondence to the superintendent; and
  • avoid permitting others in the organisations to draft the superintendent’s correspondence;
• the superintendent should not be copied into, or provided with, legal advice to the principal regarding a matter on which the superintendent is required to make an assessment or certification; and
• engage the superintendent on terms that are consistent with the functions to be performed under the construction contract.

A well-managed superintendent relationship is critical to the success of any construction project. By recognising the superintendent’s dual role and implementing clear protocols around communication and decision-making, principals can safeguard contract integrity, minimise disputes and reduce the risk of costly project delays or claims.

^1. Courts have generally implied a duty to act independently (even where not expressly stated in contract), taking the view that a power to issue payment schedules and certificates that have contractually binding force and significant commercial consequences need to be exercised with a level of impartiality, even if a contract allows for superintendent to act as principal’s agent (Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 173; Dura (Australia) Constructions Pty Ltd v Hue Boutique [2014] VSCA 326)