The Head Contractor Exemption can be a game-changer for developers, but it requires a strategic approach to ensure compliance and minimise risk.
Following on from my last article Navigating Regulatory Changes: A Strategic Approach to the Head Contractors Exemption for Developers, this article delves into the necessary considerations when it comes to appointing a Superintendent under this arrangement. Exploring the intricacies, it discusses the advantages and disadvantages of engaging external and internal superintendents, offering insights into licensing requirements and risk mitigation strategies for Developers.
The Head Contractor Exemption Unveiled
As previously outlined, the Head Contractor Exemption in section 8 of Schedule 1A of the Queensland Building and Construction Commission Act 1991 (the Act) provides a pathway for unlicensed entities to engage in building work, given certain conditions are met. Primarily, this exemption can be leveraged when the building work is non-residential, and it is performed by a duly licensed subcontractor.
To capitalise on the Head Contractor Exemption, meticulous attention must be paid to the contractual arrangements. It is imperative that the building work is entrusted to licensed subcontractors, and any consultants engaged for project management services must hold the appropriate licences under the Act.
Developers must be cautious not to personally undertake or cause unlicensed building work, as any deviation from the exemptions criteria can lead to a breach of section 42 of the Act.
Navigating the Superintendent Role
A key element in this journey is the appointment of a Superintendent, a vital role in overseeing building contracts. It is crucial that the person performing these functions must hold an appropriate licence under the Act, usually a Builder – Project Management Services Licence.
At this point, Developers face a pivotal decision between engaging an external Superintendent or transitioning their business to bring the Superintendent function in-house by hiring an internal employee for this role. Each option has its merits and demerits, demanding careful consideration.
Pros and Cons of External vs Internal Superintendent
To simplify the considerations, diagrammatically, the pros and cons of each pathway are outlined here:
If a Developer does choose to bring Superintendent functions in-house, there are a further two options available:
Option 1: Licensed Superintendent Company
This is where the Developer Company would need to obtain a Builder – Project Management Services company licence and appoint a Nominee Supervisor within the company who holds a relevant licence. Under this arrangement, Superintendent employees do not require a QBCC licence.
Option 2: Licensed Superintendent Employees
This is where each employee is liable for obtaining an individual Builder – Project Management Services contractor licence. There are some challenges associated with this pathway, including high evidentiary requirements for the employees and the need for professional indemnity insurance.
Whilst introducing a Company Superintendent can mitigate risks associated with multiple licensed employees, a single Nominee Supervisor assumes liabilities, streamlining risk management. Ultimately, this is a decision that must be made by Developers when it comes to bringing the Superintendent functions in-house.
Above all, compliance with QBCC requirements for personal and adequate supervision is critical. Whether a Developer opts for a Company Superintendent or individual licensees, adherence to legislative demands are paramount.
“Forethought and Foresight are the quintessence of an effective strategy, illuminating the path to success before it is even paved.”
– Amit Ray
At the end of the day, Developers must navigate the complexities with foresight and strategic planning. The Head Contractor Exemption, coupled with prudent choices regarding Superintendents, can pave the way for successful project execution.
As legislative landscapes shift, staying informed and adapting methodologies will be key to sustaining a thriving construction enterprise. For Developers eyeing long-term success, the journey involves not just constructing buildings, but constructing a robust and compliant operational framework.
If you need advice on how best to structure your next construction business venture or project, contact Laura King at firstname.lastname@example.org for a chat.Not intended as legal advice. Read full disclaimer.